TNAG-1900-FCO40-2699-Future-of-Hong-Kong-briefing-1989 — Page 44

CONFIDENTIAL

113361 MDHOAN 4752

CONFIDENTIAL

FM FCO

TO IMMEDIATE WASHINGTON

TELNO 1285

OF 111205Z JULY 89

INFO PRIORITY HONG KONG, PEKING

MIPT: TEXT OF MESSAGE TO MR BAKER AS FOLLOWS:

1.

AS YOU KNOW, I HAVE JUST RETURNED FROM A VISIT TO HONG KONG. THAT VISIT LEFT ME IN NO DOUBT ABOUT THE PROFOUND IMPACT WHICH RECENT EVENTS IN CHINA HAVE HAD ON HONG KONG. WE MUST NOW WORK TO RESTORE LOST CONFIDENCE: AS I SAID IN THE MESSAGE I SENT TO YOU FROM HONG KONG, THE INTERNATIONAL COMMUNITY HAS AN IMPORTANT ROLE TO PLAY IN THIS.

2. MY VISIT HAS HIGHLIGHTED TWO SPECIFIC AREAS WHERE THE UNDERSTANDING AND CO-OPERATION OF THE UNITED STATES WOULD BE

PARTICULARLY WELCOME.

3. FIRST, IN THE COURSE OF MY VISIT, A NUMBER OF PEOPLE EMPHASIZED TO ME THE EXTREMELY DAMAGING EFFECT ON HONG KONG SHOULD THE INTERNATIONAL COMMUNITY AND PARTICULARLY THE UNITED STATES, INTRODUCE FURTHER SANCTIONS AGAINST CHINA. AS CHINA'S PRINCIPAL TRADING PARTNER, HONG KONG WOULD HAVE TO BEAR THE BRUNT OF SUCH MEASURES. THERE ARE ALREADY FEARS OF A RECESSION

IN HONG KONG IN THE WAKE OF EVENTS IN CHINA. ECONOMIC SANCTIONS

WOULD GREATLY AGGRAVATE THE SITUATION AT A TIME WHEN HONG KONG

NEEDS ALL THE HELP AND REASSURANCE IT CAN GET.

4. LIKE THE UNITED STATES, WE AND OUR EUROPEAN PARTNERS HAVE ALREADY ADOPTED A NUMBER OF MEASURES WHICH HAVE CLEARLY DEMONSTRATED OUR REPUGNANCE AT THE APPALLING EVENTS IN PEKING. TO ESCALATE THAT ACTION, ESPECIALLY USING THE BLUNT INSTRUMENT OF ECONOMIC SANCTIONS, RISKS HARMING THE VERY PEOPLE WE WISH TO HELP. THE BRITISH GOVERNMENT FULLY AGREE WITH THE RESTRAINED AND MEASURED APPROACH ADOPTED SO FAR BY THE UNITED STATES GOVERNMENT IN ITS RELATIONS WITH CHINA FOLLOWING THE MASSACRE. AS PRESIDENT BUSH HAS SAID, AND AS YOU YOURSELF HAVE STRESSED, 'WE MUST REACT TO SET-BACKS IN A WAY THAT STIMULATES RATHER THAN STIFLES

PROGRESS'. I AM WELL AWARE OF THE STRONG FEELINGS IN CONGRESS ON

ALL THIS BUT I HOPE CONGRESS WILL EVEN SO SEE THE GOOD SENSE OF

THE PRESIDENT'S POSITION

5.

SECONDLY, VIETNAMESE BOAT PEOPLE IN HONG KONG. I NEED NOT REHEARSE THE GRAVITY OF THE SITUATION, WHICH REMAINS VERY GRIM INDEED.

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CONFIDENTIAL