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Mr. Ashton
I think I should now reply to (11) both to give an account of our talks with the Governor and others, and to suggest next steps.
2.
The reply I think ought to cover the
following points.
(i) The Governor and others agree that there
is no case for a direct financial contri- bution from the U.K. Government to the Hong Kong Government on a strict basis of need.
(ii) This does not solve the political
problem in Hong Kong which is to maintain the confidence of the population that H.M.G. is concerned for their interests and aware of their problems. Compare attitude of H.M.G. to
Hungarian refugees. We might send with the letter a copy of the Civic Associa- tions memorial.
(iii) Explain attitude of members of ExCo
and other leading unofficials. Danger of public protests, etc. if Governor had to use reserve power, reflected in
Parliament, etc.
(iv) Problem therefore splits into two
(a) How to produce the necessary
political gesture to maintain confidence in H.M.G.
(b) How to secure co-operation of unofficials and particularly.
Finance Committee with unofficial majority.
(v) As regards (a) the best avenue to
explore seems to be the United Nations approach. Suggest we have meeting to discuss this.
(vi) As regards (b) this turns on the defence
contribution which unofficials might refuse to vote in present state of opinion. While Governor is perfectly ready to consider proposed defence contribution as something separate from the refugee problem local opinion will not do so and any decision about defence contribution must be taken against the background of pressure of the refugee problem. We are awaiting decision about artillery regiments but if they are available Governor considers he can maintain defence contribution on present level and meet unofficial emotions by explaining H.M.G.'s intention to ask for increased contribution and that H.M.G. had agreed not to press for this in recognition of what Hong Kong were doing
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