TNAG-0098-FCO40-134-Construction-of-a-Cross-Harbour-Tunnel-1968 — Page 93

NOTHING TO BE WRITTEN IN THIS MARGIN

A

as dictated once again by Peking,

as it did come

is how

concentrating on maximising the economic benefits it derives from Hong Kong in British

hands.

[Take

im

slip]

The basic threat is the possibility of a change in chinese policy towards Hong Kong, and this remains. It has been with us ever since

X

and

1949; we had our ups and downs our

alarums and excursions in the 50'sin our

relations with the Chinese just as we have

been having them in the S. We would not

Important

expect any marked change in this situation before the 1980' Sby which time the tunnel loan should have been repaid.

will

Unless therefore ECGD have good reason to change their assessment of the commercial risk$, it does seem to me that it would be justifiable to reoffer the terms of March 1967, i.e., several (but not joint) guarantees.

it

Since the Tunnel Company now seems able to make the necessary financial arrangements, would seem a pity that the project should

fall down because of conditions that do seem

to be out of the ordinary. We cannot claim that it is of great importance to Hong Kong; but the Hong Kong Government does regard it as a worthwhile project provided it does not make too much of a call, on government resources, which are heavily committed afre where It is not, of course, for me to state the considerable British interest in obtaining

this contract. But I understand that if

Costains got the contract they would be pioneering, outside America, a new technique in tunnel-building by the use of a steel tube; this method could be increasingly used in future and the firm would be in a favourable position to exploit any such development. And, as you of course know, the steel involved (costing, I am told, about half the contract price) would be a useful boost to British steel exports.

In all the circumstances I would ask that the need for such stringent conditions for ECGD cover of the loan is given further and

careful examination.

Since Col Clacine has indicated an intention

Q

of making from the approach to the PP. I am send

a copy of 12m letter to the Prune Donner's office for mach