TNAG-0949-FCO40-1168-Effect-of-nuclear-exports-to-China-on-Hong-Kong-Guangdong-nu-1980 — Page 89

5. THE FINANCIAL LOAN TERMS MUST BE ATTRACTIVE.

17. UNDER ANY OTHER BUSINESS', MR LINGAFELTER REPORTED THAT HE HAD ARRANGED FOR THE CHINESE TEAM TO VISIT THE US FOR 15/18 DAYS BEGINNING THE 20/25 AUGUST. THE TEAM WOULD VISIT WASHINGTON DC FOR TALKS WITH THE AMERICAN GOVERNMENT AND THEY WOULD VISIT TROJAN, PRAIRIE ISLAND, CALLAWAY, A FUEL FABRICATION PLANT AND A REACTOR SIMULATOR. THE CHINESE INTERPOLATED THAT THE MAIN PURPOSE OF THE VISIT WAS TO GO TO WASHINGTON FOR A DISCUSSION

WITH THE US GOVERNMENT CONCERNING NON-PROLIFERATION AND SAFEGUARDS

INSPECTION. LINGAFELTER TOLD US THAT RECENTLY THE AMERICAN SECRETARY OF STATE HAD AUTHORISED THE US AMBASSADOR IN PEKING TO

GIVE A FORMAL MESSAGE TO THE CHINESE GOVERNMENT TO THE EFFECT

THAT THE USA WOULD LIKE TO FIND A FORMULA WHICH WOULD GIVE AN AGREEMENT ON THIS QUESTION OF SAFEGUARDS INSPECTION. LINGAFEL TER

SAID THAT THIS WAS DONE WITH PRESIDENT CARTER'S AGREEMENT, THAT THE PRESIDENT HAD PLANNED TO RAISE IT WITH THE CHINESE PREMIERE WHEN THEY MET TOGETHER IN JAPAN BUT TIME DID NOT PERMIT THIS. THE

CHINESE TEAM NOW WISH TO GO TO WASHINGTON TO HEAR THE MESSAGE DIRECTLY. THEY ASKED CLP TO ACCOMPANY THEM. KADOORIE REPLIED THAT THEY WOULD NOMINATE SOMEONE TO JOIN IN THE VISIT IF HE COULD FIND SOMEONE WHO WAS AVAILABLE DURING THAT PERIOD OF THE YEAR.

18. LINGAFELTER WENT ON TO EXPLAIN THAT THERE WERE EXAMPLES WHERE THE US GOVERNMENT HAD BEEN ABLE TO RECONCILE THIS GENERAL WISH TO SEE SAFEGUARDS INSPECTION WITH ITS PARTICULAR WISH TO ACCOMMODATE INDIVIDUAL COUNTRIES. THE SENSE OF HIS MESSAGE WAS THAT THE AMERICAN STATE S DEPARTMENT WANTED TO FIND A SOLUTION IN

THIS CASE ALSO.

19. I COMMENTED THAT IF THE BRITISH GOVERNMENT WAS INVOLVED IN A SHARE OF THE PROJECT THEN THAT BY ITSELF MIGHT BE SUFFICIENT REASON FOR THE AMERICANS TO WAIVE THEIR NORMAL NON-PROLIFERATION RULES. FROM THE DISCUSSION WHICH FOLLOWED I CAME TO THE CONCLUSION THAT THE PREFERRED SUPPLIER OF THE NUCLEAR ISLAND IS WESTINGHOUSE, BUT THE CHINESE CANNOT SETTLE UPON THAT UNTIL THEY HAVE BEEN SATISFIED ON THIS SAFEGUARDS POINT.

22. THE NEXT MEETING OF THE EXEUCTIVE COMMITTEE IS FIXED FOR

MONDAY 25TH AUGUST.

21. IN SUMMARY, THE PROJECT IS NOW QUITE TRANSFORMED. WE ARE VERY CLOSE TO HAVING IT AGREED THAT BOTH PWR STATIONS WILL BE SUPPLIED BY THE BRITISH BY USING NEGOTIATED CONTRACTS WITH THE NUCLEAR FUEL BEING SUPPLIED ON A SIMILAR BASIS, AND ALL THIS SUBJECT ONLY TO REASONABLE ASSURANCES ON PRICE AND SOME FORM OF UK GOVERNMENT PARTICIPATION IN HKNIC. SIR LAWRENCE KADOORIE TOLD ME AFTER THE MEETING THAT HE IS GOING TO PROPOSE TO THE BRITISH GOVERNMENT THEY THEY, OP AN AGENT OF THE GOVERNMENT, SHOULD TAKE UP FART OF THE EQUITY OF HKNIC.

ENDS.

CONFIDENHAL

/ FCO

PLEASE