CONFIDENTIAL
3. It is true that the Hong Kong Government is rich and could no
doubt find the money from its reserves to pay for the Kai Tak extension (the cost of which has increased from £6.2 million to about
£10.5 million.) The arguments in favour of HMG helping are almost wholly political :
4.
(a) Hong Kong has had virtually no assistance from HMG in her
post-war rehabilitation, but has pulled herself up by her
own bootstraps.
(b) HMG have dealt the Hong Kong Government several nasty
blows textile quotas and the decision to impose a tariff on imports of cotton textiles from 1 January, 1972,
devaluation, immigration controls and, especially resented
in the Kai Tak context, negotiation of air traffic rights
which have sometimes been very disadvantageous to Hong Kong's own airline (CPA).
(c)
(a)
A gesture of confidence in Hong Kong's future, which
financial assistance would undoubtedly be, would be very
welcome to all, and this was the theme of members of the
present Government when in opposition.
A political gesture of solidarity would be all the more valuable as HMG embark on the EEC negotiations in which protection of Hong Kong's trading interests may not be at
all easy.
The question remains in what form can we propose a gesture of solidarity with Hong Kong which is likely to be acceptable both to official opinion in Whitehall and to Ministers. I suggest that there are two possibilities. The first is a straight financial loan but for the reasons given above this is no more likely to be acceptable now in Whitehall or to the Chan cellor of the Exchequer, if it is to consist of "new" money, than it was in the past. The second is that the Hong Kong Government should raise a loan in the City with the full backing and guarantee of HMG. This course would not involve any direct contribution by HMG, but a guarantee, presumably through ECGD, could have the same effect of showing HMG's confidence in the future of the Colony and might adequately achieve therefore the necessary political effect. If we were to
CONFIDENTIAL
/ proceed
...
Page 15Page 16
No comments yet.
Private notes are available after approval.