CONFIDENTIAL
014545
MDHIAN J78;
HONG KONG ADMINISTRATION COULD DO TO HELP MAKE ECGD MORE COMFORTABLE WITH THE FINANCING SITUATION. IT HAD BEEN PUT TO THEM BY MORGAN STANLEY, THEIR OVERALL FINANCIAL ADVISERS FOR THE PROJECT, THAT THE ECGD ATTITUDE WOULD BE VITAL AND THAT OTHER NATIONAL CREDIT AGENCIES WOULD PROBABLY TAKE THEIR LEAD FROM THEM. SELBY SAID THEY ARE ALSO CONCERNED THAT SOME OTHER MAJOR PRIVATE PROJECTS IN HONG KONG, AND PARTICULARLY BLACK POINT POWER STATION, MIGHT MEET MEET CONDITIONS IMPOSED BY ECGD E.G. A PRC GUARANTEE, WHICH WOULD THEN SET A PRECEDENT WHICH MIGHT BE HARD FOR THE PUBLIC SECTOR TO FOLLOW.
3 =
IN REPLY TO MY QUESTIONS ABOUT THE RESPONSE OF OTHERS HE HAD
SEEN, SELBY SAID THE FRENCH AND CANADIANS HAD SAID THEY
ANTICIPATE NO TROUBLE WHATSOEVER ABOUT PROVIDING FULL SUPPORT INCLUDING EXPORT CREDIT FOR THEIR COMPANIES. THE JAPANESE HAD
BEEN FAIRLY TECHNICAL IN THEIR RESPONSE AND SAID THAT MITI WOULD WANT TO LOOK AT THE ACCOUNTS FOR THE PROJECT, TO KNOW THE SIZE OF RESOURCES ALLOCATED TO IT, GOVERNMENT ACCEPTANCE OF LIKELY SURPLUSES ETC. THEY HAD ALSO ASKED QUESTIONS ABOUT THE LIKELY STATUS OF THE SPECIAL ADMINISTRATION REGION AND THE DEGREE TO WHICH IT WOULD HAVE SOVEREIGNTY. ALL QUESTIONS I WOULD HAVE THOUGHT TO WHICH THEY WELL KNOW THE ANSWERS.
4. SELBY ENDED BY SAYING THAT THEY WOULD PROVIDE US WITH ANY INFORMATION THAT WE REQUIRED TO HELP ECGD AND WOULD BE HAPPY TO TALK WITH US AT ANY TIME. THEIR OBJECT WAS TO ENSURE THAT THEY GOT THE BEST POSSIBLE FINANCIAL SUPPORT.
5. I RESPONDED THAT I WOULD OF COURSE REPORT THIS APPROACH. THE HONG KONG GOVERNMENT WOULD BE AWARE THAT ECGD SUPPORT FOR THE WHOLE OF THE COMPLEX OF AIRPORT PROJECTS WAS A MATTER STILL UNDER CONSIDERATION, AND I WAS THEREFORE NOT IN A POSITION TO TELL HIM VERY MUCH ALTHOUGH WE WERE WELL AWARE OF THE IMPORTANCE OF THE ISSUES AT STAKE. HE AND HIS COLLEAGUES WOULD ALSO BE AWARE THAT THERE WAS CONCERN IN WHITEHALL ABOUT THE LIMITS OF EGCD'S EXPOSURE IN ALL MARKETS, AND IN PARTICULAR INTEREST IN ECGD'S EXPOSURE IN CHINA AND HONG KONG WHICH ALREADY IN BOTH CASES WAS VERY EXPENSIVE. TO THE BEST OF MY KNOWLEDGE NOTHING HAD YET BEEN DECIDED, ALTHOUGH THOSE CONCERNED IN THE FCO AND DTI AS WELL AS IN ECGD WERE AWARE THAT THE TENDERS FOR THE MAIN BRIDGE HAD TO BE SUBMITTED ON 16 DECEMBER AND THIS WOULD THEREFORE FOCUS ATTENTION VERY SHORTLY I SAID WE ARE WELL APPRAISED OT THE IMPORTANCE OF ECGD'S DECISION BOTH IN ITS OWN RIGHT AND AS A TREND SETTER FOR OTHER NATIONAL CREDIT AGENCIES. I WAS NOT, HOWEVER, PRIVY TO THE
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