Habib then commented on the problem of a definition of the assets, saying that he wished first to briefly review its history. In the February 1973 draft, there was language which met our needs. In March, the Chinese side presented a revised draft which eliminated some of our language. Since then, we have made an effort to find a way to meet our needs that would be acceptable to the Chinese side. This is not a side issue, nor is it a new one. Our purpose is merely to find language acceptable to both sides. In November 1973 the Chinese said that the changes it proposed were not intended to change the content of a settlement. Our suggestions also are not intended to change the content of a settlement. We still consider that we are talking about a package proposal and about issues present from the beginning. After my study of the record, it seems to me that the only matter preventing a settlement is language to define the assets. I hope that this explanation is satisfactory to Director Lin.
Lin asked why we raised the bondholder's question if it is not an issue. Habib responded that we raised it in order to make it clear that it is not an issue and not part of a settlement. Tsien interjected, "Should we raise all questions that don't exist?" Habib said we were talking about a matter somewhat related to a claim settlement. He repeated that we are not asking the PRC to acknowledge a liability. He said that he hoped that what he has explained removes any misunderstanding.
Tsien maintained that the issue arose after the US side raised it, so now it is an issue. It is new question. Habib answered that if we had intended it to be part of a settlement, we would have put it in the draft.
Lin said Habib had said that the issue does not exist and that the US has not maintained that the bonds are a claim against the PRC. If the US had not raised the question, we would not have responded. In March 1973 in the proposed exchange of letters, the US side attached a note about bondholders. This meant it was an issue. Thus there was a hidden meaning behind it. The US side has said it would not espouse the bondholder claims but that it cannot prevent them from making claims. This is a contradiction. Because of this, we stated our point of view in November 1973.
SECRET/NODIS
