TNAG-0949-FCO40-1168-Effect-of-nuclear-exports-to-China-on-Hong-Kong-Guangdong-nu-1980 — Page 13

CONFIDENTIAL

TIALquest

the credibility of SLK 80 the Ambassador would be quested to give

his own personal views only. At the same time, he would be asked for

advice on how HMG could make a general approach to the Chinese.

Mr Manzie was ooncerned that Dr Marshall, Sir Lawrence Kadoorie and

Mr Stones were implying a commitment from HMG which went far beyond

what Ministers had approved. Given Dr Marshall's position in the

UKAEA, it would not be at all surprising if the Chinese jumped to

the eronous impression that he was speaking wihh the knowledge and

authority of HMG.

Mr Brown to draft

a clear telegram

The meeting then considered the 4 main issues identified in Mr Brown's

Disaster liability and equity participation were considered

paper.

to be at least partially inter-related. JNU said that under

International Conventions, on the operating company, absolute liability

was clearly placed. However, given the scale of risks involved

Government underwriting of operator liabilities was normal. An

alternative would be to seek to place liabilities on the Government

of the nuclear island supplier.

The international position on operating company liability, reinforced

arguments of normal commercial practice that HMG should not take

equity. At the same time, HMG might have to underwrite some part of

the share issue. However, some political gesture by the Hong Kong

Government and HMG might be necessary and it was felt that the

Hong Kong Government would only take equity as a political gesture

if this were approved by HMG. Sir Lawrence Kadoorie himself was not

inclined to take any equity, and ECGD would be concerned if he did so

given CLPS debt/equity ratio and its indebtedness to the UK.

A furthe