Architect Surveys The Finished Work

Ive never liked leasehold, says Baroness Thatcher. Perhaps consci-ously, the words carry on echo of her role in fostering Britains home-owning democracy.

But the former UK prime minister is not talking about domestic property arrangements. She is pondering the fate of Hong Kong, and the Sino-British treaty she signed in 1984 returning the colony to China.

Had Britain held all the territory on a freehold basis, rather than a lease on all but Hong Kong island and a sliver of Kowloon, it might now be a fully independent country, she says. It could be playing a role in the United Nations.

So the thought of what might have been will make the final lowering of the British flag in Hong Kong in 10 days time a sad occasion for her. Were handing over an absolute gem, she says, perched on an armchair in her elegant Belgravia office.

She will be sad, but not despondent. Provided the new administration in Hong Kong rules with a light hand, she thinks the handover should go smoothly. The benefits that Britain brought to Hong Kong will endure, while China itself slowly becomes a more civil society but not only if China treads carefully and respects the law.

In Lady Tahtchers analysis there is not a trace of empathy with Chinas frenzied excitement at the recovery of its long lost sovereign territory. Neither is she impressed by the efforts of Chinese propagandists to portray the handover as redress for its humiliation in the opium wars of the last century. Instead, she implies, Chris Patten, Hong Kongs last governor, has ensured Britain can leave with dignity. Mr Patten, she says, was right to introduce his democracy reforms after confidence was shaken by the Tiananmen Square massacre of 1989.

China, she maintains, broke its agreement with Britain by appointing a provisional legislature to replace the body elected under those reforms. In our terms the provisional legislature is not within the (Sino-British) joint declaration.

Lady Thatcher is as responsible as anyone for the agreement. It was she, back in 1982, who broached the issue with Chinas late leader Deng Xiaoping, mindful of the leases expiry in 1997. He responded, she recalls, with the proposal that Hong Kong could retain its way of life after its return to China one country, two systems.

New ideas are a rare currency in politics. If you can get a new principle, it unlocks all sorts of possibilities. Most certainly, he had that idea and knew the prosperity that would come about by a free enterprise system.

But she quickly realised the gulf between theory and practice. During the treaty negotiations, Deng demanded that she act to stem capital flight from Hong Kong. He could not understand that she had no power to stop it.

I dont think if you have been brought up in a Communist or tyrannical system you fully understand the law, and what it is, she says. They assume that, even though we have a different system, we have the ultimate power to override any other organisation

So it is today with the handover. The existing law in Hong Kong, she muses, could appear very different when applied by people who were only used to running things in the Chinese way. In the long run, this may not matter because economic and political freedoms are indivisible and a free market will eventually bring political freedoms too. But for the short run, she says, it is important that Tung Chee-hwa, Hong Kongs incoming chief executive, exercises care.

I hope that when they take over for the first weeks and months, theyll make a special point of governing with a very light hand, so that they keep the maximum freedoms. That will be the best wisdom, the best for the people of Hong Kong. It will also be best for China.

Does Mr Tung fully grasp this? She pauses in thought. If I said it like that to him, he would understand it in a technical sense, she ventures. Whether he would understand it in the heart, I dont know.

Yet she is impressed by his decision to reappoint Ms Anson Chan a great bulwark of freedom as head of the civil service alongside all her other senior colleagues. He knew and understood the full implications of that, not only the technical implications, but also the confidence implications.

She is also stout in her defence of Mr Pattens democracy reforms. Critics of them such as Sir Percy Cradock, her former adviser and ambassador to China, were too preoccupied with Chinas response.

Mr Patten had to do something to repair confidence after Tiananmen, but his electoral reforms were very modest indeed and the UK believed they were within the Sino-British agreement. She says she has told Chinese leaders they should have been grateful to him that he managed to contain the situation and not pillory him as they have. They look at me rather strangely when I say that.

Now it is important to scrutinise the electoral arrangements that China makes for Hong Kong. People who dont perhaps have the full democratic viewpoint are expert at seeking nice words to describe things which are less than fully democratic. If youve got something nasty to get across, you put a nice cloak on it.

She approves of the decision by the US and UK the real defenders of liberty to stay away from the swearing-in of the provisional legislature. But would she be disappointed if France and Germany decided to attend? Yes the French in particular, she snarls.

Britain, she is confident, could not have obtained a better deal than it did in the handover negotiation. Now it is a question of assuming and hoping things will go well. If they dont, I think the world would have to get together, she says. But on balance she is optimistic. Its going to be all right. Were not dealing with a China of 20 or 30 years ago. Were dealing with a China that is coming up in economic freedom.

China must consider how it would stand in the eyes of the world if it came down in a heavy-handed fashion. I dont think even a powerful country like China can ignore that.

The eyes of the world will be on Hong Kong. Moreover, Mr Tung lives there and knows what it is like. There is continuity in the civil service. Everyone in Hong Kong has known what it is like to live with freedom of speech, freedom of religion and increasing rights to vote.

You cant wipe that experience out as if it had never been. And itll be up to China to prove that she can continue to give them as good a way of life.