CONFIDENTIAL
PUS' LUNCH WITH SIR ADRIAN SWIRE
BACKGROUND
Negotiations with the Chinese over 1994/95 elections
1.
Time
Our line on the state of play in the talks is that we are working for success: that we have made major moves on Functional Constituencies and the Election Committee in an effort to meet Chinese concerns; that the talks are dealing with the substances, but we remain a long way apart on the central issues. We have not given up hope of reaching agreement. But the gap between us on what is needed to achieve free and fair elections will take some bridging. is running out, though we have not set a deadline. OPD (K) will be considering these issues with the Governor when it meets on 10 November. Privately, we are encouraged at the first signs of Chinese movement (an offer of a partial agreement, finessing appointed membership in the District Boards, and the start of discussion on the Through Train). But the purpose may be largely tactical.
New Airport
1.
A large proportion of the contracts for the airport projects are Hong Kong Government (HKG) contracts and most have been let on time. Work on the airport is therefore proceeding although the timetable is becoming increasingly tight. If the airport is to open on schedule, it is essential that agreement is reached on the financing arrangements for the Provisional Airport Authority (which will become the Airport Corporation (AC)) and the Mass Transit Railway Corporation (MTRC).
2. We are at last receiving some cooperation from the Chinese on the airport. At recent meetings of the Airport Committee the Chinese agreed to the Western Harbour Crossing Franchise, Phase I of the Central Wanchai Reclamation Project, and to HKG's proposal that the Airport Corporation should not pay land premia for commercial developments on the airport island. Chinese officials are also saying in public that they are prepared to deal with airport on its merits and will not link it with difficulties on the constitutional front. However, we think it unlikely that they will be prepared to resolve the outstanding issues (detailed below) until after the constitutional talks have finished.
Financing Arrangements
In April the Hong Kong Government handed a third airport financing proposal to the Chinese side [This has not been made public]. This proposal sought to strike a balance between
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CONFIDENTIAL
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