CONFIDENTIAL
VISIT OF MINISTER OF STATE
(LORD SHEPHERD)
TO HONGKONG MAY/JUNE 1969
KAI-TAK AIRPORT,
Note No. 10
We fully recognise our considerable aviation interests in Kai-Tak. There is no prospect, however, of our providing any appreciable element of Government finance for this project, having regard to:-
(a) the United Kingdom's present economic difficulties and H.M.G.'s policies on the restriction of Government
overseas expenditure;
(b) the Hong Kong Government's buoyant financial position.
2. Even if it were acceptable to Hong Kong, access to private finance on the London market is regarded as impracticable because of current high interest rates and the difficulty of raising money for Hong Kong without an H.N.G. guarantee (which could not be given on general policy grounds).
3. Against this background, 8ir A. Snelling suggested that we should try for a "rag bag" operation, drawing where we could on a miscellany of sources and employing an "entrepreneur" to under- take the task of negotiation (Annex A). He had Mr. Christofas in mind as the entrepreneur, but unfortunately he could not be spared and no other suitable candidate appears to be available. 4. At this juncture, negotiations for ECD-backed finance for the Tunnel project had just been successfully concluded. We therefore thought the time favourable to sound out what prospects there might be for a similar ECGD-financed operation in relation to the airport. Our initial exchanges with EOOD (Annexes B and C) have not been discouraging.
5. The way is therefore open to sound out Hong Kong on the acceptability of a package proposition involving:-
(a) The execution of the project by a British contractor, with ECGD-backed credit to the extent of the "British
export content" of the contract.
(b) C.D. & w. grant assistance for half the cost of the
/ improvements ...
CONFIDENTIAL