E
ECGD REMAIN READY TO ENTER INTO EARLY DISCUSSIONS WITH ANY SUCCESSFUL UK BIDDER WITH A VIEW TO PRODUCING A CONDITIONAL
MITMENT. WE AWAIT THE ANNOUNCEMENT OF THE ADJUDICATION WITH INTEREST.
2. FOR YOUR OWN INFORMATION, MINISTERS ARE STILL CONSIDERING ECGD'S BUDGET FOR THE CURRENT FINANCIAL YEAR HNCLUDING THE ARRANGEMENTS FOR HONG KONG. (SPECIAL ARRANGEMENTS HAVE, AS YOU KNOW, NEVERTHELESS BEEN AGREED FOR BLACK POINT.) EVEN IF THIS MATTER WERE TO BE RESOLVED QUICKLY, ECGD WOULD NOT WISH TO COMMIT COVER FOR SITE PREPARATION IN ADVANCE OF THE AWARD OF A CONTRACT TO A BRITISH COMPANY: ANY COMMITMENT HAS TO BE SCORED IMMEDIATELY AGAINST ECGD'S BUDGET. THUS PRE-EMPTS COVER FOR OTHER BRITISH EXPORTS TO HONG KONG AND ELSEWHERE. ALLEN HAS IN THE PAST SOUGHT TO OBTAIN UPFRONT COMMITMENTS OF THIS KIND, AND WE HAVE TRIED TO DISCOURAGE HIM. HALL (PEP) BRIEFLY EXPLAINED THE DIFFICULTIES TO MCLEOD (FINANCIAL SECRETARY) WHEN HE CALLED ON HIM IN FEBRUARY, FOLLOWING A CONVERSATION ON THESE LINES WITH ALLEN. IF YOU JUDGE IT APPROPRIATE, PLEASE DEPLOY THE PRE-EMPTION POINT WITH OTHERS IN THE HONG KONG GOVERNMENT.
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3. ALSO FOR YOUR OWN INFORMATION, WHILE CREDIT BEYOND EN GHT AND A HALF YEARS IS NOT (NOT) A STARTER, SOME OF ALLEN'S OTHER POINTS, SUCH AS LOCAL COSTS MIGHT (REPEAT MIGHT) BE NEGOTIABLE. BUT EVEN IF ANY OF THESE WERE TO BE CONCEDED (AND ECGD WOULD NEED INTERDEPARTMENTAL AUTHORITY TO DO SO - NOT A FOREGONE CONCLUSION SINCE THEY IMPACT ON EXPOSURE) IT IS NOT POSSIBLE TO GIVE A POSITIVE STEER AT THIS STAGE.
4. FINALLY, AGAIN FOR YOUR OWN INFORMATION, OUR UNDERSTANDING IS THAT OTHER EXPORT CRDIT AGENCIES (ECAS) NCLUDING THE DUTCH (NCM) HAVE TAKEN A FIRM LINE ON THE NEED FOR HONG KONG GOVERNMENT SECURITY. THE ONLY SOFTENING IS THAT NCM HAS RECENTLY INDICATED IT WILL RECONSIDER THE NEED FOR HONG KONG GOVERNMENT GUARANTEE IN THE LIGHT OF THE ATTITUDE ADOPTED BY ECAS. THIS PROBABLY HELPS EXPLAIN PAA'S WISH FOR ECGD TO TAKE A LEAD.
PENTECOST
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EJLNAN 5292
DESTWICHED
2 9JUL 1992
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