of the future of Hong Kong.

While the project has great significance it also poses important

issues which we will have to put to Ministers. I mentioned to

you that we would have to seek Ministerial views on:

- the possibility of Government equity involvement;

the liabilities that it would be reasonable for UK interests

including HMG and Hong Kong Government to assume;

the nature of any commercial package including the choice

of nuclear island vendor having regard to contractual,

technical, safety and wider political and nuclear non

proliferation considerations;

the financial and in particular credit terms that might be

offered.

I said that the interdepartmental Whitehall committee which I chair

was considering these issues and would be submitting its proposals

to Ministers in September. Our intention is therefore to reach

conclusions in time for the Foreign Secretary's visit to Hong Kong

and Peking at the end of September and your Executive Committee meeting

in early October.

Meanwhile I hope this letter indicates the seriousness with which

we here are all approaching such a highly significant project which

owes so much to your personal foresight and the drive and determination

which you and Bill Stones have both brought to bear.

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