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DESKBY PEKING ONLY 2002OOZ
FM D O T 19160OZ AUG 82
TO IMMEDIATE PEKING
TELEGRAM NUMBER INDUS 38 OF 19 AUGUST
AND TO BTC HONG KONG
SAVING TO PARIS AND WASHINGTON.
GUANGDONG NUCLEAR PROJECT
TO CLARK FROM MANZIE
THE PURPOSE OF THIS TELEX IS TO TAKE YOUR MIND ON THE NEXT STEPS
WE PROPOSE.
FOLLOWING FURTHER DISCUSSIONS BETWEEN THE FCO AND THE U.S. STATE
DEPARTMENT IT IS NOW CLEAR THAT THERE WILL BE NO RESOLUTION OF THE
AMERICAN CONCERN ON NON-PROLIFERATION BEFORE 5 SEPTEMBER AT
EARLIEST, FOLLOWING FURTHER HIGH LEVEL MEETINGS BETWEEN OFFICIALS
IN THE FOREIGN OFFICE AND THE STATE DEPARTMENT. THE FOREIGN
SECRETARY HAS BEEN INVITED TO WRITE TO SHULTZ TO PRESS FOR AN
EARLY DECISION FOLLOWING THESE MEETINGS. WE UNDERSTAND, SIMILARLY,
THAT WESTINGHOUSE HAVE WRITTEN TO SHULTZ IN THE SAME VEIN.
HOWEVER, NEITHER WE NOR THEY ARE OPTIMISTIC OF A CLEAR CUT ANSWER
AT THE BEGINNING OF SEPTEMBER. FOR VARIOUS REASONS, NOT LEAST
SMOOTHING DOWN THE PRO-TAIWAN LOBBY, THE STATE DEPARTMENT MAY FIND IT POLITIC TO DELAY A DECISION ON THE GUANGDONG PROJECT UNTIL THE
END OF THE YEAR. NEVERTHELESS WESTINGHOUSE REMAIN CONFIDENT THAT A
FAVOURABLE ANSWER WILL EVENTUALLY BE SECURED.
THE PRIME MINISTER IS BEING INFORMED ABOUT THIS OBSTACLE TO PROGRESS
ON THE PROJECT.
IN THE LIGHT OF THESE DIFFICULTIES WE HAVE REVIEWED THE PROPOSED
UK GOVERNMENT LED MISSION TO CHINA AT THE BEGINNING OF SEPTEMBER.
MY VIEW IS THAT THIS WOULD NORWBE INAPPROPRIATE. UK GOVERNMENT
PROPOSALS FOR ANGLO/AMERICAN COLLABORATION ON THE NUCLEAR ISLAND
WOULD BE SOMEWHAT HOLLOW WITHOUT STATE DEPARTMENT APPROVAL.
MOREOVER, EXIMBANK WILL NOT GIVE DETAILED COMMITMENTS AT PRESENT AND UNCERTAINTY ABOUT THE AMERICAN DECISION LEAVES US UNABLE TO
PUT FIRM PROPOSALS ON FINANCING FOR THE PROJECT TO MINISTERS.
ON 18 AUGUST WE REVIEWED THE POSITION WITH GEC, WESTINGHOUSE, NNC,
AND BNFL. THEY ALL AGREE THAT WE CANNOT NOW TAKE FORWARD A UK
GOVERNMENT LED MISSION IN THE TIMESCALE WE FIRST ANTICIPATED.
WE REVIEWED ALL THE OPTIONS OPEN TO US AND DECIDED THAT THE BEST
SOLUTION WOULD BE TO PROPOSE A TECHNICAL VISIT BY WESTINGHOUSE/NNC/
BNFL, POSSIBLY IN THE SECOND WEEK OF SEPTEMBER. WESTINGHOUSE CONSIDER
THAT IT WOULD BE VALUABLE TO EXPLAIN TO THE CHINESE, AND CLP,
HOW IT IS PROPOSED THAT WESTINGHOUSE AND NNC WOULD WORK TOGETHER.
THE VISIT WOULD ALSO PROVIDE AN OPPORTUNITY TO EXPLORE FURTHER
THE INTERFACE BETWEEN THE UK/US CONSORTIUM AND THE CHINESE IN SUCH
AREAS AS THE ARCHITECT ENGINEERING CIVIL WORKS AND THE SUPERVISION
OF ERECTION. ALL THESE CONSIDERATIONS DO, OF COURSE, BEAR ON THE
SCOPE OF THE FINANCE PACKAGE WHICH WOULD BE NEEDED. THIRDLY, THE
VISIT WOULD PROVIDE AN OPPORTUNITY TO DEFINE FURTHER WHAT THE CHINESE
ARE LOOKING FOR ON FUEL SUPPLY.
IN OUR VIEW A TECHNICAL VISIT BY WESTINGHOUSE/NNC/3NFL WOULD BE
APPROPRIATE IN THAT IT WOULD £3RING THE DEGREE OF DETAILED
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/DISCUSSION