TNAG-0950-FCO40-1169-Effect-of-nuclear-exports-to-China-on-Hong-Kong-Guangdong-nu-1980 — Page 227

CONFIDENTIAL

5. A DECISION IS THEREFORE ESSENTIAL BY THE END OF SEPTEMBER OR EARLY OCTOBER ON EITHER :-

A) HMGS WILLINGNESS AT LEAST TO DISCUSS THE POSSIBILITY OF

PARTICIPATION AND ITS TERMS WITH THE CHINESE, OR

B) ON HOW U.K. INTERESTS COULD STAY IN THE RACE, AND POLITICAL DAMAGE BE AVOIDED WITHOUT PARTICIPATION.

6. WITH REGARD TO (A) THE EXISTENCE OF AN ALMOST UNDRAWN-ON ECGD BACKED LINE OF CREDIT OF US DOLLARS 1.4 BILLION PLUS THE REMAINDER OF THE U.S. DOLLARS 5 BILLION COVER NEGOTIATED BY MR. VARLEY IS RELEVANT: WITH REGARD TO (B) THE PROJECT IS DEPENDENT ON HONG KONG ACCEPTING THE SUPPLY, THOUGH THE APPLICATION OF THIS LEVERAGE WOULD BE A MATTER OF EXTREME

DELICACY,

7. LORD CARRINGTON'S VISIT WILL THEREFORE BE TIMELY EITHER:- (A) AS A PRELIMINARY TO REACHING A DECISION IN LONDON AFTER THE VISIT, TO SOUND OUT THE CHINESE LEADERS ON THE IMPORTANCE THEY ATTACH TO THE PROJECT AND WHETHER PARTICIPATION IS ESSENTIAL TO THE U.K. OBTAININING A MAJOR SHARE OF THE CONTRACT. ALSO WE WOULD LIKE TO HAVE A CLEARER IDEA OF THE POLITICAL SIGNIFICANCE THEY SEE IN THE PROJECT FOR RELATIONS BETWEEN CHINA AND HONG KONG, SUBJECT TO PEKING'S VIEWS, I PRESUME THIS WOULD REQUIRE AN INTERVIEW WITH GU MU WITH THE SUBJECT NOTIFIED IN ADVANCE. OR: (B) TO ASSURE THE CHINESE OF HMG'S WILLINGNESS IN PRINCIPLE TO DISCUSS PARTICIPATION (WHICH WOULD CERTAINLY IMPRESS THE CHINESE, AND I PRESUME THE U.K. AND H.K. PRESS).

B. IF THE SECRETARY OF STATE DOES NOT MENTION THIS PROJECT IT

WOULD CREATE A MOST UNDESIRABLE IMPRESSION OF INDIFFERENCE, AND

I STRONGLY RECOMMEND THE VISIT BE USED TO PUSH IT FORWARD.

9, WHILE THERE SHOULD BE NO QUESTION OF SIR LAWRENCE KADOORIE

ACCOMPANYING THE SECRETARY OF STATE, I CERTAINLY RECOMMEND THEY

MEET IN HONG KONG AND DISCUSS HOW THE LATTER SHOULD TAKCKLE THE

CHINESE.

10. FCO PLEASE PASS ADVANCE COPIES TO DOI, DOT AND DEPT OF

ENERGY.

MACLEHOSE

LIMITED

HK & GD

FED

JNU

TRED

PS

PS/LPS

PS/MR BLAKER PS/PUS

SIR E YOUDE

MR PH MOBERLY

(ADVANCED AS REQUESTED}

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CONFIDENTIAL

COPIES TO:

DOI DOT

D/ENERGY