CONFIDENTIAL
6.
It is their own
The decision had to lie with Hong Kong.
money and risk. Nevertheless we do not accept that it was
commercially prudent to discard the Anglo-Italian offer altogether.
If the soil surveys turn out well, then the Anglo-Italian price
could have been below the Japanese.
If they turn out badly then
it is difficult to believe that the Japanese ceiling price will
hold, particularly in the current world economic situation. Although
the Japanese threatened to withdraw their pre-emptive bid, the surest
way to hold them to it might well have been the continuance of
competition.
7.
Politically the decision is damaging to the relationship
between Britain and Hong Kong. This is the fore-runner of a number
of underground railway contracts throughout the world.
Presentationally, if we cannot get the work in our own dependent
territory, the UK will not be regarded as a strong competitor else-
where. A Japanese contract of this size will put Hong Kong firmly
and permanently in the Japanese economic sphere of influence.
the Prime Minister and the Secretary of State for Trade and Industry
have stressed the overriding importance of getting this contract for
Britain and are correspondingly disappointed. There is some
disposition to blame the Governor. But much more of the
Both
responsibility for the decision lies with his advisers on Executive
Council. (None
Line to Take
8.
of
this
can,
of
стих,
be revealed to Sir Y.K. Kun)
We understand Executive Council's reasons for deciding to
negotiate only with the Japanese.
The decision is of course Hong
Kong's own. But we are not fully convinced of the commercial wisdom
CONFIDENTIAL
/of this