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a compromise (which must involve at least a partial surrender to China) would be bad.

2. I think it worth mentioning, since the important relevant factor in Hong Kong Chinese opinion is doubt about H. M. G. 's intentions for Hong Kong, that there has been no reaction from Hong Kong (or indeed from anywhere else) to the parliamentary question and answer of the 7th July (see 282), of which we sent copies to the Governor, which conveyed clearly

(albeit a little obliquely) that H. M. G. has no intention of giving up Hong Kong. This question and answer, or their implications, do not seem to have been noticed in Hong Kong. We may, I think, in our reply fairly draw the Governor's attention to them, though admittedly we cannot ask him to publicise them, so that opinion should be less susceptible to a British retreat over Kowloon.

3. The Governor makes his representations very strongly and they will have to be most carefully considered. He says that the advantageous course from Hong Kong's point of view is to take the case to court and that this still holds even if we lost the case. Therefore he wants to know what reasons we have for deciding not to go to court dher than the possibility (or likelihood) of losing. Do we contest his view that from the point of view of Hong Kong's advantage the loss of the case in court would be less serious than a compromise? If not, then the reasons for our decision must transcend the local interests of Hong Kong and relate to H. M. G. 's foreign policy generally. (The mere fact that the Law Officers who have advised us that we are likely to lose our case would be the very people who would have to conduct our case at the International Court is of itself no sufficient reason for deciding not to go to Court. For, if it were decided to go to Court it could presumably be explained to the Law Officers that the decision arose from no doubt as to the soundness of their advice, but from the political desirability of fighting the case, irrespective of the chances of success, rather than of yielding without a fight.)

4. The Chiefs of Staff (see 280) share the Governor's dislike of "a weak compromise" which involves giving the Chinese jurisdiction, partial or otherwise. But this does not necessarily mean that they share his preference for - "arbitration, win or lose"; a win at arbitration would of course suit them and be infinitely better than any compromise, but a loss at arbitration would present them unconditionally with Chinese jurisdiction in Kowloon City and might be worse from their point of view than a compromise such as the Consulate proposal.

5. We cannot take a decision in this matter either way without consulting the Foreign Office and the Ministry of Defence. And a decision in the Colonial Office will have to be by Ministers. I do not think we can advise Ministers on this difficult case without another meeting with Foreign Office and Ministry of

Defence