of the Chicago Convention; that the fixed nature of the commitment
(the grant of traffic rights must be maintained for at least the term
of the loan) might prove embarrassing to us in our future aviation
dealings with the Dutch; and that as a precedent it could be
dangerous in that we ourselves might be faced with similar requests
when seeking to obtain or maintain traffic rights in less developed
countries.
26.
A continental loan would raise similar points to those noted in
the case of a loan on the London market (see paragraphs 20-21 above).
In the circumstances of Hong Kong it seems probable that awkward
questions would be asked about the Colony's future and a guarantee
by HMG sought. The mere arrangement of the loan by HMG is unlikely
to be regarded by Hong Kong as adequate recognition of our own
aviation interests unless accompanied by a subvention to reduce
interest charges (although it is conceivable that lower continental
interest rates would reduce, if not dispense with the need for, such
a subvention).
The Case for and against Assistance
27.
Under the "Colonial formula" adopted at the Colonial Civil
Aviation Conference, 1947, colonial administrations were made primarily
responsible for the construction, maintenance and operation of civil
aviation works and services in their territories. The "formula" was
designed to apportion the shares in which costs, both capital and
recurrent, of civil aviation works might be apportioned between a
territory and the U.K. on the basis of the respective benefits they
derive from the facilities. Many intangible factors are involved
and the formula is capable of producing a wide range of answers by
It is more suited to assessing grant aid
different manipulation.
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