CONFIDENTIAL
دیا
3
that they wore not proparod to guarantee any part of the loan. Thoy asked the Hong Kong Government to take the latter's 25% option ($27.5 million) and to persuade the Yaunati Ferry Company to tako up tho romaining $21.5 million. The Governor, however, in roporting this approach, said that ho night prefer to take up the whole $49 million and to offor tho Forry Company no more than would leave control in the hands of tho Hong Kong Government and of tho liong Kong and Shanghai Bank.
10.
Recent events in Hong Kong have made the tunnel project less of a good commercial risk but have greatly increased its political importance. Tho local Communist olomonts have sought by propaganda, intimidation and violence to undormino the confidence of the poople of Hong Kong in our ability to maintain our authority and administration thoro. They have failed so far bocause the vast majority of Chinese havo firmly and oponly supported their Government and tho oxisting order. But the battlo of sustaining public confidence roquiros that the outside world and Britain in particular should demonstrato support for Hong Kong and show confidonco in thoir ability to withstand those pressures. The Hong Kong Govornnont are concorned that indefinito postpononont of the tunnel project would be intorproted in Hong Kong as an indication of the outside world's lack of confidence in the Colony's future. It is not known whothor, if Costains had to withdraw, one of the other tondering firms would still wish to procood but avon if the project wore to be savod damage to confidence occasioned by the with- holding of British financial support would romain and a major and probably prostigious onginooring contract would almost certainly be lost to Britain.
11. Costains tonder expired on 28th Juno but thoy agrood to extend it until 31st August on cortain conditions one of which was that a further £35,000 should be paid by the Tunnel Company (the Hong Kong Government agrood to reimburse the Company 50% of this paymont). Successive extensions have kopt the tender opon until now. In spite of the troublos and of their retreat from thoir provious position on sharoholdings and on guaranroos, tho Tunnol Company still insist that they wish tho project to proccod.
CONFIDENTIAL
No comments yet.
Private notes are available after approval.