Dem Bozum,
831 A
Mrr Mailman
Foreign and Commonwealth Office
London SWIA 2AH
LAW
FLIC
29 May 1979
DEFA
30 MAY 1979
ARTMEN
HKK 2431
RECEIVED IN EGOT NO. 51
Vietnamese Refugees
DESK OFFICE" INDEX
PA
NOM
Hugh Cortazzi's letter of 28 May noted that the last Government had cancelled all future aid for Vietnam but that it had maintained commitments to make finance available under the Aid and Trade Contingency Provision (ATCP) for turbine generators and ships.
The present position on these contracts is as follows:
(a) Turbine Generators
The total value of the contract was £9 million, for three units. £2.9 million (30 per cent) was to be provided from aid funds. The contract has been completed, the units have been shipped, and final payments received.
(b) Ships
The total value It was to be
Austin and Pickersgill, a subsidiary of British Shipbuilders at Sunderland, contracted so supply 4 x 14,000 DWT general purpose cargo ships of standard design. of the contract was about £22 million. financed by some £4 million aid, a £4 million loan, backed by ECGD, and the balance of £14 million, a normal commercial loan.
The others Approxi-
One ship has been delivered to the Vietnamese. are scheduled for delivery in late 1979or early 1980. mately £2.3 million of the ATCP money has still to be paid.
If this money is not paid, the Vietnamese would no doubt argue that we were in breach of our obligations in the exchange of Notes with them in February 1979 concluding the financial aspects of the contract. They might accordingly no longer make payments under the contract. Their obligations could amount to as much as £14 million.
If
British financial and shipbuilding interests involved would be likely to demand compensation for losses they would sustain. the order were not proceeded with, there would be employment con- sequences in the Sunderland area, where unemployment is at present at 14%. 50% (1,500) of Austin and Pickersgill's work-force are occupied in building the remaining three ships.
In the current severely depressed state of the ship-building market, it is unlikely that the ships could be sold off other than at a loss. If they were to be disposed of at cut prices (through--
BG Cartledge Esq
/ aid
I
t
CONFIDENTIAL
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