CONFIDENTIAL
2.
the
details of the guarantee are just/matters to
which the opposition will give a thorough airing.
4.
political
The unacceptable/risk lies not in the fact
that the Hong Kong Government must give a guarantee
but in the demand that the guarantee should be
enforceable against its London assets. The
implication that would immediately be read into
this requiramat is that H.M.G, reckons that the
Colony's only worthwhile assets are those which
are held in London. The impact of this on
confidence in and outside Hong Kong would be
shattering; the whole purpose of the exercise
would be lost.
5. We therefore welcome your alternative
proposal involving promissory notes. The
arrangement could equally attract publicity but it is
not susceptible of the dangerous inferences which
must put the previous suggestion out of court.
The Hong Kong Government see no difficulty in
meeting your wish that your bankers should receive
payment in London without further specific
authorisation.
6.
There is one further point in your letter
which we must take up and that concemia your
query as to how the Hong Kong Government will
satisfy Costains that the firm will be paid if the
contract cost exœooûs £10 million. The same
point arises, of course, on the condition laid
down in paragraph 6(e) of the agroadbrief for
Lord Shepherd. As Cotterill will recall,
Cowperthwaite made the point that Costain's, and
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/the