return for their premium.
And finally we have been
asked to consider the point that special consideration should be given to terms to be given to private interests when undertaking a project normally undertaken by govern-
ments.
As we understand them, ECCD's reasons for requiring a joint guarantee are mixed, stemming partly from their assessment of the commercial risk attaching to a project of this nature and partly from the political risk of develop- ments in China leading to the liquidation of Hong Kong. The requirement or a joint guarantee admittedly formed part of the original conditions for cover laid down by ECCD early in 1967, at a time when that department can only have been concerned about the commercial risk. However in April of that year you felt able to agree that the joint guarantee requirement could be dropped. That decision implied that no too serious a view needed to be taken of the comercial risk.
In reimposing the condition of a joint guarantee I suspect that the main consideration weighing with ECGD now is the political risk w ich, at the height of communist confrontation last year, led them to ask for a Hong Kong Government guarantee on terms and conditions that proved quite unacceptable to that government. It might help you and ECGD if I were to say something about the political risk.
The threat to Hong Kong's continued existence is basically the same now, both in nature and degree, as it has been since the communists came to power in 1949. It does not lie in the internal situation of the Colony; the events of 1967 have shown that communist pressures within the Colony can be contained if they are not supported from outside. But once the Peking Government conceives the
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