Mr. Godden
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Lord Shepherd has probably seen yesterday's telegram No. EXCED 49 from Mr. Hannam in Hong Kong (copy attached).
This provides increasing evidence (paragraphs 2 and 4 of the telegram) that the Tunnel Company intend to open serious negotiations with ECGD and to hold the French offer open. The answer to Lord Shepherd's most recent personal telegram 2to the Governor (despatched last night) may establish this
beyond doubt. But judged from the Governor's telegram No. 203 the Bank's objections to guarantees might not be so easily resolved as Mr. Hannam hopes (paragraphs 3 of his telegram).
This could, of course, be a factor impeding the decision by the Company to open negotiations with ECGD.
While sharing Mr. Hannam's assessment of the advantages we derive from the Tunnel Company's own interest in clinching the Costain contract, we do not altogether share his belief
that it will forego the opportunity of playing the French off against us. However in the Dutch auction that could develop our position might be a little stronger than we had first
thought.
(W. S. Carter)
Hong Kong Department
7 March, 1969
Copy to: Sir Arthur Galsworthy
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