HANDED GUERR
By
Ме
FELL
ECGD
ON
22 MARCH.
B.
DISCUSSION WITH MR OZU: 20.3.73
I recounted briefly the form of the discussions in Hong Kong between the authorities and the British consortium. I said that I presumed that the Japanese talks would follow the same pattern. I emphasised that we had made no change in our credit offer: it was exactly as we had informed Mr Ozu. He showed interest in
(a) the form of the civil contract: was it likely to be lump sum, cost plus or bills of quantity;
(b)
the time scale: was the British consortium content with completion at end 78/beginning 79.
Reverting to his Washington proposals, I said that I had reported his approach to the appropriate people in London who had shown interest. I had not at that stage mentioned them to the Hong Kong authorities.
2. He said that the Japanese position was unchanged except that following the intervention of the British Ambassador in Tokyo who had explained the references in the remarks by the Governor of Hong Kong, there was no longer any bar
to Ministerial consideration of their offer. MITI would not be represented in the Hong Kong talks but the consortium would come to MITI on their return. He undertook to inform me of their outcome. We should consider our joint position in light of this remark in Hong Kong.
3.
In the course of the discussion Mr Ozu
(a)
(b)
(c)
showed remarkable sensitivity about China and this could be a factor in their thinking about Hong Kong;
suggested that their financial approach would require some sort of guarantees from Hong Kong;
G
said that Japanese firms were having great difficulty in pricing medium term business the Government were not intending to introduce exchange risk cover as this might in itself provoke speculation leading to a further revaluation so that some firms were operating a shadow rate of Yen 230 to the US dollar in their pricing.
4. We agreed that there would be an opportunity for Mr Mason to review the general situation with Mr Ozu at the beginning of
Mr Özu said that he looked forward to a British-Japanese
April. alliance.