TNAG-2256-FCO40-3240-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-gene-1991 — Page 39

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MDHIAN 9196

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INFO IMMEDIATE PEKING, UKREP JLG HONG KONG

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PERSONAL FOR BURNS, AUSS, FROM GOVERNOR

PEKING PERSONAL FOR AMBASSADOR

UKREP JLG HONG KONG PERSONAL FOR GALSWORTHY

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YOUR TELNO 549 : PÁDS: THE WAY FORWARD: MEETING WITH LU PING ON 23 MARCH

1. WE WILL BE DOING VERY WELL INDEED IF WE REACH FULL, OR CLOSE TO FULL, AGREEMENT TOMORROW. SHOULD WE DO SO I TAKE YOUR POINT ABOUT THE VALUE OF SOME RECORD OF WHATEVER IS AGREED ON THE FISCAL RESERVES. HOWEVER WE SHOULD HAVE TO BE VERY CAREFUL ABOUT HOW WIDE TO CAST THE NET ON WHAT IS RECORDED FORMALLY AND AGREED TO SPECIFICALLY BY THE CHINESE. IT WOULD BE VERY DIFFICULT, I AM SURE, TO NEGOTIATE WITHOUT ENDLESS DISCUSSIONS A TEXT ACCEPTABLE TO BOTH SIDES THAT COVERED ALL THE DETAILS. I AM INSTEAD INCLINED, IF WE DO REACH A SATISFACTORY CONCLUSION AT FANLING, TO TELL LU THAT I WILL WRITE TO CONFIRM OUR UNDERSTANDING. THIS WOULD GIVE ME AN OPPORTUNITY TO CLEAR THE TEXT WITH YOU, AND ALSO WITH EXCO (WHICH WILL BE ESSENTIAL).

2. I DOUBT IF ANYTHING MUCH NEED BE SAID IN SUCH A LETTER ABOUT THE AIRPORT AUTHORITY AND CONSULTATIVE COMMITTEE. I WOULD PROPOSE TO CONCENTRATE ON THE FINANCIAL ASPECTS. I WOULD REFER TO OUR AIM OF RETAINING A MINIMUM LEVEL OF HKD 14-15 BILLION IN THE FISCAL RESERVES IN 1997 AND SOME SUITABLE FORMULA ON HOW WE WOULD DO THIS (EG WE WOULD EARMARK SUFFICIENT FUNDS TO ENSURE THAT, AT THE END OF EACH YEAR, THERE WAS HK 15 BILLION AT MONEY OF THE DAY PRICES IN THE FISCAL RESERVES). I MIGHT ALSO NEED TO SAY SOMETHING ON THE LIMIT OF HONG KONG GOVERNMENT BORROWING UP TO 1997. THESE POINTS WOULD BE IN RETURN FOR FULL CHINESE SUPPORT FOR THE AIRPORT AND AN ASSURANCE THAT THE TASK OF CARRYING OUT THE PROJECT IN THE PERIOD UP TO 1997 WOULD BE UNDER THE EFFECTIVE CONTROL OF THE HKG. I WOULD ALSO WISH TO RECORD A CHINESE COMMITMENT THAT, IF ASKED BY INVESTORS, THEY WOULD CONFIRM THAT OBLIGATIONS EXTENDING BEYOND 1997 WOULD BE HONOURED IN THE WAY SET OUT IN ARTICLE 160 OF THE BASIC LAW.

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