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guarantees
within which ECGD could be considered or to express a view about the ability of the City to find the large amount of finance required. However we welcomed the thinking which lay behind this initiative which was in line with the view expressed in your letter of 16 February that the time was approaching when the Hong Kong Government will be receptive to constructive ideas about financing indeed, that such ideas might help them to make up their minds. Ross is coming to us again next week by which time he hopes to have the team's report. At the time of writing we have no indication of the success they have had in producing proposals which will be at the same time feasible and helpful to Hong Kong. If they have been able to work something out one question which will arise will be how the result should be communicated to
Hong Kong bearing in mind local susceptibilities and the fact that the Steering Committee do not have a direct relationship with the
I Secretament Finance Department. Also that in the nature of things it could not
be put forward as a fira proposal by or on behalf of a British contractor. Equally in the absence of any reply from the Governor to the FCO offer of assistance it could not be put forward by HMG as an indication of possibilities or at least it would have to be so heavily qualified as to rob it of its effectiveness.
The same objection applies to Shephard's suggestion that a leading British politician should offer to discuss means by which the UK might assist with the financing of the scheme. Provided they have been able to arrive at a reasonable conclusion we think it would come better from industry making the sort of unofficial approaches suggested the final paragraph of your letter of 5 April, ie discreet lobbying of selected members of EXCO and LEGCO. It would be useful to know in a little more detail how you would recommend they should go about it. I assume that contacts would include Mr Szeto ai, the Chairman of the Transport Committee, Colonel Clague, possibly Mr Saunders of the liong Kong and Shanghai Bank and others who are known to favour the Mass Transit Scheme. Is Shephard the best point of contact on the official side: he seems to be the main protagonist of the project, but as you described him in an earlier letter as very much 'persona non grata' with Cowperthwaite and Jordan, might it be better to look elsewhere for contact on the official side? How will Shephard get on with Haddon Cave and would it be better to await Cowperthwaite's retirement?
I agree with you that we are all treading the knife edge between too little and too much interest. UK industry is ready to have a go but seeks guidance and support from us so far as finance is concerned. The problem is to know how best to be constructive at this stage of indecision without appearing importunate, and without giving hostages to fortune in the shape of commitments which we should find it difficult or impossible to fulfil. Presumably the Japanese are not inactive in this matter. Is there any evidence of how they are playing their hand and whether they have succeeded in making any contacts in the quarters which count?
A F Toms
ce Lai
Lairg/FCO,
Laird FCO, R Jones Tsy, Blackburn ECGD
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