SOUTH AUGUST
CHINA MORNING
13th
73
Post
HRR 5/.4.
South China Morning Post
MONDAY, AUGUST 13, 1973
Disappointment in London
Mr Haddon-Cave's disclosure at the airport last night that Britain had still not come to a firm decision on the future of the agreements covering overseas sterling reserves, provokes amazement, bordering on disbelief.
For there are about six weeks to go before the present five-year agreement expires and the best assurance Hongkong- can be given is that "a message would be sent at the beginning of the second week in September."
In other words, two weeks before expiry date, Britain will condescend to inform us ⠀ about whether our sterling balances in London are to be given any better security than previously or indeed, for all we know, it may be no security at all.
prior
This clearly suggests no discussions with any country or territory holding sterling in London -- just an offer which we must accept or reject with equal peril.
Yet Hongkong has been asking for clarification of Britain's views for months.
..
Our concern is obvious: our holdings of approximately £700 million sterling | represent about a quarter of Britain's total overseas-held reserves and constitute 89 per cent of Hongkong's total overseas
reserves.
Nor are they all Government funds but local bank funds, and in view of sterling's far from stable performance this year it is essential for Hongkong to demand first, the freedom to decide how it should dispose its holdings, and second, a far greater measure of protection for at least part of its
reserves.
Clearly Hongkong is fully aware of the risks of trying to force the pace of t diversification this could result in driving down the sterling parity to levels which would be harmful to all sterling holders, including Hongkong, as well as Britain.
ix
1
Any attempt, however, by Britain to deny Hongkong the right to safeguard its reserves^~ already depleted by recent devaluations would provoke serious repercussions in the Colony.
Indeed it is difficult to imagine anything more inimical to the stability of sterling than a prolonged and noisy outcry by bankers, businessmen and the public against any such step.
We referred last year to Hongkong as a "puppet on a string" being manipulated by the British Treasury.
Mr Haddon-Cave in an unenviable position being a colonial civil servant, yet there is no doubting his loyalty to Hongkong and his concern to get the best deal possible for our reserves.
4
Mr Haddon-Cave's statement yesterday suggests that he and the Governor, Sir Murray MacLehose, "pressed their views forcibly" on Britain and it would be unjust and unwarranted to suggest that they shirked a showdown.
But it must be apparent that if Whitehall tries to ride roughshod over their views, local confidence in the Hongkong Administration must be affected.
It may be regretted that Sir Murray and Mr Haddon-Cave did not go one step further and press their claims with the Prime Minister, Mr Heath, on his return from Ottawa-but that may be possible two weeks' hence.
There can be no question of Britain dictating to Hongkong.
Whatever views London may have on guarantees for other sterling holders and it should make every effort to encourage them to stay with the pound Hongkong's.. is а special case which requires a negotiated agreement, giving us the right to diversify a far greater share of our reserves than the eleven per cent so far conceded.
Mr Haddon-Cave's uncharacteristic brevity at the airport last night was more eloquent than any words he spoke.
He is evidently very dissatisfied with the mere promise of a statement from London at virtually the 12th hour.
The British Government may be having its troubles in finding a suitable fix for the pound inside the E.E.C. currency “snake" but it is time it fairly considered the problems of the one territory that has done more than any other country to back the pound in recent years.
་་་་
London can be assured that Hongkong has no intention of ratting on the pound now or in the future but the right to be flexible with our reserves is basic to our hard-won economic security, gained, as everyone knows, through our own hard work and enterprise and not anyone else's generosity,
+
No comments yet.
Private notes are available after approval.