TNAG-0425-FCO40-471-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 179

CHRISTIAN TELEGRAM TO HONG KONG

CONFIDENTIAL

No 38 of 24/10

363

cc Mr S L Edwards CRE2

Mr R Fell ECGD

Mr A C Stuart FCO Mr H Hochfelder OFP

259

PRIORITY

For Aston from Glaves-Smith.

267

I have sent you a Creda telegram today in response to your

Creda 134.

Following for your personal information.

FCO lawyers advise that Hong Kong is legally able to give a

guarantee which would not bind HMG. But some moral commitment

on HMG would remain unless we publicly disclaimed responsibility,

which would itself be embarrassing. Moreover, we have the

ultimate power of veto over the Hong Kong Government's actions,

and it might be argued that we should use it. For these reasons,

the giving of the contract to the Japanese with a Hong Kong

Government guarantee attached could be embarrassing politically

in a number of ways.

Our provisional view, not yet approved by Ministers, is that as

soon as a respectable counter offer from an Anglo-Italian group

can be mounted, we shall make use of this potential embarrassment,

and also of course of the fact that a major concession has been

made to the Japanese, to get the Hong Kong Government to be at

least as flexible over other conditions which we may find difficul ty

in accepting.

A major meeting with the Italians will take place in London on

31 October. It is not to be expected that a detailed bid on the

But we believe Japanese lines will be mounted within the 45 days.

that the Anglo-Italian group will have proposals to put forward

sufficiently attractive to keep them fully in the competition.