TNAG-0448-FCO40-513-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1974 — Page 50

01

CONFIDENTIAL

Reference....

MF 9/393/1

(72)

Flaj A -/46

Mr Cambridge

STERLING GUARANTEE: HONG KONG

1.

I agree that the tone of the draft telegram enclosed with Mr Walker's letter of 12 June is unnecessarily, and probably counter-productively, abrasive, but I think that its general structure is right. I am sure that one of the reasons why this argument over the "accidental" breaches provision of the guarantee has dragged on for so long, is that we have never previously given him a consistent and reasoned explanation of (a) why we interpret the provision in the way we do; and (b) why its interpreta tion does not represent any change on a part "half way through", as Mr Haddon-Cave complains.

So whilst I agree that we should urgeddon Gave Hong Kong to look to the future, I think that they are unlikely | to do so until we have answered the points they have made rather more fully than we have hitherto.

2.

I therefore attach a draft letter from you to Mr Walker, enclosing a re-draft of the telegram.

Димой

D I Lewty

Financial Relations Dept

13 June 1974

c.c.

VMr Goodfellow, HKIOD

Mr Aust, Legal Advisers

CONFIDENTIAL

?

the Armor hass

Aprend

with relverance

се

preference to day draft

PA (sterling)

2

14.0