CONFIDENTIAL
Reference.........................
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Mr Goodfellow (HK & IOD)
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10.17
GJ)
AID FOR HONG KONG
1.
We in FPAD certainly feel there is a strong case for doing much more for Hong Kong. But the question remains how best to make an impact in ODA and to change their long-standing resistance to capital aid for Hong Kong.
2.
I see no objection to the letter, as at present drafted, going to DTI to seek their views on the proposal that a soft loan might be made to Hong Kong for airport development. But I can see all too clearly a tremendous battle with ODA should this proposal be put to them. Inter-alia they would ask the following questions:
(a) How much would the loan be and how would it
further British interests?
(b) Why should the cost of any such loan be
carried on the aid programme when ODA are not convinced of the developmental need? Would not an Exchequer loan be more appropriate?
(c)
Is there not an inconsistency between the argument that we should not provide an airport consultancy lest we lay the Hong Kong Government open to accusations of prejudicing the granting of the final airport contract and giving a British Government loan which must surely, because of its greater size, be designed to influence the Hong Kong Government in favour of awarding the contract to a British firm even more obviously?
(a) How can there be any question at all of our
seriously presenting the case for a soft loan when we have no explicit guarantee that the money thus made available to Hong Kong would be used for British goods and services? Any loan would have to be explicitly linked in this way, but would not this be unacceptable to the Hong Kong Government for the reasons set out at (c).
3.
To my mind there is considerable substance to this probable ODA line. I am not at all sure that we would be well advised to attempt to breach their established position that capital aid should not be given to Hong Kong by weak arguments and a weak case. I personally see much more attraction in Mr Haddon-Cave's proposals for British assistance to the Hong Kong Polytechnic and navigational aids at the airport. I
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1.
CONFIDENTIAL