1
SECRET
3.
Turning to the alternative course which you and Philip Haddon-Cave have in mind (your telegrams 1134 and 1136), it is indeed helpful to have your thoughts on this. But, as a preliminary layman's reaction, I am uneasy about the idea. I recognise all you say about Hong Kong's responsibility in the event of your cutting out of the guarantee arrangements: and about the reduction of political tensions at your end which the new liberty would be calculated to bring about. But as you say there would still be the presentational problem, which might prove even more tricky than for the deal under consideration at present. And on the political front I would be afraid that the possibility of friction would still remain for the future. However responsibly you acted under a 'free' régime, it is not difficult to envisage circumstances in which you might be under strong local pressure to get out of sterling and strong pressure from us not to do so. If this happened it could seriously damage the political relationship.
SECRET
- 2 -
(Duncan Watson)
No comments yet.
Private notes are available after approval.