CONFIDENTIAL
this
Furthermore our ATP budget is currently under severe
pressure and it would be impossible to make any major new
commitments in the near future. The total worldwide budget for the current year is £97 million, which will increase to
artport, and associated £112 million next year. The scale of the projects we are talking about for the airport several hundreds of millions
hundred
of pounds (even when broken down into their smaller components could not be accommodated even though payment would be spread over a number of years.
We do have to consider what our partners, particularly the Japanese, might do in this area. There have been suggestions that the Japanese might offer aid for this project. We consider this to be very unlikely. Japan has been very ready in the OECD discussions to accept a ban on associated financing to richer markets and there is no
history of Japanese concessional assistance to Hong Kong.
[An
An area where we could be more exposed to criticism,
either by the public or by British companies, is our position on ECGD cover. Hong Kong is one of the "amber zone" markets and, with the rules now agreed on how to deal
with new commitments in the amber zone, ECGD may provide
cover for the airport project only after seeking the
agreement of EGC on each and every contract over a certain
size. Further because of the size of the contracts that
British companies are bidding for several hundreds of
millions of pounds there could be problems with the size
-
-
of ECGD's future global business budget and Hong Kong's
market limit. This issue has already been flagged up in inter-departmental discussion.
PIGABE/2
CONFIDENTIAL