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this happening other than by a frank discussion between U.K. Ministers and the Government of Hong Kong - and in particular, with the Queen's representative, the Governor, who is at present on leave in the U.K., and the future Governor who is easily available. What I am suggesting is that in such a discussion the Hong Kong Government should be told quite firmly that this order cannot be permitted to go to the Japanese but that if this decision were to result in Hong Kong suffering financial loss, HMG would try to compensate for this in some measure by providing favourable financial terms.
I am sorry I cannot be more specific but the precise terms of I such an arrangement are, of course, outside my competence. am only describing in general terms what it seems to me must be done if this order is not to be lost by the U.K.
It is certain that the Japanese Government will be prepared to pay a very substantial price to obtain this very valuable prize and frankly to talk of allowing market forces to operate in this case seems to me to be nonsense in the circumstances. Any Japanese offer would certainly be Government subsidised.
It may well be that the Hong Kong Government (at least as at present constituted) would resent this interference in their internal affairs but my argument for so doing would be that the effects of this order going to the Japanese might easily have serious political repercussions. If HMG cannot speak frankly to a Colonial Government, run for the greater part by British expatriates with virtually no democratic control, it seems to me to be a complete abnegation of the U.K.'s responsibilities in this Colony. I feel strongly that the tendency of this Government to act, and react, as if they were running an independent state should be resisted by HMG before our position here becomes quite untenable.
I am sorry to be so outspoken on this rather delicate subject but you asked for my comments. You are, of course, in a better position to judge whether my suggestions are practicable but there are surely times when a firm stand is necessary and I believe this is one. We do, of course, constantly make the points you mention in your last paragraph and this might be effective in a foreign country where I was my country's representative. Here I have no locus standi and HMG's view can only be acceptably given by a British Minister. As regards the realisation of this project, virtually every one outside the Financial Secretary's office is convinced
a) that an underground system is the only answer to Hong Kong's traffic problems and b) that there is no reason why it should not pay for itself. (I enclose a newspaper report of a talk by the Commissioner for Transport to the Hong Kong Rotary on this question).
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