CHRISTIAN TELEGRAM TO HONG KONG
CONFIDENTIAL
No 38 of 24/10
363
cc Mr S L Edwards CRE2
Mr R Fell ECGD
Mr A C Stuart FCO Mr H Hochfelder OFP
259
PRIORITY
For Aston from Glaves-Smith.
267
I have sent you a Creda telegram today in response to your
Creda 134.
Following for your personal information.
FCO lawyers advise that Hong Kong is legally able to give a
guarantee which would not bind HMG. But some moral commitment
on HMG would remain unless we publicly disclaimed responsibility,
which would itself be embarrassing. Moreover, we have the
ultimate power of veto over the Hong Kong Government's actions,
and it might be argued that we should use it. For these reasons,
the giving of the contract to the Japanese with a Hong Kong
Government guarantee attached could be embarrassing politically
in a number of ways.
Our provisional view, not yet approved by Ministers, is that as
soon as a respectable counter offer from an Anglo-Italian group
can be mounted, we shall make use of this potential embarrassment,
and also of course of the fact that a major concession has been
made to the Japanese, to get the Hong Kong Government to be at
least as flexible over other conditions which we may find difficul ty
in accepting.
A major meeting with the Italians will take place in London on
31 October. It is not to be expected that a detailed bid on the
But we believe Japanese lines will be mounted within the 45 days.
that the Anglo-Italian group will have proposals to put forward
sufficiently attractive to keep them fully in the competition.