TNAG-0097-FCO40-133-Construction-of-a-Cross-Harbour-Tunnel-1968 — Page 82

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are likely to encounter some opposition, there is

sure to be debate on the resolution before the

Legislative Council; the details of the guarantee

are just the matters to which the Opposi tion will

give a thorough airing.

The political risk which ie as totally

unacceptable to H&M.G.asi

to the Hong Kong

Government lieor not in the fact that the Hong Kong

Government- must give a guarantee, but in tre demand

that the guarantee should be encoreeable against its

bondor assets and that

4.

If the Hong Kong Government are to guarantee a

loan, it would be perfectly normal and excite no

comment for the Hong Kong Government to give a

guarantee secured against its general assets and

revenues. The political risk which is as totally

unacceptable to H.M.G. as it is to the Hong Kong

Government lies not in the fact that the Hong Kong

Government must give a guarantee but in the demand

that the guarantee should be enforceable against its

London assets and that these assets should be adequately

maintained for the purpose. The implication that

would immediately be read into this requirement is

that H.M.G. reckons that the Colony's only worthwhile

assets are those which are held in London. The

impact of this on confidence in and outside Hong Kong

would be shattering; the whole purpose of the exercise

15. We therefore

would be lost.

CONFIDENTI AL

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