Rale th
Foreign and Commonwealth Office
London S.W.1
2 July, 1969
40
John Moreton has reported on the talks which Lord Shepherd and he had with the Governor and Sir J. Cowperthwaite about financial assistance for the development of Kai Tak airport.
2. In answer to questions about U.K. assistance for this project Lord Shepherd referred at both his opening and closing press conferences to the difficulties in the way of direct financial assistance from the U.K. given the present economic restrictions in Britain; to the pressure on aid funds from more deserving countries; and to Hong Kong's buoyant revenue. However in Government circles, particularly among unofficial members of both Councils, there is still a very strong feeling that the considerable benefits we derive from control of traffic rights at Kai Tak should be matched by some sharing of responsibility on our part for keeping the airport up to full international standards. I do not think that this is disputed in principle amongst Departments in London. If we do not acknowledge and assume some measure of responsibility, our relations with Hong Kong on the question of the disposal of traffic rights will grow steadily more difficult.
3. In discussions about a possible ECGD-backed facility on the lines set out in our correspondence with ECGD (of which you have copies), Cowperthwaite ruled out the possibility of steering the whole contract into British hands on the grounds that :-
(a) the contract was in several parts, e.g. aprons, runways,
terminal buildings and freight buildings the first of which has already been put out to tender;
(0)
(c)
public opinion would insist on contracts being submitted to public tender;
it would create great difficulties over the use of local materials such as cement and steel reinforcing bars.
The Governor also emphasised that it would not be possible to avoid public tender.
We did not 4. (c) above rests, I think, on a misunderstanding. envisage a British contractor importing materials available locally and obviously more cheaply, and had excluded such items from our rough calculation of the possible "British content" eligible for ECGD-backed finance.
R. H. J. Steel, Esq., H.M. Treasury
LAST
REF.
1.EA.
L. I
150
/5.