TNAG-0380-FCO40-426-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 151

CONFIDENTIAL

4.

THE HONG KONG GOVERNMENT HAS, HOWEVER, NOT BEEN

CONSULTED ON THE SUBJECT OF SUCH A REVIEW NEITHER WAS IT

CONSULTED OVER 2 STEPS TAKEN UNILATERALLY BY THE BRITISH

COVERNMENT: FIRST, THE FLOATING OF STERLING: SECOND, THE

EXCLUSION OF HONG KONG FROM THE STERLING AREA. THE

UNOFFICIAL MEMBERS DEPLORE THE FAILURE TO ENTER INTO

NEGOTIATIONS BOTH OVER THE GUARANTEE ITSELF AND OVER THE

FUNDAMENTAL CHANGES MENTIONED ABOVE. WHILST HAVING LED

TO NO DIRECT BREACH OF THE AGREEMENT ITSELF, THESE CHANGES HAVE FUNDAMENTALLY ALTERED THE SITUATION IN WHICH THE AGREEMENT WAS FIRST ENTERED INTO.

5.

THE UNOFFICIAL MEMBERS UNDERSTAND THAT IT IS NOW

THE INTENTION OF THE BRITISH GOVERNMENT TO DISCUSS ABOUT MID-SEPTEMBER POSSIBLE NEW ARRANGEMENTS SUBSEQUENT TO THE EXPIRY OF THE GUARANTEE ON 24TH SEPTMBER, LEAVING VIRTUALLY NO TIME FOR HONG KONG TO PREPARE FOR THE NEW SITUATION AND TO MAKE SUCH AN ADJUSTMENT AS MAY BE NECESSARY PROPERLY TO

SAFEGUARD ITS OWN RESERVES. THEY UNDERSTAND THAT, DESPITE

REPEATED APPROACHES BY THE FINANCIAL SECRETARY TO THE BRITISH GOVERNMENT, THERE HAS BEEN NO SATISFACTORY RESPONSE. THIS THE UNOFFICIAL MEMBERS CONSIDER TO BE A BREACH OF FAITH AND A BREACH OF THE SPIRIT OF THE AGREEMENT. THEY CONSIDER

TOO THAT IT SHOWS A LACK OF RECOGNITION OF THE SPECIAL

RELATIONSHIP BETWEEN HONG KONG AND BRITAIN, AND OF THE RESPONSIBILITY OF THE LATTER FOR HONG KONG AS A BRITISH COLONY. WITH SUCH A LARGE STAKE IN THE FUTURE OF STERLING HONG KONG HAS A RIGHT TO IMMEDIATE CONSULTATIONS AS TO THE

PROPOSALS OF THE BRITISH GOVERNMENT.

6. FAILURE TO DO SO CAN ONLY INCREASE THE IMPRESSION WHICH HAS RECENTLY BECOME WIDESPREAD IN HONG KONG (AND WHICH

IS THE VIEW OF MANY OF OUR MORE RESPONSIBLE AND INFORMED CITIZENS) THAT, IN RELATION TO THIS AND CERTAIN OTHER MATTERS,

-2- CONFIDENTIAL

/THE