د اقع
Mr Youde
Coude
PS/Mr_ Royle
SECRET
M. Strait
Tels
Qmended
aund
In vain
P/A Bes/12
as
despatched
'48'
agreed
Anas Guest
10712
HONG KONG MASS TRANSIT SYSTEM
(x6)
1.
Flag
Flag B
347
I have discussed the Governor's telegrams nos. 1417 and
1418 with the Treasury, the DTI and ECGD. We have also discussed
them with Mr Royle.
2.
Neither the Treasury nor the DTI are prepared to give the
sort of open-ended guarantee which the Governor now requires. The
Governor's withdrawal in his telephone conversation with Sir D Watson
of the suggestion that, if the worst came to the worst, we could
cancel the guarantee, has strengthened their conclusion. Planning
on the worst case this could cost the Treasury an extra £40 million
and increase the so-called subsidy to exports to almost 40%.
The
DTI are preparing a telegram accordingly from their Secretary of
State to the Governor and a submission to the Prime Minister.
3.
Following the discussions with Mr Royle, I told the DTI
and the Treasury that we would have wished to see a guarantee if,
in their commercial judgment, this had been possible. But in the
circumstances the FCO would not wish to challenge their decision.
I pointed out that the Prime Minister would need to be satisfied
not only that we had gone as far as was commercially prudent, but
also that we had taken all possible steps on the political net to
push the Governor towards validation of the Anglo-Italian bid. I
accordingly offered the attached passage for the DTI's message to
the Prime Minister. This has been accepted by the DTI.
SECRET
14.
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