In Morrissey & Marr: the Severed Alliance (Omnibus Press, London, 1992) author Johnny Rogan paraphrased & commented on a 10 page letter written by Morrissey on the 5th of August 1977 when Morrissey was 18 years old.
Even when seriously denouncing racial prejudice, he was wont to admit that he disliked Pakistanis. “I don’t hate Pakistanis, but I dislike them immensely”, he wrote in one letter of the time. It was a flippantly blunt adolescent observation. The basis of his aversion (they give off odorous aroma) was crudely stereotypical and completely out of step with his general philosophy. Then again he may simply have been indulging himself in an ironic joke, expressed in his characteristically haughty tone.
The letter has never been published, so we only have Rogan’s version to go on. Racists in the 1970s were highly unlikely to use Pakistani over the four letter offensive short form & it’s structured as a joke.

It was only highlighted because of the “race row” in 1986 – when Frank Owen’s framing of Black pop as everything dumb & dancey went unchallenged while Morrissey was condemned for remarks about reggae & mid 1980s American soul.
In August 1992 the NME used it as part of their “evidence” that Morrissey was racist. A student protest, under a Union Jack on the outside of EMI’s offices, cited it as their biggest reason that Morrissey had a “case to answer”. To the NME. In an interview.

The NME also used Morrissey’s sarcastic joke about Rogan to suggest he was no longer “gentle & kind” & his career had taken a wrong turn.
Equally, his recent response to the publication of Johnny Rogan’s Smiths book The Severed Alliance, was at best distasteful, at worst illustrative of a severe lack of perspective. Rogan’s book, which Morrissey was asked, but declined, to co-operate with (as Johnny Marr already had), is a well researched if slightly worthy account of the greatest British group of the ’80s. There seemed precious little in it for Morrissey to get upset about; indeed, members of his family have written to Rogan congratulating him on the book. Yet in an NME news story, Morrissey, while admitting that he’d never even read it, condemned the book, and said that he hoped Rogan died in a car smash on the M3. Asked in a more recent interview if he’d really meant that, he said no, what he really meant was that he hoped the journalist would meet his end in a hotel fire! Is this the same man who, in The Smiths’ finest moment (‘I Know It’s Over’) wrote “It’s so easy to laugh, it’s so easy to hate, it takes guts to be gentle and kind”? Sadly, yes. The same man but now displaying a cruelty and lack of deftness that makes his golden days seem light years away. (NME, 22 August 1992)
Rogan either felt he couldn’t disagree with the NME (then the most powerful music publication in the UK) or he was influenced by the coverage, because in a letter to them he claimed he knew Morrissey was in trouble the moment he saw the Union Jack.
The moment Morrissey unfurled that Union Jack I knew he was in trouble. I assumed that the ‘Is Morrissey A Racist?’ debate was a discredited old chestnut, but now it’s back, bigger than ever… It’s the other trappings that I find irksome – particularly the Union Jack. Perhaps he regards the flag as a suitable prop to emphasise the sentiments of ‘Glamorous Glue’, but he well knows its other connotations. (Johnny Rogan, NME letters page, 29 August 1992)
Morrissey held the flag for less than 2 minutes, he scrunched it up & threw it away. There is absolutely no way a British Nationalist would interpret an effeminate Irish Catholic chucking away a Union Jack as a sign of support.
The people who threw missiles at him were calling him a “poof”. They started before he thrashed the flag about & they kept going long after. They weren’t interested in the flag at all.
Not to mention that any negative “connotations” were confined to squabbles on the hard left. To the vast majority of British people, it was just the flag.
Every year, including 1992, it was on prime time UK television at the Last Night of the Proms.

It was on bunting, and party hats & respectable people wore it while raising money for charity.

It was at every Royal Event…

It was on souvenirs.

It was on record covers.

It did not need to be reclaimed.