TNAG-1265-FCO40-1612-Future-of-Hong-Kong-despatch-on--The-Hong-Kong-Negotiations--1983 — Page 7

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consistent with co-operation. Such a course might not be a diplomatic triumph but would be the least bad of the courses which may confront ut. Sir P Cradock's analysis of the options which might face us in considering whether or not to reject an eventual deal is particularly helpful in considering the way ahead.

6. As the conclusion makes clear this is a bleak picture. But there are no easy answers and the Ambassador does not believe that

could have adopted any other approach that would have brought us to a different position today. We have little scope for manoeuvre but there is still, he believes, much to play for.

we

7.

We shall be taking this despatch into account in preparing the new policy reviews paper for Ministers. In general I share the Ambassador's analysis and conclusion. We have for the moment at least reduced Chinese suspicion of our aims and methods to a manageable level; and despite signs of irritation at what the Chinese still see as British prevarication, they remain anxious to enlist our co-operation in the implementation of their plan. There is thus a reasonable chance that we shall get agreement on some measures to limit the damage that plan will do to Hong Kong. But achievement of even such a limited goal will call for patience and skill, as the Ambassador says. Another point (on which Sir E Youde may well comment) is the problem of attitudes in Hong Kong and the difficulty of persuading EXCO that we must face the consequences. In a sense our negotiations are conducted with two interlocutors, Peking and Hong Kong, and to an extent the temperature and progress in the one exchange is in inverse proportion to the other. EXCO are frankly concerned that we have got so far down the road with the Chinese. The discussions in January are likely to be difficult.

DISTRIBUTION

8. I believe this despatch should be given very limited distribution. I recommend that in addition to those listed above it should go only to the Prime Minister and other members of OD(K), and to Sir Robert Armstrong in the Cabinet Office. For this purpose I attach a short draft minute from the Secretary of State

to the Prime Minister.

ACKNOWLEDGEMENT

9.

It is customary for ambassadors to be thanked for their despatches by the Department. Since Sir P Cradock will be leaving Peking in а few days time and given the particular importance of the talks and his role as leader of our negotiating team, I

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