21/2
CONFIDENTIAL
8 February, 1969.
Cross Harbour Tunnel
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You will have seen from my telegram EXCED 20 to you that the gist of your telegrams EXCED 19 and 20 has now been conveyed to Clague.
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2. By chance I seem to be seeing a lot of Clague at the present time at various receptions and dinners. This morning at the New Zealand Day reception he made a great deal of the fact that at last Sir John Cowperthwaite and the Hong Kong Government seem to be more amenable towards the project than they have been in the past. I pricked up my ears at this, as I knew I was going to see Cowperthwaite later in the day to discuss the Secretary of State's telegram No. 99 to Governor, Hong Kong asking for the Hong Kong Government's views on the several guarantee question.
3. I regret to say that when I spoke to the Financial Secretary I could not discern any great movement in Cowperthwaite's thinking about this project. He said flatly that as far as he personally is concerned he does not like the project. He does not think that the Tunnel Company's estimates of toll paying traffic will be realised, especially now that there is a prospect of a subway railway tunnel being constructed under the harbour. Cowperthwaite, however, went on to stress that the Hong Kong Government's policy was to do all they could to prevent any party having grounds for accusing the Hong Kong Government of being instrumental in killing the scheme. In other words they will soldier on within the limits of their 25% of the equity and a $12 million loan.
4. Cowperthwaite admitted, not unexpectedly, that the delays attending this scheme are frustrating as far as the Hong Kong Government is concerned. The ferry companies are bringing increasing pressure to bear on the Government to reach some decision, so that they may know where they stand with their future building programmes. For this reason Cowperthwaite has it in mind to make a quick trip to the United Kingdom after the Budget Session of the Legislative Council in March, in order to try and arrive at some solution.
5. Cowperthwaite and Clague take divergent views on the value of para. 2 of your telegram EXCED 20 which concerns the manner in which you would operate the several guarantees in the event of a foreign take over. Clague feels that this is a great step forward, and already the buzz is going around that the British may build the tunnel after all. Cowperthwaite on the other hand says that E.C.G.D. are merely drawing a distinction between the theoretical and the practical value of a several guarantee in the event of a foreign take over. In such an event he feels it is possible that Hutchisons and Mardens may have no worthwhile assets outside Hong Kong on which E.C.G.D. could clamp down. The Hong Kong Government and the Hong Kong and
K.W. Cotterill, Esq.,
Export Credits Guarantee Department, London, E.C.2.
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