SECRET
w/355
Chancellor of the Exchequer
DNR
Frime Minister
Mr Royle, FCO
HONG KONG MASS TRANSIT SYSTEM
You will have seen the developments over this since I
minuted on 26 November and, in particular, the Governor 'S
telegram No 1417. Cfficials in the Treasury, 700 and my
Department have looked at the Governor's proposal for a
Luarantee from HG in the UK that would enable the Anglo-
Italian Consortium to bid a fixed price of Hong Kong
5,000 million. Their conclusions are set out in the minute
to me of which I attach a copy. I agree with those
conclusions.
I am sure the Chancellor of the xchequer
will do co too. Mr Royle, in ir Alc Douglas-lone's
absence has said that the 700 will abide by Treasury and
LEI's advice on this. This means that we do not offer a
qunrunted as suggested by the Governor. I have, however,
in the message of which a copy is also attached, asked him
to do the best he can with the material he has. If he
cannot hold the position I would then suggent we try to
got some business for UK firms out of any Japanese contract.
10/12/73
Secretary of State
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