(1
Flag A
Flag
"1 Flag &
Mr. Moreton
tyand
Mr. Maitl
I attach a draft reply to Sir Alec Douglas-Home's letter of 1st April about the Kai Tak airport project.
2.
Sir Alec wrote to the Prime Minister on 26th February asking if
he and Mr. Anthony Royle, MP., could see him about the project. The
Prime Minis ter replied on 17th March suggesting that the best plan
would be for Sir Alec and Mr. Royle to see Mr. Stewart when the
examination of the project by officials had been completed.
3. I am not altogether happy about suggesting a postponement of the
interview Sir Alec seeks since it now seems almost certain that very
shortly indeed officials will be reporting to Ministers that they
have been unable to agree on a U.K. contribution to this project.
But if the interview is postponed it is likely at least to take place
when the matter is under ministerial consideration and accordingly
much easier to satisfy Sir Alec that the project is being taken
seriously.
4. Before officials can report to Ministers we have to evaluate a recent Treasury proposal that the outside financial contribution sought by Hong Kong might be found by trading traffic rights at
Kai Tak for KLM in return for Dutch finance for the project.
The departments concerned in the F.C.0. do not consider that this can provide a solution. The Board of Trade's reactions are not yet known, but it is to be expected that they will remain of the view that traffic rights should be traded only for reciprocal traffic
right benefits a view which Ministers endorsed in the Defence and Oversea Policy Committee last month when considering a proposal that traffic rights in Hong Kong might be offered to KLM for political returns (i.e. in order to ensure continued Dutch support for our European policy).
5.
A background note is attached.
Ls. Carter
(W. S. Carter)
Hong Kong Department
14 April, 1969
Copy to: Mr. Godden
Tokoch
14/4.