TNAG-2515-FCO40-3669-Future-of-Hong-Kong-International-Rights-and-Obligations-Sub-1992 — Page 173

281358Z

REFERRED TO HD/HKD FOR DIST ADVICE

L NMDAN 5221

CONFIDENTIAL

00 FCN

HMLNAN 2427

FM HO N TO FCOLN

28110OŽ JAN

GRS 463

CONFIDENTIAL

FM HONG KONG

TO IMMEDIATE FCO

TELNO 253

OF 28110OZ JANUARY 92

REFTEL SUGGESTED

PERSONAL FOR RICKETTS,

HKD .

FROM GOVERNOR.

YOUR TELNO 109: 1997 IMF ANNUAL MEETING.

Comme

to

Kreat

Mr Marten Action Pls: Ask

the fus

29/1

Mr Shed

Interesting! For Angus to take

actre

L

para

6 pre

plus our outgesny tel)

YOU ARE RIGHT IN DETECTING A CERTAIN HESITATION HERE ABOUT THE IDEA OF A 1997 IMF MEETING IN HONG KONG. IN ADDITION TO YOUR CAREFUL KREMLINOLOGICAL READING OF THE TELEGRAMS, OUR PEOPLE HAVE TOLD PERETZ THAT WE WERE LOOKING AT THIS AGAIN.

2. TWO BASIC PROBLEMS ARE APPARENT NOW IN A WAY WHICH WAS NOT THE CASE WHEN WE FIRST EMBARKED ON THIS EXERCISE. FIRST THE COST, AT SOME HK DOLLARS 200M AT PRESENT DAY PRICES, IS VERY SUBSTANTIAL (AND WE HAVE TO LOOK AT THIS AGAINST THE BACKGROUND OF LEGCO FINANCE COMMITTEE RECENTLY QUERYING THE VERY SMALL AMOUNT WE WILL SPEND ON AN ADB MEETING THIS YEAR). SECONDLY, IT IS NOW MUCH MORE APPARENT THAN IT WAS THAT, WITH HONG KONG'S MEMBERSHIP OF THE IMF BEING SUBORDINATE TO THAT OF THE SOVEREIGN STATE, THERE IS A RISK THAT HOLDING THE MEETING HERE IN 1997 WILL FINISH UP NOT/NOT BY UNDERLINING HONG KONG'S FINANCIAL AUTONOMY BUT INSTEAD CHINA'S SOVEREIGNTY. THERE IS ALSO OF COURSE THE ARGUMENT ABOUT THE IMMENSE AMOUNT OF ADMINISTRATIVE EFFORT INVOLVED AT A TIME WHEN THERE WILL BE MANY OTHER PRIORITIES: BUT WE WERE ALWAYS AWARE OF THAT ASPECT.

A MAJOR INTERNATIONAL

3.

ON THE OTHER SIDE OF THE ARGUMENT MEETING HERE IN 1997 COULD BE A SIGNIFICANT BOOST FOR HONG KONG IN ITS NEW STATUS. WE ALSO HAVE TO FACE THE REALITY THAT WE ARE ALREADY A GOOD WAY DOWN THE TRACK (FURTHER IN MANY WAYS THAN WE WOULD LIKE), AND THAT WITHDRAWING NOW COULD SEND A GREAT MANY WRONG SIGNALS.

J

4. WE DISCUSSED THE WHOLE MATTER IN EXCO TODAY THE RESULT IS THAT WE THINK WE SHOULD APPROACH THE MATTER POSITIVELY, BUT IN A WAY WHICH WILL MAKE THE ADMINISTRATIVE ARRANGEMENTS MANAGEABLE AND SERVE TO HIGHLIGHT, RATHER THAN UNDERMINE, THE MESSAGE ABOUT THE HONG KONG SAR'S FINANCIAL AND ECONOMIC AUTONOMY UNDER THE JOINT DECLARATION.

5. EXCO HAS ASKED FOR A SHORT NOTE ON HOW THESE POINTS WOULD BEST BE PRESENTED TO THE CHINESE AND THE IMF BEFORE GIVING THE GO AHEAD. WE WILL ALSO KEEP IN MIND THE POSSIBILITY THAT, IF IT LOOKS AS THOUGH ARRANGING THE CONFERENCE JUST AFTER THE TRANSFER OF SOVEREIGNTY WILL BECOME UNMANAGEABLY COMPLICATED, OR AS THOUGH WE CANNOT GET THE ASSURANCES WE NEED ON MAKING CLEAR HONG KONG'S UNIQUE POSITION, EG ON LINES OF THE BERLIN PRECEDENT, WE MIGHT HAVE TO STEP BACK FROM MAKING A FORMAL OFFER TO HOST THE CONFERENCE.

6.

WHILE WE ARE GETTING OUR POSITION CLEAR AND BEFORE WE GO BACK TO THE IMF, IT WOULD BE BETTER NOT TO HAVE ANY FURTHER