SECRET
BEARING IN MIND THE NECESSITY OF LIMITING THE LIABILITY OF THE
HONG KONG GOVERNMENT.
5. AS I TOLD YOU WHEN YOU WERE HERE I AM ACUTELY CONSCIOUS OF THE POLITICAL IMPLICATIONS OF THE JAPANESE GETTING THE WHOLE CONTRACT AND/OR OF THE U.K. NOT DOING SO. INDEED THERE
ARE ASPECTS WHICH I FIND MORE DISQUIETING THAN THOSE YOU
MENTION. BUT UNFORTUNATELY THERE ARE ALSO STRONG POLITICAL AS WELL AS ECONOMIC ARGUMENTS AGAINST SETTING AT RISK AN AVAILABLE
AND ADVANTAGEOUS JAPANESE BID, IN FAVOUR OF A MERE PROMISE
TO PRODUCE ONE FROM THE METROPOLITAN POWER.
6.
THE EXECUTIVE COUNCIL WILL NOT BE BLIND TO POLITICAL CONSID- ERATIONS, AND IT IS JUST CONCEIVABLE IT MIGHT REFUSE AUTHORITY TO NEGOTIATE WITH THE JAPANESE ON THE BALANCE OF POLITICAL
ARGUMENTS ALONE, BUT :-
(A) I THINK IT UNLIKELY, AND
(B) TO BRANDISH POLITICAL CUDGELS AT THIS STAGE WOULD BE THE WRONG
WAY TO SET ABOUT THIS PROBLEM, AND WOULD LEAVE SCARS AND SET UP REACTIONS, AND WOULD BE TAKEN AS AN ADMISSION OF UNCOMP- ETITIVENESS, AND
(C)
7.
IN ANY CASE IT SEEMS TO ME UNNECESSARY.
IN. AMPLIFICATION OF (C), THE BRITISH AND ITALIANS HAVE ALREADY DONE A GREAT DEAL OF WORK IN PREPARING THEIR ORIGINAL AND SUBSEQUENT PRESENTATIONS. THESE COMPARED WELL WITH THE
JAPANESE UNTIL THE LATTER PUT IN A PRE-EMPTIVE BID AND THUS THCEW THE BRITISH CONSORTIUM INTO DISARRAY, ME HERE BELIEVE THAT ON THE BASIS MORE OR LESS OF THE WORK ALREADY DONE, AND IF THE ANGLO- ITALIAN GROUP'S FINANCIAL STRENGTH AND EXPERTISE WERE FULLY DEVELOPED, SOMETHING SUFFICIENTLY SPECIFIC TO BE REGARDED AS A COUNTER-BID COULD BE PUT TOGETHER QUICKLY, AND BEFORE DECEMBER 2ND. THIS SHOULD ENABLE US TO RECOMMEND TO EXECUTIVE COUNCIL THAT IT HELD OUT SUFFICIENT PROMISE OF COMPARABLE BENEFIT TO THE COLONY TO JUSTIFY AUTHORISING NEGOTIATIONS WITH THE ANGLO-ITALIANS AS WELL
AS THE JAPANESE.
2. SECRET
/8.