CONFIDENTIAL
the United Kingdom's bargaining position, or which maintaining the inter-
national rights of British airlines (including Hong Kong's) depends. It'
would certainly bring adverse reactions to the dilution of value of their
existing rights, from such countries as Italy, Germany, France, Switzerland
gor Australia whose airlines already serve Hong Kong. Hong Kong participates
in United Kingdom negotiations on scheduled service rights involving the colony
* for which, other States can hold HMG responsible internationally as United
Kingdom territory under the Chicago Convention. Control there of charter
flights is in Hong Kong's own hands! Apart from traffic rights, all States
o party to the relevant multilateral instruments have rights for technical
ilandings by civil, aircraft in Hong Kong.
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Hong Kong has sought a financial contribution from the United Kingdom
a for its civil airport development to accommodate jumbo-jets and supersonics.
t This was, refused because of the Colony's own interest in the development and
Il since, it was able to bear the cost itself. If HMG wished to assist Hong Kong
outside, the field of the EEC negotiations, there might be a wish to re-examine
this, though there are no existing funds available for a United Kingdom con-
tribution.
- 31. Another suggestion is that funds for investment in order to diversify
Hong Kong's industry might be found either from the Colony's large reserves or
from provision of aid from United Kingdom. The use of development aid to help
a dependency as wealthy as Hong Kong is at present would clearly need special
justification and should be avoided if at all possible. However, up to now
Hong Kong has not found difficulty in raising capital for investment, and has
not been short of foreign exchange. Diversification has not been limited by
lack of capital, but by her lack of natural resources and her social structure.
But if she invests in new industries, she will still require an outlet for
their products. The pre-requisite for continued investment in Hong Kong's
industry is primarily confidence in the stability of the colony (and it is
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CONFIDENTIAL
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