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SECRET
DESKBY 118100Z
TO IMMEDIATE GOVERNOR HONG KONG TEL NO 1264 OF 10 DECEMBER 1973
YOUR TELEGRAM NO 1417: MASS TRANSIT
FOR GOVERNOR PERSONAL FROM SECRETARY OF STATE FOR TRADE AND INDUSTRY
I HAVE LOOKED AT YOUR SUGGESTION TO THE FOREIGN AND COMMONWEALTH
SECRETARY FOR BRINGING THE ANGLO-ITALIAN CONSORTIUM'S PROPOSALS WIT-
HIN THE CEILING SUGGESTED BY THE STEERING GROUP, BUT CANNOT RECOMMEND
IT HERE. A GUARANTEE WOULD COMMIT THE UKG OVER A PERIOD OF YEARS
TO PUT UP PERHAPS POUNDS STERLING 36-40 MILLION AS, IN EFFECT, A GRANT-IN-AID TO HONG KONG. HEDGING MIGHT GET US OUT OF IT, BUT,
AS YOU HAVE RECOGNISED, ONE HAS TO HOLD TO THIS KIND OF PROMISE.
THIS LEAVES OUT OF ACCOUNT THE PROBLEM OF PERSUADING THE ITALIANS
TO PUT UP THE POUNDS STERLING 60 MILLION ODD GUARANTEE NEEDED FROM THEIR SIDE. FINALLY, WHATEVER WE MIGHT SAY, A PRECEDENT OF INCAL- CULABLE EFFECT WOULD HAVE BEEN CREATED AND THIS IS UNACCEPTABLE. I MUST ASK YOU TO DO EVERYTHING POSSIBLE AS FAR AS THE ANGLO
ITALIAN CONSORTIUM IS CONCERNED, HONG KONG HAS MUCH TO GAIN IN
EUROPE AND THE PUBLIC REACTION BOTH HERE AND ON THE CONTINENT
WOULD BE ONE OF VERY CONSIDERABLE DISAPPOINTMENT IF THIS VERY FAIR
BID WAS REJECTED.
DOUGLAS-HOME
FILES,
HD HKIOD
HD TRED PS
PS/PUS
PS MR ROYLE
SIR D WATSON
MR YOUDE MR MARSHALL
SECRET
COPIES TO:
PS TO SECRETARY OF STATE FOR
TRADE AND INDUSTRY DTI
MR D N ROYCE DTI
VICTORIA STREET