CONFIDENTIAL
nature was a proper candidate for a government guarantee in any circumstances; Buch projects were normal'y undertaken by governments or public authorities and automatically carried a government guarantee.
At this stage I could see that nothing short of a ministerial directive to ECGD to ignore the political risk would resolve the matter. That clearly was not going to come from the Board of Trade ministers. Nor did it seem that we were likely to get any support for such a directive from Treasury ministers. The Treasury were not disposed to query ECGP's judgment as to the right underwriting standards to adopt and left it to us in the Commonwealth Office to urge any special political considerations that might justify a departure from normal underwriting standards. This I felt unable to do. It is widely known that the Hong Kong Government does not give a nigh priority to the project; and, of course, it no longer has the political significance it had at the height of last year's crisis.
Had there been ministerial agreement to a directive that the political risk should be ignored, I think we would still have had some difficulty in arguing against ECGD's contention that a covering government guarantee was a reasonable requirement for a project of this nature. And I am fairly certain that this is a point on which Ministers would not have been prepared to overrule ECGD'S judgment.
(W. S. Carter)
CONFIDENTIAL
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