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underlying interest in the good government of Hong Kong.
There are at the moment a number of such problems all of
5.
may have to be resolved at much the same time.
The most vital of these from both our points
of view is the Sterling Guarantee Agreement, which is of
course principally a Treasury concern. The Chancellor's
recent unilateral offer is designed to provide a six-month
breathing space while all concerned take another look at the
developing situation. Hong Kong is a major holder of sterling,
and has had, for a variety of historical reasons, to keep a
much higher proportion of its reserves in sterling than the
other major overseas holders. Our present temporary offer
seems a fair one, but I fear that we must assume that Hong Kong
will press us hard, on both technical and broader political
grounds, for modifications to the unilateral declaration as
it applies to her.
6.
The next major issue involving the Foreign and Commonwealth
Office was the decision to reprieve Tsoi, the convicted
murderer. This action did not go down at all well in Hong
Kong, more particularly as it was closely followed by a case
where, for strictly legal reasons, we have so far been unable
to send back from this country for trial in Hong Kong a British
police officer accused of large scale corruption. To the man
in the Hong Kong street it seems that in both cases we have
/frustrated
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