In the ODM's view there is no possibility of the ADB loaning £óm. for this project, The possibility of joint HMG/ADB financing, with the Bank advancing up to 50% of the proposed sum, would by no means be certain of success and could involve long-drat-out and embarrassing negotistions. The ODM see little point in initiating even informal
enquiries at the Bank unless it could be on the basis of a reasonable assurance that HKG would take up 50% of a proposed joint loan and would charge the Bank's going rate of interest (61%).
25. The Gas Council and British kuropoan Airways have recently raised loans on the Continent and local authorities are being encouraged to
look in the same direction, The Treasury have suggested that the Dutan should be asked to provide finance for the project in return for the grant of the traffic rights thay are seeking for KLM at Hong Kong. This suggestion has been opposed on the grounds that the proposition would probably be condemned as discriminatory treatment in the termIBE
of the Chicago Convention; that the fixed nature of the commitment (the grant of traffic rights must be unintained for at least the tarm of the loan) might prove embarrassing to us in our future aviation dealings with the Dutch ; and that as a precedent it could be dangerous in that we ourselves might be faced with similar requeste when seaking to obtain or maintain traffic rights in less developed
countries.
26. A continental loan would raise similar points to those noted in the case of a lean on the London market (see paragrapha 20-21 above). In the circumstances of Hong Kong it seems probable that awkwardİ questions would be usked about the Colony's future and a guarantee by HMG sought The sere arrangement of the loan by HMG is unlikely to be regarded as adequŭte recognition of our own aviation interests
unless accompanied by a subvention to reduce interest charges (although it is conceivable that lower continental interest rates would reducs, if not dispense with the need for, such a subvention).
The Case for and against Azziztanga
27.
Under the "Colonial formula" adopted at the Colonial Civil Aviation Conference, 1947, colonial administrations were made primarily responsible for the construction, maintenance and operation or civil aviation works and services in their territories. The "formula" mes designed to apportion the shares in which costs, both capital and
/ recurrent ...