CAB129-45 — Page 184

Annex B

164

Page 184

Text of telegram No. 814 Saving of 17th February, 1951

from the Foreign Office to His Majesty's Embassy,

Washington

Following are conclusions of Study on Economic Sanctions toegether with political and strategic implications.

Part I. We have considered the following forms of economic sanctions:-

b

Total embargo.

Selective embargo.

c) Shipping controls. a) Naval blockade.

Financial controls.

Total Embargo

2. By embargo we understand export prohibition imposed at the source by participating countries on goods destined for China. We hope that this idea will be discarded at the earliest possible stage. Even if all United Nationa countries outside the Soviet bloc were to participate, we do not think that it would be possible to achieve what we understand to be the object of sanctions, namely, to induce the country against which they are directed to mend its ways. China is not seriously dependent on sea-borne imports, and though their denial might in the long term impede her general economic development, in the short term we could not expect it to do more than create certain difficulties for movement and supply of the Chinese armed forces in the field; it would not alter the course of operations or deflect China from further acts of aggression.

3. The participation of all the United Nations countries outside the Soviet bloc is moreover an unrealistic hypothesis. India Burma and perhaps Pakistan would certainly abstain; and they would presumably have little difficulty in aligning other countries, e.g. the Asian and Arab group, against a measure calculated to strike indiscriminately at the war potential and the civilian economy of China. Thus, to press the proposal for a total embargo would intensify dissension in the United Nations and might well cause a serious division between the four 'old' and the Asian members of the Commonwealth.

4. Finally

G

an important consideration from our point of view - a total embargo on exports to China might well be disastrous for Hong Kong. Some 45 per cent of the Colony's exports go to China. The loss of this trade would cause unemployment and economic distress in the Colony and endanger its internal security, thus rendering it vulnerable to an attack which China, deprived of the benefits which she at present derives from trade with Hong Kong, might no longer hesitate to launch.

Selective Embargo

5. It will be clear from the above that we do not regard economic sanctions as an effective instrument against China. We recognise, however, that it may not be possible to leave the matter there and we may eventually have to consider a formPagesloot58 embargo, which, while secPage 84ef §8ørt

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