TNAG-0109-FCO40-145-Detainees-and-prisoners-following-19671968-disturbances-1968 — Page 136

CONFIDENTIAL

2

intermediary's initial reaction to our approach was somewhat

surprising. He made it clear that in his view any negotiation

with the Chinese about Grey would be an act of folly.

He gave

three reasonsi-

(a) The Chinese would be bound to raise their terms, probably

demanding the release of

newspaper workers imprisoned

in Hong Kong as the quid pro quo.

(b) It would encourage the Chinese to arrest more British

subjects as a means of exerting pressure on us.

(0)

It would embarrass the "moderate" elements in Peking, with

whom the intermediary was in contact, by showing that a

policy of seizing hostages produced results.

At subsequent meetings the intermediary intimated that he

had received messages from the Chinese on the following lines.

He should not go ahead with discussions with the Hong Kong

authorities about an exchange; any negotiation would embarrass

the Chinese authorities and force them to demand a high specific

price for Grey. In fact "there was no price". The Chinese

authorities would prefer simply to release Grey "in their own

time", which would in the view of the intermediary, be in the

fairly near future.

In the conduct of a cover operation of this delicacy the

difficulty is of course to decide how much reliance can be

placed on the intermediary. The Hong Kong authorities have,

however, had much experience with this intermediary. They

regard him as reliable and think that he has faithfully retailed

what the Chinese have told him.

/ We accordingly

CONFIDENTIAL