SECRET
the same thing without actually mentioning British rule, then we
suggest substituting "for so long as this Order is in operation'
for the phrase quoted above.
3. Clause 3 is more problematical.
We have not been able to devise
an amendment that will deal effectively with the power to legislate
for and administer the New Territories after 1997 without referring
to continuing British administration. The choice therefore is between
retaining this clause at the risk of provoking Chinese objection, or
omitting it at the risk of having your power to legislate for the New
Territories after 1997 challenged in the Hong Kong courts. Given
that we are advised that such a challenge if made before 1997 would
fail, and that the clause is unnecessary in order to enable us to
achieve our primary purpose of issuing indeterminate leases, we
suggest that in the new circumstances this clause should be dropped
altogether, leaving the question of legislative and executive powers
after June 1997 to be considered in the light of contemporary circum--
stances when that date approaches.
4. There is a further question of tactics which you may wish to
discuss with McLaren and Samuel. The initiative now rests with the
Chinese to resume the whole discussion on the leases and it seems as
well to give them a good period for reflection before starting to
consider the possibility of reopening discussion through other
channels (your paragraph 16). However, given that Deng's objection
to the offending phrase is in the record for Chinese officialdom to
see, it might be best to keep open the option of seeking to point
out to the Chinese that the phrase was inserted as something of a
reassurance to them, rather than decide now that when the subject is
reopened we will indicate our readiness to drop it.
OWEN
Files
Ild. HK & GD
Ha. FED
PS
PC/Lord Goronwy-koberts
PS/PUS
Sir A Duff
Mr Cortazzi Mr Murray
Copies to:
Sir Ian Sinclair
Legal Adviser
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