TNAG-0380-FCO40-426-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 195

...LONDON COULD ABROGATE (HONG KONG'S FINANCIAL) FREEDOMS.

IN PRACTICE, THE BRITISH GOVERNMENT DARE NOT TAKE SUCH HIGHHANDED

ACTION.....'

**

...NEVERTHELESS, THE NEED TO MENTION SUCH FOSSIBILITIES

IS SOME MEASURE OF THE MUTUAL SUSPICIONS ENGENDERED BY THE DELAYS

IN LONDON'S RESPONSE.....

.....FURTHER, HIGHANDED ACTION WOULD PROBABLY TRIGGER SOCIAL UNREST IN HONG KONG, WHERE THE MAJORITY OF THE POPULATION IS ALREADY CONVINCED THAT THE COLONLY ''SENDS ITS MONEY TO LONDON'' AS A FORM OF COLONIAL TRIBUTE...."

"'.....THE SINO-BRITISH RELATIONSHIP HAS BEEN BUILT UP ON THE BASIS

OF HONG KONG'S FINANCIAL STABILITY.....

....BLUSTER ASIDE, WHAT COMPROMISE IS POSSIBLE?.....

....THE INTERESTS OF THE TWO SIDES ARE IN DIRECT CONFLICT.....

.....WHAT HONG KONG NEEDS IS A POST-SEPTEMBER GUARANTEE OF THE

HONG KONG DOLLAR VALUE OF ITS STERLING INVESTMENTS FOR A FURTHER SIX TO TWELVE MONTHS, ALLOWING AN ORDERLY RUNDOWN OF A REASONABLE SHARE OF THE MONEY IT HAS BEEN COMPELLED TO HOLD IN BRITAIN....."'

..THE REAL ARGUEMENT SHOULD BE ABOUT THE PERIOD OVER WHICH HONG KONG WILL BE PERMITTED TO MOVE OUT OF STERLING AND THE

SPECIFIC EXCHANGE RATES IN WHICH A SUITABLE GUARANTEE COULD BE

EXPRESSED....."'

WHILE HONG KONG OFFICIALS CAN EXPECT LITTLE SYMPATHY AND SCANT COURTESY FROM LONDON, THEY HOLD A POKER HAND STRONG ENOUGH TO COME AWAY WITH AN ACCEPTABLE COMPROMISE.....

".....IF LONDON SHOULD PROVE UNEXPECTEDLY BRUTAL, THE GOVERNOR HAS ENSURED EXPERT ADVICE TO CARRY HONG KONG THROUGH THE MAJOR MONETARY CRISIS WHICH WOULD UNDOUBTEDLY ENSUE."

END OF F.E.E.R. EXTRACTS.

2

/ REPORTS

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