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25
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HKK 164/1
HKK 172/1
Original at: HKK 164.
kki
This Copy for:
Information only / Action on Para(s)
Sir Murray MacLehose GBE KCMG KCVO Governor and Commander-in-Chief HONG KONG
Dear Murray,
Foreign and Commonwealth Office
London SW1A 2AH
29 September 1980
HKK 172
RECEIVED 25 COURY NO. 51 29 SEP 1980
DESK MAJEN
INDEX
REGISTRY
PA
on Tai
No
MS
ECGD COVER FOR HONG KONG CONTRACTS
1.
1777
AKK 16471
David Jeaffreson telegraphed (Hong Kong Telegram No 1214 of 20 September) about a letter from Philip Morrice of 9 September on ECGD cover for the Castle Peak 'B' contract. Hong Kong Telegrams Nos 1031 and 1032 to Hong Kong Government Office also refer.
2.
(24
I have replied in FCO Telegram No 844 of 26 September.
I hope this will put matters in perspective. Philip's objective in writing was not to start the alarm bells ringing about an ECGD threat but simply to give advanced notice of the extent of their
Their problems concern and the sort of security they had in mind.
are real, even though their proposed solutions may not fit the Hong Kong case. They have been bitten recently in a number of major markets, notably Iran. They are bound to look carefully at any area in which their stake is large, increasing and spread over a long period.
3. So far as Hong Kong is concerned, Departments here, including ECGD, recognise the enormous commercial importance of the contracts in question, the potential business in the future and the need to show HMG's confidence in the Territory. That does not remove ECGD's obligation to operate a prudent insurance system. They recognise that they may be directed by Ministers to override their commercial scruples, but they must try to get as good security as possible meanwhile.
4.
Obviously this must not be done bull-headed. ECGD would like some assurances from CLP and Esson/Exxon. They agreed that they should not take action until Exxon have undertaken to come in with CLP. After that there will be very careful discussion here in which the DOI, no less than us, will make sure that nothing is done to scare the clients away to the Japanese or elsewhere.
5.
So far as the Hong Kong Government are concerned, we have explained why full guarantees are not possible. ECGD appear to accept that. They still hanker after some kind of assurance on
/the
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