MUA 10/393/1
Hong Kong Department
Foreign and Commonwealth Office
London S.W.1
9 May, 1969
24
You will have seen Coe's letter of 15 April in which he comments inter alia on your suggestion that we might trade traffic rights for KLM in Hong Kong in return for a Dutch financial contribution to the Kai Tak development project.
2. We are not certain that the proposal would enrage the Dutch, as Coe suggests: it is after all not so very different from the proposition that was seriously considered not so long ago of trading such rights for a deal over Chieftain tanks.
Having
regard to the terms on which we have now rejected the Dutch request following on last month's consideration of the question in the Defence and Oversea Policy Committee, it is our view that there is now little political advantage to be gained by reopening the matter with them nor do we think Ministers will be inclined to
authorise a fresh approach on the basis you propose.
3. We note the Board of Trade's view that the proposition would stand a very good chance of being classed as discriminatory treatment in terms of the Chicago convention.
4.
For our part we see the following additional objections :-
a) A grant (if the Dutch could be persuaded to make one)
would give them a more or less permanent stake in Kai Tak, A loan would tie us to the grant of rights at Hong Kong
at least for its term. In both cases so fixed a
commitment might prove embarrassing to us in our future aviation dealings with the Dutch.
R. H. J. Steel, Esq.,
H.M. Treasury.
/ (b)
(b) ..