CONFIDENTIAL
(39)
Flag
Flag F
4.
The papers show that £38,000 were allocated on 1 October 1973 for expenditure on books prior to the presentation of the revised paper. This money has run out and when my Department consulted Finance Department requesting further funds to be made available, Finance Department (in consultation, I understand, with Mr Ridgwell) took the view that since the project arises from a ministerial announcement, approval to it hinges more on our honouring the commitment than on its acceptability based on aid criteria which have changed meanwhile. I am bound to say that this seems to me
to be sound. The amount involved is small in relation to the total
aid programme and any attempt now, particularly after all the delays, to go back on our word, would cause us disproportionate harm in our relations with Hong Kong and perhaps also cast doubt on the credibility of our aid policy more generally.
5. Is this not a case for cutting the Gordian knot and submitting the case direct to the Minister on the basis of our previously announced commitment and on the basis of the revised Projects Committee paper at Flag C? If the Minister is agreeable, this Department will, of course, supervise the expenditure in order to ensure that the money is properly spent.
6. A similar situation arises in the case of the announced grant of £0.4 million for four technical institutes in Hong Kong. I suggest that this case should be similarly treated.
Willath
PL O'Keeffe
Hong Kong & Indian Ocean Dept.
20 August 1975
Сс
Mr Stickels, Finance Dept. Mr Ridgwell, I & CD
CONFIDENTIAL