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and says it will not be possible to do so until next April. It
also rejects the concept of a fixed price for local Hong Kong
costs, and says there will have to be an escalation clause.
are both sticking points for the Hong Kong Government.
These
4. I have discussed the situation with Mr Kindersley of Lazards
with the DTI, and
at a fairly low level, (unfortunately the responsible Under-
Secretary there has just been moved). Mr Kindersley, who has
spent some time in Hong Kong discussing the project with
Mr Haddon-Cave and the Governor, shares my reaction. He has
undertaken to try to get some improvements in the offer. He has
also suggested that we should ourselves present some background
facts and figures to the Governor, which would present the Anglo/
Italian offer in a better light. I think we will have to do
this. It seems clear that validation of our offer is going to be
a major hurdle. I believe it will need intervention from us at
the personal and political level.
5.
Meanwhile we have been discussing in parallel the implications
of the Japanese bid, and particularly the demand for a guarantee.
Officials of the Treasury, the DTI, the Bank of England and the ECGD
B have agreed with us that Hong Kong could, if they so decided, give
such a guarantee without involving us. We also considered, and
Mr Royle strongly agreed, that it would be pointless and probably
counter-productive to reproach Hong Kong with having bent the
rules to accommodate the Japanese bid. This willingness to bend
the rules is in fact essential to us if our own bid is to get
off the ground. The Japanese could probably in the last resort
meet the Hong Kong conditions in full. We could not.
6. DTI ministers originally took a more belligerent view, but
/have
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