TNAG-1038-FCO40-1288-Future-of-Hong-Kong-1981 — Page 32

SECRET

HKK ovel,

RECEIVED INI RESHITY NO. 51

02 198

DESK MACER

ISTRY

GOVERNMENT HOUSE

HONG KONG

126

770

5 May 1981

香港總督府

Датель

INDEX

PA

Acton Taken

875.

FUTURE OF HONG KONG CONTINGENCY PLANNING

When you were here last month it was agreed that Hong Kong would produce a first draft of a contingency paper on actions that might be taken to halt a slide of confidence in Hong Kong. The same options could form the basis of points for negotiation with the Chinese when and if we get to that stage.

2.

I am now attaching our draft. I have tried to look at the problem from the Chinese point of view and to consider what actions are most likely or possible for them. I think this is the best angle of approach but am conscious of straying into Percy Cradock's territory. I hope he will forgive, correct, and amend.

3.

Since any plausible scenario which would give sufficient confidence in Hong Kong also involves a concession by us on sovereignty, the legal implications of this, and its equivalent, the abrogation of treaties, need to be examined carefully by the experts in London. We have not attempted this here.

4.

The paper makes clear that any plausible scenario must contain at least two elements: firstly a concession on sovereignty (however dressed up) and perhaps on other things by us to the Chinese; secondly agreement by the Chinese to action by us to remove the termination phrase in the 1898 Order in Council, or other legislation with the same effect. Both elements

Sir E Youde KCMG MBE

FCO

SECRET

/ 2.