TNAG-0753-FCO40-957-Future-of-Hong-Kong-1978 — Page 113

SECRET

4.

Your proposal to change the term of current leases to "unde... termined" meets most of these criteria. It is simple; it gets rid of 1997; and it commits the Chinese to nothing new. On the other hand it does require explanation and interpretation and might there- fore be more difficult to negotiate with the Chinese than appears at first sight. Furthermore our legal adviser is very doubtful about this solution, not so much because of its novelty but because it amounts in his view to a "perpetual lease", in other words, a free- hold with rent charges. The Treasury Solicitors, who have been con- sulted informally, take a similar view.

5.

These objections certainly do not rule out your solution but they do suggest that others might be worth exploring. The following are among those we have considered:-

(a) the conversion of current leases to leases for a fixed

term (es 75 or 99 years); and the crant of new leases for the balance of that term;

(b)

•

fixed term leases incorporating a clause which would give the Crom the right to determine on 28 June 1997 ( or some other suitable date) and each subsequent 28 June "if the

rown shall cease to occupy the leased territories".

(c) fixed term leases with the rider "if the Crown shall so

long occupy the territories";

(a) leases without fixed term "for so long as the Crown may

occupy the leased territories".

(e) leases (as at present) until 28 June 1997, "thereafter

for as long as the Crown may occupy the leased territories".

We have not yet worked out precise Egal wording for any of these formulae. Consideration night for example be given to substituting

'administer" for "occupy" in those at (b), (c), (a) and (e), and "provided that" for "if" in the formula at (c).

#

6.

Some of these solutions can be eliminated fairly quickly. (a) is legally much the simplest - and is therefore preferred by the Treasury Lolicitors, who also favour (c). It would undoubtedly boost confidence. But as it would be tantamount to an extension of the New Territories Lease for the period chosen it is most unlikely to be acceptable to the Chinese - unless the extension were for a very short period, in which case we would be faced with a Quw deadline with all the attendant problems. (b) seems excessively complicated, and might not be acceptable to the Chinese for that reason. It would probably not serve to promote confidence to any marked degree. By mentioning a fixed term of years (c) suffers to some extent from the disadvantages of (a), though its accept- ability to the Chinese should be increased by the qualifying clause. (a) is clear and simple and, like the "undetermined" solution would not require the Chinese to commit themselves to anything new. (e) would clearly be better than (d) in confidence building terms, if the Chinese could be brast to accept it.