SECRET
7734
010432
MDHOAN 3209
SECRET
FM FCO
TO IMMEDIATE HONG KONG
TELNO 895
OF 091735Z MAY 91
HKB 182 12.
TOP COPY G DIST
INFO IMMEDIATE PEKING, UKREP JLG HONG KONG, CANBERRA
PERSONAL FOR DEPUTY TO GOVERNOR FROM BURNS, AUSS CANBERRA: PLEASE PASS TO PS/GOVERNOR
AIRPORT PROJECT: COSTINGS
1. LORD CAITHNESS HAS SOUGHT ADVICE ON THE LATEST COST
PROJECTIONS FOR THE AIRPORT PROJECT. HE IS AWARE THAT THE FIGURES PUT TO THE CHINESE MAY NO LONGER BE THE MOST CURRENT ONES, AND THAT THE REALISTIC COMPLETION DATE FOR THE PROJECT WILL HAVE SLIPPED, ALREADY, FROM 1997 TO SOME TIME BEYOND THE TRANSFER OF SOVEREIGNTY.
2. IT WOULD OF COURSE BE IN NO-ONE'S INTEREST, LEAST OF ALL HONG KONG'S IF WE WERE TO FIND OURSELVES IN A SITUATION, CLOSE TO 1997, IN WHICH THE PROJECT WAS COSTING SUBSTANTIALLY MORE THAN BUDGETED FOR AND WAS RUNNING WELL BEHIND SCHEDULE, AND IN WHICH THE HONG KONG GOVERNMENT WAS UNABLE TO FULFIL ITS ''BEST ENDEAVOURS'' UNDERTAKINGS WITH THE CHINESE ON FINANCE. THAT WOULD RAISE THE UNWELCOME PROSPECT OF A SERIOUS ROW WITH THE CHINESE AT A POLITICALLY SENSITIVE TIME AND THE NEED TO CONSULT WITH THE CHINESE ACROSS THE WHOLE SPECTRUM OF HONG KONG'S BUDGETARY POLICY IN ORDER TO FIND PUBLIC EXPENDITURE SAVINGS. THAT COULD DEAL A SERIOUS BLOW TO THE IDEA OF HONG KONG'S FINANCIAL AUTONOMY, EVEN BEFORE THE BIRTH OF THE HONG KONG SAR.
3. IN THE SHORT-TERM, IF THE COST ESTIMATES WE HAVE GIVEN THE CHINESE ARE ALREADY OUT OF DATE, THE CHINESE MAY, WHEN THEY DISCOVER THIS, ACCUSE US OF NEGOTIATING IN BAD FAITH. THEY WOULD NO DOUBT USE THIS TO MAXIMUM PROPAGANDA ADVANTAGE.
4. WITH THESE CONSIDERATIONS IN MIND, IT WOULD BE HELPFUL TO KNOW THE LATEST POSITION ON COST ESTIMATES AND COMPLETION FORECASTS. LORD CAITHNESS WOULD BE GRATEFUL FOR THE GOVERNOR'S ASSURANCE THAT HE IS ABSOLUTELY CONFIDENT OF THE LATEST COST ESTIMATES AND THAT, ON THIS BASIS, THE CONCESSIONS WHICH WE HAVE ALREADY OFFERED THE CHINESE ON THE FINANCIAL ASPECTS ARE
MANAGEABLE.
PAGE
SECRET
1