TNAG-0448-FCO40-513-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1974 — Page 75

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CONFIDENTIAL

"It would moreover be our intention to regard as covered by this provision breaches which occurred in consecutive months, provided that each was accidental in the sense described."

I also suggested that some of the points I had earlier made and which Mr St Clair had apparently accepted might still be worth including, subject to your views and Mr Stuart's.

Mr Jones told me that Mr Walker wished the telegram to be as conciliatory as possible. Their view was that

5.

Hong Kong's request for a modification of the

accidental breaches provision was being made for the record, so that EXCO could be told that they had tried but failed. I said that this might well be true for all I knew, but that it would doubtless be easier for Hong Kong to accept our refusal to meet their wishes if we

Mr Jones also told me put our strongest case to them. that Mr Walker wished a telegram to be sent before Mr Barratt sees Mr Haddon-Cave (who will be in London on holiday) over lunch on Thursday, 16 May. I said I understood that Mr Stuart in Hong Kong Department thought that there was no need to rush this, andI suggested that the best way to proceed might be for Mr Barratt to be briefed on our position, but not to raise the subject. If Mr Haddon-Cave did not either, then the telegram could go once agreed. If Mr Haddon-Cave did raise it and agreement was reached, then that would be admirable.

6.

Mr Jones said he would telephone me later this afternoon to seek our views. I should be grateful if you and others would tell me what I should say to him on

(a) what we should say to Hong Kong; and

(b) how we should go about saying it, ie should we

wait until the Barratt/Haddon-Cave lunch?

13 May 1974

Copied (with enc) to:

Mr Goodfellow (HKIOD) Mr Aust (Legal Advisers)

CONFIDENTIAL

Dhewty

D I "ewty

Financial Relations Department

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