TNAG-2144-FCO40-3063-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-1990 — Page 54

CONFIDENTIAL

HKC 182 12

222

033642

MDHIAN 7719

CONFIDENTIAL

FM HONG KONG

TO DESKBY 051200Z FCO

TELNO 3223

OF 05100OZ NOVEMBER 90

INFO IMMEDIATE PEKING, UKREP JLG HONG KONG

MNG

TOW CAD QE

༣ ;

PERSONAL FOR PAUL HKD FROM GOVERNOR

PADS DISCUSSIONS : THE WAY FORWARD

1. FOLLOWING THE CONCLUSION OF THE PADS DISCUSSIONS ON 25 OCTOBER, AN INTERESTING EDITORIAL APPEARED IN THE COMMUNIST NEWSPAPER WEN WEI BAO ON 26 OCTOBER. THIS STATED THAT THE EXPERT DISCUSSIONS SHOWED THAT SINO-BRITISH RELATIONS WERE MOVING IN THE RIGHT DIRECTION. IT GAVE THE VIEW THAT THE OBJECTIVE OF THE TALKS WAS TO ENSURE THAT THE SAR WOULD HAVE SUFFICIENT FINANCIAL RESERVES AND COULD OPERATE NORMALLY AFTER 1997. THE WORK OF THE BRITISH SIDE WAS TO PROVIDE SUFFICIENT INFORMATION TO PROVE THIS AND TO SHOW THAT THE PROJECTS WERE COST-EFFECTIVE. SOME IMPORTANT INFORMATION ABOUT THE FINANCIAL ARRANGEMENTS AND THE SCHEDULES FOR REPAYMENT OF DEBTS WAS STILL NOT AVAILABLE. BUT HONG KONG PEOPLE WERE GLAD THAT, AT THE END OF THE DISCUSSIONS, THE HONG KONG GOVERNMENT HAD RECOGNISED THAT THE CHINESE SIDE WERE INTERESTED IN THE FISCAL POSITION WHICH THE SAR WOULD INHERIT, AND THAT IT WAS WILLING TO CONTINUE TO PROVIDE MORE INFORMATION TO PUT CHINESE HEARTS AT EASE.

2. WE WOULD BE UNWISE TO READ TOO MUCH INTO THIS IN TERMS OF SUBSTANCE. BUT IT CONFIRMS OUR IMPRESSION THAT THE ATMOSPHERE IMPROVED TOWARDS THE END OF THIS FIRST ROUND OF DISCUSSIONS. WE CONTINUE TO RECEIVE INDICATIONS THAT AT THE SEPTEMBER MEETING ON HONG KONG, THE CHINESE POSITION WAS NOT BASICALLY UNFAVOURABLE TO PADS. BUT THE CHINESE GOVERNMENT CLEARLY WANT TO BE SATISFIED ON FINANCING, AND THE EXPERTS WERE SENT TO SEE WHETHER HOLES COULD BE PICKED IN THIS ASPECT OF OUR PLANS IN PARTICULAR. THE CHINESE ALSO NO DOUBT WISH TO FEEL THAT THEY HAVE GREATER CONTROL OVER PADS.

3. WE ALSO SUSPECT THAT THE CHINESE ARE WORRIED THAT A STRAIGHT INDICATION OF QUOTE SUPPORT UNQUOTE FOR THE AIRPORT AND RELATED PROJECTS MIGHT COMMIT THE PRC IN FINANCIAL TERMS. THEY WILL NEED CONVINCING THAT OBLIGATIONS TAKEN ON BY THE HONG KONG GOVERNMENT

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