WE SHOULD MAKE CLEAR FROM THE OUTSET THAT THE OBLIGATION TO
PROVIDE INSURANCE WOULD HAVE TO BE CONSIDERED BY ALL THE PARTICI-
PANTS IN THE PROJECT AND PARTICULARLY BY THE SUPPLIER THE
NUCLEAR ISLAND, WHO, IF NOT BRITISH, MAY WELL HAVE TO INVOLVE HIS OWN GOVERNMENT, GIVEN THE MANITUDE OF THE INHERENT RISK.
MINISTERS WOULD CERTAINLY BE UNHAPPY ABOUT GIVING A BLANKET
THIRD PARTY GUARANTEE AGAINST A WORST-CASE DISASTER.
ALTHOUGH THIS WOULD OBVIOUSLY HAVE TO BE SETTLED IN DISCUSSIONS
BOTH WITHIN WHITEHALL AND BETWEEN HMG AND THE CHINESE, WE WOULD
BE UNLIKELY TO ACCEPT ANY THIRD PARTY OBLIGATION INSIDE CHINA
THOUGH IT MAY BE POSSIBLE TO OFFER THE SAME SORT OF UNDERTAKING
TO THE HONG KONG GOVERNMENT, AS IT IS CURRENTLY AVAILABLE TO
THE UK POPULATION. IN ANY EVENT, WHEN DECIDING WHETHER HMG WOULD WISH TO BECOME INVOLVED IN SUCH INSURANCE MATTERS,
MINISTERS WILL HAVE TO WEIGH UP CAREFULLY THE BALANCE BETWEEN
THE ECONOMIC/PILITICAL ADVANTAGES AND THE POTENTIAL LIABILITY,
UNTIL THE COMMERCIAL STRUCTURE AND ALLOCATION OF WORK AND RISK IS
CLEARLY ESTABLISHED, HMG CANNOT TAKE ANY FINAL VIEW ON SUCH
MASSIVE POTENTIAL LIABILITIES AS WOULD BE INVOLVED. WE LOOK TO
GEC AND OTHER INTERESTS TO ESTABLISH A VIABLE COMMERCIAL
PACKAGE. ONLY WHEN THE FEASIBILITY STUDY AND COMMERCIAL PACKAGE
HAVE BEEN COMPLETED CAN HMG FORM A VIEW. MEANWHILE I THINK CARE.
IS NEEDED TO ENSURE THAT NO COMMITMENTS ARE GIVEN UNTIL THEY
HAVE BEEN PROPERLY CONSIDERED BY HMG.
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