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1
CONFIDENTIAL
DRAFT
to: GOVERNOR, HONG KONG
AU
1
Meli
Cypher Priority
Personal for Governor from Lord Shepherd.
Cross Harbour Tunnel.
Since your telegram No. 19 I have been watching developments with close interest. I entirely share your view that, if the project is to go ahead, it would be singularly unfortunate if the contract were to be lost to Britain. I am sure you will have welcomed the recent easement in ECGD's terms. Unfortunately we cannot yet be sure that even these modified terms will suffice to secure the project for Britain, in the absence of any firm knowledge of what the final offers of those competing for the project may be.
But I
2. As I read the papers, it seems to me that a crucial and determining factor may well be the attitude of the Hong Kong and Shanghai Bank over the question of giving a several guarantee in any form. I realise that the Hong Kong Government is an interested party as a potential shareholder (incidentally, we must appreciate your willingness to recommend acceptance of a several guarantee to your Executive and Legislative Councillors). think it is none the less entirely proper for me to ask whether you have information about the attitude of the Hong Kong and Shanghai Bank on this point. And since we both are keenly interested on the broadest political grounds to ensure that the project stays British, in order that we at this end can respond quickly and decisively to whatever fresh developments there may be I should be most grateful if you could keep us closely informed of any significant developments in the situation, and let us have your advice
CONFIDENTIAL
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