TNAG-1166-FCO40-1446-Future-of-Hong-Kong-1982 — Page 68

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MR CLIFT, HKGD

FUTURE OF HONG KONG

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Mr Steel (Law Officers)

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You will probably have already seen the article "Countdown in Hong Kong" that appeared on pages 15 and 16 of The Economist of 23-29 January 1982, volume 282 no.7221, of which I attach a copy for ease of reference. I gather from Mr Morris that Mr Mark Schreiber of The Economist has recently been making enquiries about Hong Kong from Hong Kong & General Department so he may have had a hand in the article.

2. The suggested solution of amending the 1898 Order with the private consent of the PRC but without a formal agreement so that it does not expire on 30 June 1982 goes in the same direction as my own thinking about "unilateral" action by HMG.

3. The idea of granting a commercial lease in the New Territories expiring after 30 June 1997 to a suitable Chinese tenant who is a representative, nominee or protégé of the PRC also accords with my ideas.

4. As you know, I have argued that there is strictly speaking no legal impediment to the grant of such a lease, or at any rate none that could not be removed by an enabling Order in Council.

5. While one would naturally wish to be able to deal simultaneously with

a) the continuance of UK administration in the New

Territories after 30 June 1997; and

b)

the grant of leases in the New Territories capable of running after that date,

so far as the law is concerned, one could deal with the question of the leases in advance of the question of continuing the administration if it seemed politically expedient to do so before, say, 30 June 1982. While ideally one might prefer not to take two bites at the cherry, there seems little likelihood that the UK will be able to do a deal with the PRC before 30 June 1982, and one cannot foresee when the PRC would be ready to do such a deal. If the deal is not clinched within a fairly short time, HMG might find it increasingly awkward to adhere rigidly to their traditional self-imposed policy of refusing to grant leases capable of running beyond 30 June 1982. I recognize of course that local lawyers are (understandably) doubtful whether the Governor at present possesses the necessary legal power to grant such leases (indeed his own advisers think he does not), and that HMG would have to do something that would effectively remove the doubt before a new policy could be adopted.

6. When I wrote my original minute of 17 August 1978 the

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