2-FD.24/643/01.
Onis
~ MUA 10/593/1 (43)
10/593/143).
Treasury Chambers,
Great George Street,
London, S.W.1
28th March, 1969.
9/411
Telephone 01-930 1234, ext. 193.
Dear Carter.
Hong Kong Airport
You wrote to me on 27th February enclosing a memorandum prepared jointly by Foreign and Commonwealth office and the Board of Trade and suggesting that H.M.G. should provide a loan of about £6 million to the Hong Kong Government for the development of Kai Tak Airport. Subsequently the Foreign and Commonwealth Secretary produced another paper proposing that we should agree to grant the Dutch traffic rights for a weekly service to and from Hong Kong. As these two proposals are to a certain extent inter-connected I think it might be sensible to consider them together rather than separately even though the second proposal has now been turned down in the OPD Committee.
2.
When we met to discuss the first of these proposals on 5th March you agreed as an initial move that you would find out from Hong Kong the extent to which from a developmental angle they expected to benefit from the development of the airport e.g. from increased tourism etc.
It was also agreed that the Board of Trade would try to quantify the additional benefit which the development would provide to U.K. Civil Aviation, though we recognised that this would not be an easy exercise. Following your enquiry the Governor cabled emphasising once again that it was largely because of the benefit to the U.K. civil aviation business that Hong Kong was asking for a loan and saying that although there might be some reduction in tourism if the airport was not developed it would probably not be great. He also appeared to be unworried as regards the effect on freight traffic.
3. Assuming that the Board of Trade can substantiate their case we think a reasonable case can be made out for H.M.G. to provide some help for Hong Kong on civil aviation grounds. We also think that on developmental grounds 0.D.M. would be justified in providing some assistance, if not for the development of the airport, then at least for some of the Colony's pressing social needs such as housing, water supplies and education if these would suffer if Hong Kong itself had to finance the airport extension. In view, however, of this country's difficult economic position and Hong Kong's buoyant economic position £6 million is too much to expect H.M.G. to provide and the most which we would consider would be £3 million spread over the four years 1969/73. Nor can we agree to there being any increase in the overall Votes of Departments to cope with this £3 million which would therefore have to come out of existing budgets through the postponement or cancellation of other projects.
W.S. Carter, Esq.,
Foreign and Commonwealth Office.
14.
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