CONFIDENTIAL
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ON 17
AUTHORISATION TO PROCEED (BY WHICH POINT THE CONTRACTS AND LOAN
AGREEMENT MUST BE BOTH SIGNED AND EFFECTIVE) IS 7 OCTOBER.
OCTOBER THE GEC LETTER OF INTENT EXPIRES. ON 1 NOVEMBER GEC'S
MEMORANDUM OF UNDERSTANDING ON PRICES CEASES TO APPLY AND WOULD
HAVE TO BE RENEGOTIATED IF CONTRACTS WERE NOT EFFECTIVE BY THAT
DATE. GEC
WILL BE CONCERNED NOT TO MISS THESE DATES. IF HMG COULD BE SHOWN
TO HAVE DELIBERATELY CAUSED DELAY BEYOND THEM WE COULD FACE
CLAIMS FOR FINANCIAL COMPENSATION.
4.
CURRENTLY THE FRENCH PRIORITY IS TO ACHIEVE CONTRACT
SIGNATURE AS SOON AS POSSIBLE AND THEY WILL BE RELUCTANT TO SEE
ANY STEPS TAKEN WHICH COULD JEOPARDIZE THIS. HOWEVER WE SHALL BE
MEETING THEM ON 11 AUGUST TO BRING HOME THE CONTINUING FORCE OF
THE POLITICAL PRESSURES IN HONG KONG, AND THE POTENTIAL
DISADVANTAGES IF CONTRACT SIGNATURE PRECEDED THE UMELCO REPORTS.
5.
IN DRAWING UP OUR STRATEGY WE HAVE ASSUMED THAT THE
UMELCO REPORTS CAN BE PRODUCED BY MID-SEPTEMBER AND DEBATED (AS
WE ASSUME THEY WILL) BY END SEPTEMBER. THIS APPEARS TO BE
CONSISTENT WITH TIMINGS ENVISAGED IN YOUR TELNOS 168 TO PEKING AND
2242 TO US. WE SHOULD BE GRATEFUL FOR YOUR CONFIRMATION THAT
THIS WILL COMPLETE THE POLITICAL STEPS THAT NEED TO BE TAKEN IN
HONG KONG BEFORE SIGNATURE IF THE ADVERSE POLITICAL CONSEQUENCES
WHICH YOU FORESEE ARE TO BE AVOIDED.
ON THIS BASIS WE THINK OUR STRATEGY SHOULD BE:
6.
(A)
FOR US TO KEEP OUR FINGER ON THE COMMERCIAL PULSE SO AS
TO MONITOR THE PACE OF NEGOTIATIONS, AND DISCREETLY TO
SLOW IT DOWN IF NEED BE:
(B)
(C)
FOR YOU TO KEEP CLOSELY IN TOUCH WITH THE HONG KONG SIDE
OF THE JVC
(EG. SIR JACK CATES) TO MONITOR PROGRESS ON THAT FRONT:
FOR PEKING, WHEN THEY RESPOND TO ZHOU PING (SEE BELOW) TO
REFER APPROVINGLY TO WHAT WE UNDERSTAND XU JIATUN TO HAVE
SAID EXPRESSING CHINESE WILLINGNESS TO ENVISAGE A SHORT
DEFERRAL IN CONTRACT SIGNATURE (HONG KONG TELNO 2405),
GIVEN THE EFFECT ON PUBLIC ATTITUDES TO THE PROJECT IN
HONG KONG IF SIGNATURE PRECEDED THE PRODUCTION OF REPORTS
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