4
__CRET
FM HONG KONG
TO DESKBY 13110OZ THE HAGUE
TELNO 009
OF 13095OZ MARCH 91
INFO IMMEDIATE FCO, PEKING
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D
157163 MDHIAN 7731
PLEASE PASS PERSONAL TO GOVERNOR HONG KONG, VISITING PEKING PERSONAL FOR AMBASSADOR AND EHRMAN, VISITING
FCO TELNOS 67 AND 68 TO THE HAGUE AND FCO TELNO 477 TO PADS THE WAY AHEAD
HONG KONG:
1. I SEE THE FORCE OF THE POINT MADE IN FIRST TWO TURS ABOUT NOT REVEALING TOO MUCH OF OUR HAND TOO QUICKLY. THERE MAY WELL BE ADVANTAGE IN NOT MENTIONING ANY FIGURE IN THE LETTER TO LU PING: IT MIGHT EVEN MAKE IT EASIER FOR HIM TO COME TO FANLING FOR FURTHER DISCUSSIONS. I SUGGEST IF WE WERE TO PURSUE THIS LINE THAT PARA 8 OF THE DRAFT LETTER COULD READ SIMPLY :
''NEVERTHELESS, IN RECOGNITION OF YOUR CONCERN I WOULD BE PREPARED TO DISCUSS A FIGURE WHICH WOULD BE LEFT IN THE FISCAL RESERVES IN 1997.!!
THIS WOULD ENTAIL REDRAFTING THE FIRST SENTENCE OF PARA 9 AS FOLLOWS:
''IF WE ARE TO REACH AGREEMENT ON A FIGURE WHICH CAN BE LEFT IN THE RESERVES IN 1997, I WOULD NEED A CLEAR UNDERSTANDING THAT THE OTHER FINANCIAL RESTRICTIONS WHICH THE CHINESE SIDE HAVE SUGGESTED ARE PUT ON ONE SIDE.
2. AS TO THE BROADER OBJECTIVES ALLUDED TO IN FIRST TWO TURS, I THINK IT WORTH STRESSING THAT THE STAKE WE ARE PLAYING FOR IS NO BAGATELLE. CHINESE SUPPORT FOR THE NEW AIRPORT IS CRUCIAL TO ITS SUCCESS. WITH THAT SUPPORT, WE NOT ONLY HAVE THE PROSPECT OF PROCEEDING WITH THE PROJECTS ACCORDING TO PLAN AND WITH A GOOD FOLLOWING WIND (E.G. IN TERMS OF PRIVATE SECTOR INVOLVEMENT) BUT ALSO STAND TO GAIN SIGNIFICANT POSITIVE KNOCK ON EFFECTS ON HONG KONG'S ECONOMIC DEVELOPMENT AND PROSPERITY, AND CONFIDENCE GENERALLY. CONVERSELY, THE DOWNSIDE OF FAILING TO OBTAIN CHINESE SUPPORT COULD IN THE WORST SCENARIO INCLUDE BEING FORCED TO ABANDON THE AIRPORT PROJECT ALTOGETHER, WITH VERY SERIOUS
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