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SL/C# 24126/35 Pt.3.
14th May, 1968.
Hong Kong Tunnel
As I told you on the telephone yesterday the Parliamentary Secretary at the Board of Trade saw Colonel Clague yesterday. At the end of the meeting I undertook to do two things: first to put to Commonwealth Office the point that Clague made that if it became known in Hong Kong that we were not prepared to cover the risk of a Chinese take over for more than 5 years forward this could have severe repar- cussions upon financial confidence in the Colony. He argued also that for social and political reasons the British Government should support Hong Kong in this respect. We made it clear that our assessment of the Hong Kong risk was essentially a commercial one and that we were not able to take these intangible features into consideration except in a very minor degree.
2.
Secondly, I undertook to prepare a draft for the Minister to send to the Prize Minister since it was at the latter's suggestion that Colonel Clague sav Ers. Dunwoody. As agreed I attach a draft of a note we proposeto send forward for the Minister to let the Prime Minister's office have.
3.
You showed some concern when I discussed this with you about the point that the 5 year limitation might become widely known in Hong Kong and that this could have unfortunate consequences. You therefore suggested that it might be useful if you and I and Carter from the Commonwealth Office could find time for a short meeting to discuss this; you have now confirmed this for 4.30 p.m. tomorrow, 15th May. I entirely agree that a meeting would be valuable and I hope that Carter will be able to find time to come along, particularly in view of the fact that I have in the attached note expressed a Commonwealth Office view which he may feel is rather too bald.
C. C. Lucas, Esq., H. V. Treasury,
Great George Street, London, S.W. 1.
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