CONFIDENTIAL
106554
MDHIAN 0222
(B)
FAILURE TO DO THIS. IN TALKS WITH KEY JAPANESE PLAYERS (SUCH AS NIPPON STEEL), THE UK FIRMS ARE FREQUENTLY FINDING THAT MITSUI HAD FAILED TO INFORM THEM ADEQUATELY ABOUT THE APPROACH THAT WAS PROPOSED, OR TO ENLIST THEIR SUPPORT. A SIMILAR LACK OF COMMITMENT HAS BEEN APPARENT ON MITI'S PART. IT WOULD BE GOOD TO PRESS MITSUI TACTFULLY TO TAKE THIS ASPECT MORE SERIOUSLY. DIFFICULT DISCUSSIONS ARE IN PROGRESS ABOUT WORK SHARING. THE THREE PARTIES - TRAFALGAR HOUSE, COSTAINS AND MITSUI - CURRENTLY HAVE AN EQUAL ONE THIRD SHAREHOLDING IN THE CONSORTIUM. BUT SEPARATE CONSIDERATIONS APPLY BOTH TO THE QUESTION OF EQUITY PARTICIPATION IN THE FIXED LINK AND TO THE QUESTION OF WORK SHARE. EQUITY PARTICIPATION IS DIFFICULT: IT COULD WELL BE THAT UK INTERESTS WILL PUT UP SIGNIFICANTLY LESS THAN HALF THE EQUITY FOR THE FIXED LINK. BUT TRAFALGAR HOUSE REPORTS THAT MITSUI HAS SEPARATELY CANVASSED A WORK SHARE THAT WOULD GIVE JAPANESE COMPANIES THE LION'S SHARE OF WORK WON BY THE CONSORTIUM - AN 80 : 20 SPLIT HAS SOMETIMES BEEN MOOTED. WE REGARD IT AS EVIDENT THAT A SHARE WHICH GAVE THE UK LESS THAN HALF THE WORK WON BY THE CONSORTIUM WOULD BE UNACCEPTABLE TO HMG. WE WOULD OF COURSE LIKE TO SEE MORE THAN THAT, BUT 50 PERCENT SEEMS A REALISTIC MINIMUM.
THE BRITISH FIRMS UNDERSTAND THIS POSITION VERY WELL, BUT IT WOULD BE USEFUL IF MR RIDLEY COULD CONFIRM THIS PERSPECTIVE AS A CLEAR HMG VIEW.
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DISTRIBUTION
9
ΜΑΙΝ
9
NO DISTRIBUTION MR ADAMS, PEP, DTI MR ROGERS, PEP, DTI
MR GALLAHER, PEP, DTI MR MEADWAY, OT2, DTI MR MCLAREN, FCO
MR ALAN PAUL, HKD, FCO MR DAVIES, FED, FCO COMED
DTI VICTORIA ST
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