TNAG-2750-FCO40-3965-Most-favoured-nation-status-for-China-Hong-Kong-interests-1993 — Page 104

PRIT EMB MASHINTON I

TUE 04 MAY 93 20:18

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meant that talks might need to go on rather longer than we had originally hoped. In a few weeks time we could well be faced with a difficult decision over whether to decouple the arrangements for district board elections in 1994 from those for LegCo in 1995. was self-evident that the urgency for the former was considerably It greater than for the latter.

19.

The Chinese side had been seeking to put on pressure through economic leverage. They had withheld their agreement to overall financing arrangements for the airport and container terminal 9. Meetings of the Land Commission had been postponed (although we had just heard that a timing had now been fixed for a meeting on May); and little progress had been made in the Joint Liaison Group. As we approached 1997 this type of leverage would be increasingly less effective since it would be China's SAR which would suffer without a decent airport, proper container facilities and clear arrangements for a smooth transition.

20.

The Governor said that he had sought to keep Martin Lee as closely in the picture as he was able to do. that any agreement reached between the UK and China would gain a Lee took the view majority in LegCo and that it was therefore incumbent on HKG/HMG to secure the best possible democratic deal in Peking. doubt about the difficulties of achieving this but made it clear He was in no that the UDHK would have no alternative but to denounce the Governor and the British Government if it failed to deliver an acceptable settlement. The Governor said that Britain's best card was that the Chinese side were concerned about international opinion and about how that would affect their achieving the goal: they really wanted such as GATT membership, MFN renewal and the Olympics in Peking.

21. Mr. Williams asked whether it would weaken the Governor s position if the negotiations dragged on. would prefer to reach a quick solution.

The Governor said he But what would be worse than delay would be to break off talks, put legislation to LegCo and then either have it turned down or be told to go back to Peking and try harder. It was also not necessarily true that the longer talks went on, the better it would be for China. away from the negotiations with reasonably open and transparent If we could come elections in 1994/95 and an objective determining who should ride the through train in 1997, we would set of criteria for have done well.

warmly for his frank He confirmed that the US attached

22. Mr. Wharton thanked the Governor exposition of the situation.

a great deal of significance to Hong Kong and to the issues which the

"nor had described. He wished the Governor well in his The Governor said that he too had appreciated the n the US side. He would continue to keep Dick Williams successor fully in the picture.

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