TNAG-0033-FCO40-69-Relations-with-China-1968 — Page 186

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b)

.)

12

The covert channel has until now proved slow and we have

not been able to julge its effectiveness. Its use for this

particular purpose might result in unacceptable delay.

In addition I think that we should offer Hsueh and Lo from

the outset since to offer first the one and, if this is not

enough, the other will not merely add to the delays (sinoe

neither in secret nor in formal discussion will our

interlocutor have authority to clinch a deal immediately)

but will also, as Mr. Cradock argues, encourage the Chinese

to ask for more.

As Mr. Cradock very rightly says, the main risk of any

preliminary discussion with the Chinese about Mr. Grey is that

it will encourage them to push up their price. For that reason

I see advantage in initiating discussions through the covert

channel rather than through the Mission. If the Chinese

initial asking price is unacceptably high, it should be easier

to get them to lower it if it has only been put to us informally

than it would be if it had been put to us through the Ministry

of Foreign Affairs and thus possibly have become an issue of

face. I think that this advantage outweighs the disadvantages

of the admitted cumbersomeness and slowness of the covert

channel. We should however try to ensure that our emissary

impresses on his contact the desirability of speed; and in

the final instance if after, say, a month, we have had no

satisfactory results through the covert channel, we can always

make a follow-up approach through the Mission if this seems

/desirable.

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