CONFIDENTIAL

We were, of course, met by all the usual arguments that

Hong Kong was already so rich that it was not aid-worthy

and did not merit money from ODA funds.

We stressed,

with increasing support from the Department of Trade and

Industry, that in proposing that HMG should provide up

to £100,000 for the equipment of each of the institutes

we were not only giving some modest help towards the setting up of the institutes, but by equipping them with

British machinery, teaching the rising generation to know

and work with British equipment and thus improving

i

export prospects.

It took us nearly 4 months to

achieve a satisfactory outcome and then only when we

had had to seek a ruling from

which went were able to convince the Secretary of State to rule

against ODA.

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For this reason we simply could not

contemplate re-opening the matter in order to meet your

request for discretion in the way the money is spent.

If we were to do so there is a real danger that we

should lose the money, altogether or in part.

3. I note from your telegram that one institute is

already built and that you are contemplating a second (which would, in fact, be the first of the 4 recommended

by ITAC). Has the first institute been equipped

already, or would our gift of up to £100,000 for it be

helpful to you? I dare say that we could get agreemen

to this, but I would not like otherwise to vary the

offer contained in FCO telegram No. 147.

And that trade considerdig

Could not gover

the use of and funds

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CONFIDENTIAL

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