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by the NCNA in Hong Kong (on whose advice the CPG would depend) since the prosperity of Hong Kong and the value of the CPG's large investment in it are closely associated with land values. The dwindling span of Crown leases is already a talking point here, particularly among accountants - though it has so far had no effect on land values.
10. The action we take over leases (and jurisdiction) would need to be agreed in advance with the CPG, and it is possible they might make conditions as in (c) of Annex B of the Planning Paper. But dealing in this way with leases would have the attraction for the CPG of requiring no public action or agreement on their part, or any change of position on the validity of the treaties. All would be done by HMG and the Hong Kong Government. The CPG's acceptance would simply be implied by the absence of public objection. The legal steps that we believe necessary on our side, and the considerations involved, are spelt out in the attached note (Annex A).
11. Such action by us over leases, blessed by the silence of the CPG, would be sufficient to maintain confidence and investment in Hong Kong and obliterate the legal and administration significance of 1997 - long as this fitted in with China's policy. It would also cover us against any charge of acting ultra vires in land matters.
12.
The disadvantage of this line of approach is that the legalities and legislative action necessary are complex and would be hard to explain to the Chinese - although they would understand the need for action of some sort. In addition it seems that some mention of the possibility of exercising jurisdiction beyond 1997 would be necessary in the Order in Council if we are to avoid being ultra vires in our administration. Were it not for this it would be greatly preferable if the Order in Council confined itself to giving cover for the issue of leases of indeterminate length. It would also seem preferable, if we have to make the point, to refer to the exercise of administration rather than jurisdiction but I do not know what the Legal Advisers will say.
13.
However, something must be done about these leases in any case, and it seems a sufficiently hopeful line of approach to be worth putting to you - more to start consideration than to suggest we have the complete answer. If you would like to discuss it with me after you and Richard Samuel and a Legal Adviser have had a look at it, I would gladly make myself available before returning to Hong Kong.
14.
After writing this it occurs to me that some unexpected turn in the Portuguese negotiations may create a precedent in Macau that overtakes the above;
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