TNAG-0381-FCO40-427-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 272

RCH

VED IN

No.51 SEP 1973

PICKS

Mr Marshall

Thove in Barralt can find time to let us how exactly what

вере happened belie Vas long!

HONG KONG: STERLING

&

SECRET

Walk

Czela

no

Songle

162

2619

Si D. Watson WW 26/9

1. Caughson / 1, Goodfellow May care to see. If m, H-Cave is costarted that will be a plus. But if the Treasury are still insisting on the same MSP it will mean that

precisely what the upshot of Mr Haddon-Cave's talks with at some stage Mr Barratt in Dar-Es-Salaam was because the final meeting Hong Kong will

1. I mentioned to you this morning that I did not know

took place at the very end of the proceedings and I did not have a chance to find out from Mr Barratt how it went. I have been in touch with the Treasury this morning;

have to

but hey st.

is now heavily engaged in the briefing for the Brandt visit and no-one else there (not even Mrs Hedley-Miller) knows the full story. So we shall just have to wait until Mr Barratt

has time to record what happened.

then do

this willingly

25/9

Enked!

Excy that

2. In the meantime, it may help if I set out what the position broadly is. The talks with Haddon-Cave seem to have gone well. The main factor here, evidently, was that Haddon-Cave was not expecting to find any sympathy for Hong Kong's predicament and was agreeably surprised when Barratt indicated that there was in fact some give in our position. At their first meeting, Haddon-Cave explained that as a result of the Ilong Kong banks' selling forward, Hong Kong would have real difficulty in getting to its MSP by the 31 October deadline. (He was not certain what the exact short fall was likely to be.)

Mr Barratt hinted that although the Treasury would insist on keeping MSP at its present level, they would be prepared to see a phased return, ie extending beyond 31 October. This concession would, however, only be made on the understanding that Hong with the Kong accepts the general principles of our declaration and will work in compliance with them. The position now is, therefore, that Hong Kong is to make specific proposals to us about phasing.

with the HK your

Agreemen

Vaules

#1

exfined the curent Guarantee

3. I realize the above is imprecise. The important point is very for us, however, is that events seem to be moving in the quad wicted

right direction.

Sur.cambridge

PA. I

24 September 1973

Copied to:

Mr Holland

Mr Stuart (HKIOD) Miss Pestell

SJ G Cambridge

Financial Relations Dept.

SECRET