TNAG-0508-FCO40-573-Construction-of-underground-railway-system-in-Hong-Kong-1974 — Page 133

GRS 265

PRIORITY

CYPHER CAT A

TOKYO 1405002

CONFIDENTIAL

CONFIDENTIAL

TO PRIORITY ECGD TEL NO EXCED

RECEIVED IN REGISTRY No.52

OE14 MARCH 74.

REPEATED FOR INFO TO FCO.

1HKK 21/2

(36)

AR Squan has discussed the possible sinister implications with

îk Royce

A 401

•) BU

noted Jj.

· Apach

FOLLOWING FOR COTTERILL FROM MCGHIE. HONG KONG MASS TRANSIT SCHEME.

1. WEEDON AND WRIGHT SEEM SATISFIED WITH THE SEPARATE TALKS THEY HAVE HAD WITH MITI AND REPRESENTATIVES OF THE JAPANESE CONSORTIUM, THE JAPANESE THROUGHOUT MAINTAINED THE FICTION THAT THE BRITISH HAD TAKEN THE INITIATIVE IN THIS APPROACH. WEEDON WAS PREPARED TO GO ALONG WITH THIS. THE JAPANESE CONFIRMED THAT THEY ARE THINKING IN TERMS OF A BRITISH PARTICIPATION OF AROUND 10% TO 15% ON THE MECHANICAL AND ELECTRICAL EQUIPMENT SIDE ON A A

SUB-CONTRACTING BASIS. THEY DO NOT WISH TO INVOLVE THE ITALIAN SIDE OF THE ANGLO-ITALIAN CONSORTIUM. GEC WERE INVITED TO MAKE FROPOSALS AS SOON AS POSSIBLE ON THE RANGE OR PRODUCTS OR DISCIP-

LIMES THEY COULD OFFER.

REF.

NEXT

RFF

2. THE REASONS FOR THIS TORTUOUS JAPANESE APPROACH HAVE NOT

EVERCED CLEARLY BUT CEC CONSIDER THAT HAVING PUT IN A FIXED PRICE PRE-EMPTIVE BID, THE JAPANESE HAVE NOW REALISED THAT THEY CANNOT POSSIBLY CARRY OUT THE CONTRACT WITHOUT HEAVY LOSS, GIVEN HEAVY ESCALATION IN COSTS FOLLOWING THE ENERGY CRISIS. IT IS CONCEIVABLE THAT THEY MAY WISH TO ATTEMPT TO RENEGOTIATE WITH THE HONG KONG GOVERNMENT AND WISH TO INVOLVE THE BRITISH TO ASSIST THEM WITH THIS. IT MAY NOT BE WITHOUT SIGNIFICANCE THAT MITI WAS REPRESENTED BY KOINO WHO LED FOR THE JAPANESE SIDE DURING THE OFFICIAL TALKS

WITH MR CHATAWAY ON INVESTMENT MATTERS WHICH OF COURSE INCLUDED

JOINT VENTURES IN THIRED COUNTRIES.

3. THE JAPANESE HOPE THAT SECRECY CAN BE OBSERVED ABOUT THESE PRELIMINARY EXCHANGES, THAT NO FURTHER REFERENCE SHOULD BE MADE TO THEM AND THAT GEC PROPOSALS SHOULD COME OUT OF THE BLUE. THIS MAY RE BECAUSE OF PRESENTATIONAL REASONS WITH THE REST OF THE LARGE

JAPANESE CONSORTIUM.

FULLER REPORT FOLLOWS BY BAG.

WARNER.

EXCED DISTN

HKIOD

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