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Mr Keating is less naturally inclined to be fulsomely supportive of the Governor's proposals than his Foreign Minister, that he did indeed say something along the lines of Mr Lague's allegation during his meeting with Li Peng in June, and that his close advisers have suppressed the record as part of a damage-limitation exercise ever since. We (and DFAT!) may never know if he actually used the words ascribed to him by Mr Lague. Senator Evans, though, remains fully supportive. I would expect the substance of his Senate statement to have been cleared with DPMC officials, if not with the Prime Minister himself.

7.

All this suggests that Mr Keating may be less willing than we would hope to sacrifice a bit of bilateral credibility with the Chinese by raising Hong Kong in the way we have proposed (FCO telno 443 during his Seattle bilateral with Jiang Zemin, but that there is more hope that Senator Evans will do so with Qian. Sir John Coles's intervention with the Australian High Commissioner (FC0 telno 447) should have strengthened our hand in that respect.

SIGNED.

·

DAVID BLUNT

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