TNAG-0279-FCO40-315-Visit-of-Secretary-of-State-for-Foreign-and-Commonwealth-Aff-1970 — Page 66

CONFIDENTIAL

BACKGROUND

The Hong Kong Government has asked us for assistance in

financing a £13 million project for developing this airport, which

is second only to Heathrow in its importance to British aviation

interests because of the value of traffic rights there. The

request is for a loan of about £6 million on favourable terms

(i.e. over 15 years at interest below the market rate); this sum

would finance the extension of the runway so that it can take the

new generation of jumbo and supersonic aircraft. They have also

asked for a grant of about £250,000 from aid funds towards the cost

of replacing the aeronautical communications system. In 1959

we gave Hong Kong an interest free loan of £3 million to assist in

building the present runway.

2. For two years attempts have been made without success at

official level to obtain a measure of assistance.

The Treasury

the

have considered that in our present economic circumstances Govern-

mont expenditure should not be increased for this purpose;

necessary funds must be found from existing sources. The only

possible major source of existing funds is the Aid Programme;

the ODM do not consider Hong Kong to be "aidworthy" and hold

strongly to the view that Board of Trade votes for civil aviati on

are the appropriate source for expenditure in aid of British

aviation interests. Board of Trade votes have been effectively

pruned in past exercises to contain government expenditure and

there is no money to spare for additional projects; even a minor

allocation, it is claimed, could only be found at the expense of

aviation development in the UK. Other quasi or non-governmental

sources

CONFIDENTIAL