TNAG-0098-FCO40-134-Construction-of-a-Cross-Harbour-Tunnel-1968 — Page 118

Our reference: 2F45/54/01B Your reference: HWB 21/5

CONFIDENTIAL

Dear Carter,

108

Treasury Chambers Great George Street, London S.W.I Telephone: Whitehall 1234, ext. 288

318

1st May, 1968.

To be held until

pps are returned loyan.

Hong Kong Tunnel

115

Thank you for your letter of 17th April. At the moment I only want to reply urgently to paragraph 5 of your letter. I understand that there are likely to be very difficult discussions this week about sterling balances. I can accept therefore that it would be unfortunate to strain relations with Hong Kong unnecessarily by telling them that the offer of an H.M.G. guarantee has now lapsed.

As you say, it now appears very doubtful whether the Hong Kong Government would ever agree to give their own guarantee in terms which could attract partial backing by H.M.G. In these circumstances it may be unwise to court unnecessary trouble. If a situation were to arise in which they are asked, and agree to give an overall guaantee then we can all look at the situation again. We do, however, have to be extremely careful about setting a precedent of this kind in a situation which I am assuming we can regard as markedly different from that obtaining when the offer was originally made.

Copies to to Cotterill (E.C.G.D.) and Gowers (B/Trade).

Yours sincerely,

then Zen.

(C.C. Lucas)

HWB 21/5

W. S. Carter, Esq.,

Commonwealth Office,

Curtis Green,

S.W.1.

AST

REF.

X

REF.

108