TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 29

CONFIDENTIAL

Foreign and Commonwealth Office London SW1

Telephone 01-

234

fill

K W Cotterill Esq

Export Credits Guarantee Dept Aldermanbury House

Your reference

Our reference

Date

1KK2/4

9 October 1973

Dear Ven

HONG KONG: MASS TRANSIT SYSTEM

232 1.

PA

15.€

Thank you for sending me a copy of your letter to Frank Glaves-Smith of 5 October about ECGD's tentative contacts with the Japanese. We do not in the FCO have any information about the Japanese pre-emptive bid beyond what is available to you. Clearly the Hong Kong Government regard it as serious and will expect us to respond quickly or not at all.

2.

You say that you deduce that the Japanese have the same doubts about the fixed price approach as we do; but the enclosure to your letter also appears to imply that the Japanese regard their pre-emptive bid as having put them ahead of the game. The implication of paragraphs 3 and 4 of their telegram seems to be that we are now the demandeurs and that if we want a slice of the Japanese cake, we had better hurry up, and accept whatever part of the work the Japanese choose to offer us. Whether this is the right climate for us to work in is for you and the DTI to judge; but it does seem to imply accepting that our position is weak.

3. If finally the negotiations with the Italians break down we will have to review our position, but I do not think it is necessarily as weak in political terms as the Japanese suggest.

Copy to:

FW Glaves-Smith Esq DTI Miss M J Lackey OBE CRE2 DTI TW Aston Esq CMG HONG KONG G F Finlayson Esq

TRED FCO

CONFIDENTIAL

A C Stuart

Hong Kong & Indian Ocean Department