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might argue that it was inconsistent with our Treaty commitment (in the Joint Declaration) to Hong Kong's continuing prosperity and stability. In practical terms it could destroy our negotiating leverage with the Chinese to achieve arrangements for Hong Kong before and after 1997 which will enable us to hand over sovereignty then on terms which are politically acceptable and which preserve our economic interests there.
We have invested a great deal of political credibility in securing the airport MOU with the Chinese. It is a cornerstone on which Hong Kong is building its confidence for the 1990s. It is very firmly in the Government's interests to do everything we can to ensure that it works.
The Treasury believe that the potential costs to the taxpayer of large scale guarantees to Hong Kong need to be given greater weight. Other Departments agree that the potential costs to the taxpayer should be given full weight alongside other considerations. The various issues will be examined thoroughly in the EGC assessment of the Lantau Fixed Crossing project so that the right balance between the various considerations can be determined.
Given the amount of cover currently available and the amount which will become available as repayments on existing contracts are made, the Foreign Secretary and the Secretary of State for Trade and Industry believe that cover should be available to support transactions in Hong Kong which satisfy ECGD's underwriting judgement and are accepted for PMS purposes as in the national interest. They also believe that ECGD should be able to indicate accordingly and that Ministers should be free to speak positively about Government support.
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