SECRET FM FCO
TO PRIORITY HONG KONG
TELNO 1612
OF 28134OZ JULY 89
SECRET
HKC 062/1
TOP GOPY
DIST ?
TODO
AND TO PRIORITY UKREP JLG HONG KONG, PEKING
154
164107 MOLOAN 6072
FROM MKD
FCO TELNOS 1529 AND 1578 : DEFENCE AND PUBLIC ORDER
1. WE HAVE BEEN CONSIDERING FURTHER THE DEFENCE LANDS ISSUE IN THE LIGHT OF RECENT EXCHANGES WITH YOU AND PEKING. AS YOU KNOW, WE CONCLUDED THAT IT WAS RIGHT TO BRIEF THE SECRETARY OF STATE TO RAISE THIS ISSUE WITH QIAN IN PARIS, THEREBY REOPENING DISCUSSION ON THE RECLAMATION PROJECT. THE FOLLOWING REPRESENTS OUR MORE DETAILED THINKING. WE HAVE NOT (NOT) YET CONSULTED MINISTERS. 2. WE AGREE THAT, FOR SOUND ECONOMIC REASONS AND IN ORDER NOT TO BE SEEN IN HONG KONG TO BE BOWING TO CHINESE PRESSURE, THE CENTRAL/WANCHAI RECLAMATION MUST GO AHEAD AS PLANNED. SINCE THE PROSPECT OF NEGOTIATING AN ACCEPTABLE OUTCOME IN THE JLG IN THE TIME AVAILABLE SEEMS REMOTE, EVENTUAL UNILATERAL ACTION IS LIKELY TO BE INEVITABLE. IT IS MOST IMPORTANT THEREFORE IN OUR VIEW THAT WE SHOULD ADOPT TACTICS FROM THE START WHICH WILL PUT US IN THE BEST POSSIBLE POSTURE TO TAKE SUCH ACTION WHEN THE TIME COMES.
3. ON THE FACE OF IT THE RECLAMATION IS A GOOD CANDIDATE FOR UNILATERAL ACTION IN THAT IT WILL BE VERY DIFFICULT FOR THE CHINESE TO REVERSE IT AFTER 1997, EVEN IF THEY SO WISHED. HOWEVER, WE MUST CONSIDER VERY CAREFULLY THE RISKS OF ADOPTING THIS STRATEGY AND, IF POSSIBLE, HAVE CONTINGENCY PLANS TO DEAL WITH THE FALL OUT. MIGHT THE CHINESE SEEK TO RETALIATE, APPROPRIATELY, IN THE LAND COMMISSION FOR INSTANCE? WHAT WOULD THE CONSEQUENCES BE? OR MIGHT THEY ANNOUNCE AN INTENTION NOT TO RECOGNISE AFTER 1997 LEASES ON SPECIFIC AREAS OF LAND ON THE RECLAMATION, MAKING THEM UNLEASABLE? HOW WOULD WE RESPOND? THEY MIGHT CHOOSE TO WITHDRAW CO-OPERATION ON A WIDER BASIS, THOUGH THIS WOULD NOT BE IN THEIR INTERESTS. WE WOULD PRESUMABLY THEN TAKE UNILATERAL ACTION AS NECESSARY, STRESSING THAT WE WOULD PREFER TO NEGOTIATE SOLUTIONS.
4. FROM OUR POINT OF VIEW THE OPTIMUM CHINESE RESPONSE TO A DECISION UNILATERALLY TO PROCEED WITH THE RECLAMATION WOULD PROBABLY BE A CHINESE PROTOEST, AND RESERVATION OF THEIR POSITION, BUT WITHOUT ANY ACTIVE STEPS TO FRUSTRATE US. WITH
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