CONFIDENTIAL
ruled out the possibility of concessions. The point was made to me more than once that commutations should not mean riduculously short terms of imprisonment.
THE FUTURE OF HONG KONG
12. This can only be uncertain. The lease of the iler Territories will fall due in 1997 and it may be that the Chinese Government will not intervene overtly in the meantime unless they feel they have no alternative. They might take over when the lease ends: or it is conceivable that they might wish to extend the status quo even beyond 1997 probably by informal rather than formal arrangements. If they did decide to take over, it is difficult to see how they could be stopped. The case for our forces' presence there is less that of deterrence than of internal order. So far, it suits Peking to let things be. But we should consider in the Office whether it would be possible and productive to probe very tentatively the possibility of a long term arrangement with them without ourselves precipitating a crisis. Otherwise uncertainty will grow as the period between now and 1997 diminishes.
PHILIPPINES
13. We have no serious political interests in the Philippines but we do have substantial and rapidly growing trade (£30 m exports in 1973 and likely to be about £50 a in 1974). There are opportunities here, and since the Philippine halance of payrants is still in surplus despite the oil crisis, they should be able to pay for more imports. It was pado very clear to me that the Philippine Government wish to diversify from their present dependence on US and Japanese imports.
CONFIDENTIAL
/14.
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