PRIVY
OUNCIL FOR TRADE
Copy to Mm. Inster. Bring to M. Cont
BOARD OF TRADE
1 VICTORIA STREET
LONDON S.W.1
ABBEY 7877
валий
29"
From the
Minister of State
Dear Malcolm,
18
Fond Sugher he
Аркал
осит
Bina 201
17th January, 1969
You wrote to me on 9th January about the Hong Kong tunnel.
Mr. Whitaker of E.C.G.D. has reported on his discussions with the French authorities.
It is not true that the French have already agreed to give an export credit guarantee. They have only very recently received full particulars of the proposal which now has to go before an inter-departmental Committee. The meeting will not take place until some time in February, probably in the second half of the month. French officials, however, have told us that they propose to recommend terms somewhat less strict than ours. They will not, as alleged, be ready to cover the project on the security of the tunnel and its revenue alone. But they will be content with several guarantees. They said that the minimum demand will be for several guarantees from the commercial shareholders, who hold 65% of the equity, and that the Committee might require several guarantees from all the shareholders, including the Hong Kong Government and the Hong Kong and Shanghai Bank who between them hold the remaining 35% of the equity. The French will also require some sort of guarantee, in terms yet to be worked out, that the success of the project will not be prejudiced by a price-cutting battle between the Tunnel Company and the Ferry.
The French also said that they would be very interested in a joint venture by British and French contractors. If this could be arranged they felt that there would be no insuperable difficulty in agreeing common terms. Mr. Whitaker replied that this would be a difficult operation but that it would be considered and that we would let the French know within 14 days whether or not it was a starter. I appreciate that the idea may not be attractive either to you or to the British contractors nor is it particularly attractive to us and we shall need to weigh the balance of advantage carefully. But the terms at present contemplated by the French are not so far out of line with our own ideas of what we could accept for a risk of £6m.: whereas if we compete for the whole it is not inconceivable that the French might soften their terms still further. Early next week my officials will be considering what reply should be made and will be ready to discuss the question with your officials.
The Rt. Hon. The Lord Shepherd, P.C.
Minister of State,
Foreign and Commonwealth Office,
Downing Street,
London, S.W.1.
RECEIVED IN ARCHIVES No.31
21 JAN 1969
H+KK 21/v
/As regards
1ST
18
3/