CONFIDENTIAL
We cannot, however, indefinitely postpone an answer to
Hong Kong's request. The Secretary of State's visit will
undoubtedly raise the expectation that a reply will be forth-
coming and it is suggested that the Secretary of State should
foreshadow what it is to be.
9.
It is considered that the likely consequences in terms of
deteriorating relations preclude altogether returning a straight refusal to contribute, relying on our difficult (but improving)
economic situation; a straight refusal would morcover unão much
of the good that we hope will flow from the Secretary of State's
visit. Alternatively, the Secretary of Stato, while expressing
regret that the present economic situation precludes our making
a contribution at the present time, could say that arrangements
will be made for the position to be looked at in about a year's
time with a view to socing whether it would then be possible to
make a contributin to financing the later stages of the project
(it is not due for completion before 1974). It would be
necessary to add that we would need to consider in particular
the extent to which this and other essential development projects
in prospect impose a strain on the Colony's resources.
Hong Kong Department April 1970
CONFIDENTIAL