TNAG-1501-FCO40-2059-Guangdong-nuclear-power-station-project-at-Daya-Bay-safety-c-1986 — Page 92

CONFIDENTIAL

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AUTHORISATION TO PROCEED (BY WHICH POINT THE CONTRACTS AND LOAN

AGREEMENT MUST BE BOTH SIGNED AND EFFECTIVE) IS 7 OCTOBER. ON 17

OCTOBER THE GEC LETTER OF INTENT EXPIRES. ON 1 NOVEMBER GEC'S

MEMORANDUM OF UNDERSTANDING ON PRICES CEASES TO APPLY AND WOULD

HAVE TO BE RENEGOTIATED IF CONTRACTS WERE NOT EFFECTIVE BY THAT

DATE. GEC

WILL BE CONCERNED NOT TO MISS THESE DATES. IF HMG COULD BE SHOWN

TO HAVE DELIBERATELY CAUSED DELAY BEYOND THEM WE COULD FACE

CLAIMS FOR FINANCIAL COMPENSATION.

4.

CURRENTLY THE FRENCH PRIORITY IS TO ACHIEVE CONTRACT

SIGNATURE AS SOON AS POSSIBLE AND THEY WILL BE RELUCTANT TO SEE

ANY STEPS TAKEN WHICH COULD JEOPARDIZE THIS. HOWEVER WE SHALL BE

MEETING THEM ON 11 AUGUST TO BRING HOME THE CONTINUING FORCE OF

THE POLITICAL PRESSURES IN HONG KONG, AND THE POTENTIAL

DISADVANTAGES IF CONTRACT SIGNATURE PRECEDED THE UMELCO REPORTS.

5.

IN DRAWING UP OUR STRATEGY WE HAVE ASSUMED THAT THE

UMELCO REPORTS CAN BE PRODUCED BY MID-SEPTEMBER AND DEBATED (AS

WE ASSUME THEY WILL) BY END SEPTEMBER. THIS APPEARS TO BE

CONSISTENT WITH TIMINGS ENVISAGED IN YOUR TELNOS 168 TO PEKING AND

2242 TO US. WE SHOULD BE GRATEFUL FOR YOUR CONFIRMATION THAT

THIS WILL COMPLETE THE POLITICAL STEPS THAT NEED TO BE TAKEN IN

HONG KONG BEFORE SIGNATURE IF THE ADVERSE POLITICAL CONSEQUENCES

WHICH YOU FORESEE ARE TO BE AVOIDED.

6.

(A)

(B)

(C)

ON THIS BASIS WE THINK OUR STRATEGY SHOULD BE:

FOR US TO KEEP OUR FINGER ON THE COMMERCIAL PULSE SO AS

TO MONITOR THE PACE OF NEGOTIATIONS, AND DISCREETLY TO

SLOW IT DOWN IF NEED BE:

FOR YOU TO KEEP CLOSELY IN TOUCH WITH THE HONG KONG SIDE

OF THE JVC

(EG. SIR JACK CATES) TO MONITOR PROGRESS ON THAT FRONT:

FOR PEKING, WHEN THEY RESPOND TO ZHOU PING (SEE BELOW) TO

REFER APPROVINGLY TO WHAT WE UNDERSTAND XU JIATUN TO HAVE

SAID EXPRESSING CHINESE WILLINGNESS TO ENVISAGE A SHORT

DEFERRAL IN CONTRACT SIGNATURE (HONG KONG TELNO 2405),

GIVEN THE EFFECT ON PUBLIC ATTITUDES TO THE PROJECT IN

HONG KONG IF SIGNATURE PRECEDED THE PRODUCTION OF REPORTS

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CONFIDENTIAL