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of giving tangible assistance for Hong Kong development without coming up against the well-known objections to making capital grants to Hong Kong. Economically, of course, it could be extended without risk and could, presumably, be linked to UK participation in the project.
4. I think it would be looked at in Hong Kong in a different light from e.g., the payment of consultancy fees. The fact that much larger sums would be involved would in itself be attractive. It could be argued that the loan facility was made available as an acknowledgement of the UK's interest as Administering Power in Hong Kong's general development and in particular her recognition that the airport itself is an important link in BOAC's world network.
5. Traffic rights at Hong Kong provide valuable bargaining counters in air services negotiations with other countries to the benefit of UK airlines as well as those based in Hong Kong. There is, as you know, a great deal of resent- ment in Hong Kong that we secure these benefits for UK airlines after refusing to make any contribution to the construction of the airport. It would therefore be a great help to us vis-à-vis official and unofficial opinion in the Colony if we could point to a substantial contribution that we had made to the development of the airport.
6.
I should be glad to know whether you think this is a starter. If you do we shall then need to consider how best to tackle the ODA and Treasury.
7. This suggestion cannot be entirely divorced from the Hong Kong's own proposals for aid which have been sent to us by Philip Haddon-Cave (please see the attached copy of his letter of 17 August). We are looking into these proposals within the office and considering how best to deal with them. If you have any comments they would be welcome.
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K M Wilford