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(A)
(B)
(C)
(D)
(E)
CONFIDENTIAL
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BOTH SIDES HAVE SHOWN GREAT COMMITMENT TO THIS
PROJECT OVER THE YEARS, CULMINATING IN AGREEMENT
ON PRICE AND FINANCING IN JANUARY. BOTH SIDES
MUST CONTINUE TO SHOW RESPECT FOR THE OTHER'S
POSITION AND FIND MUTUALLY ACCEPTABLE SOLUTION
TO PERMIT SWIFT PROGRESS NOW THAT THE MAJOR
POINTS HAVE BEEN SETTLED.
SURPRISED AT CHINESE INSISTENCE ON INCLUSION OF
GOVERNMENT ASSURANCE FROM MOU IN LOAN AGREEMENT.
MEMORANDUM OF UNDERSTANDING IS A GOVERNMENT TO
GOVERNMENT DOCUMENT, SIGNED BY BOTH PARTIES.
CAN BE NO QUESTION THAT HMG WILL NOT HONOUR
TERMS OF MOU.
HMG CANNOT AGREE TO INCORPORATE TEXT OF
GOVERNMENT ASSURANCE INTO LOAN AGREEMENT, WHICH
IS A COMMERCIAL DOCUMENT TO WHICH HMG IS NOT A
PARTY. WE HAVE TAKEN LEGAL ADVICE ON THIS.
BOTH SIDES MUST THEREFORE GIVE UP SOMETHING IF
A SOLUTION TO BE FOUND. AUTHORITIES IN LONDON
HAVE CONSIDERED FURTHER PRC POSITION.
NEGOTIATORS IN SHENZHEN HAVE BEEN EMPOWERED
TO PUT FORWARD FRESH PROPOSALS ON THIS POINT.
LOOK FOR A POSITIVE RESPONSE FROM CHINESE SIDE
IN INTERESTS OF SWIFT SIGNATURE OF L.O.I.
(F)
(ONLY IF PRESSED: NEW PROPOSALS ENVISAGE
INCLUSION OF A REFERENCE TO RELEVANT PART OF
MOU.)
WE RECOMMEND AGAINST PUTTING FORWARD THE DETAILED TEXT OF
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CONFIDENTIAL