TNAG-0426-FCO40-472-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 165

د اقع

Mr Youde

Coude

PS/Mr_ Royle

SECRET

M. Strait

Tels

Qmended

aund

In vain

P/A Bes/12

as

despatched

'48'

agreed

Anas Guest

10712

HONG KONG MASS TRANSIT SYSTEM

(x6)

1.

Flag

Flag B

347

I have discussed the Governor's telegrams nos. 1417 and

1418 with the Treasury, the DTI and ECGD. We have also discussed

them with Mr Royle.

2.

Neither the Treasury nor the DTI are prepared to give the

sort of open-ended guarantee which the Governor now requires. The

Governor's withdrawal in his telephone conversation with Sir D Watson

of the suggestion that, if the worst came to the worst, we could

cancel the guarantee, has strengthened their conclusion. Planning

on the worst case this could cost the Treasury an extra £40 million

and increase the so-called subsidy to exports to almost 40%.

The

DTI are preparing a telegram accordingly from their Secretary of

State to the Governor and a submission to the Prime Minister.

3.

Following the discussions with Mr Royle, I told the DTI

and the Treasury that we would have wished to see a guarantee if,

in their commercial judgment, this had been possible. But in the

circumstances the FCO would not wish to challenge their decision.

I pointed out that the Prime Minister would need to be satisfied

not only that we had gone as far as was commercially prudent, but

also that we had taken all possible steps on the political net to

push the Governor towards validation of the Anglo-Italian bid. I

accordingly offered the attached passage for the DTI's message to

the Prime Minister. This has been accepted by the DTI.

SECRET

14.

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