TNAG-2411-FCO40-3506-Proposed-airport-in-Macao-(Macau)-1992 — Page 13

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TEL No.0712156088

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the department for Enterprise

18 Aug 92 16:12 No.011 P.02

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Overseas Trade Services

Mr S Wood

HM Treasury

Parliament Street

London SW1P 3AG

Department of

Trade and Industry

Ashdown House 123 Victoria Street London SW1E 6RB

Enquiries 071-215 5000

Telex: 8813148DIHQ G

Fax: 071-828 3258

Direct line

Our ret 071--215 6284

Your ret

Date

1

18 August 1992 |

Year Stephen,

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I have seen Norman Lambert's letter to you of 17 August, which requests comments on the Macau airport project.

This contract, while relatively small in cash value terms would be very important in securing influence and a reference project in civil aviation in the Hong Kong/China region. This is, of course, a region where air traffic is growing rapidly, 'leading to a need for increased airport capacity. It is hoped that if this project could be secured, it would lead to further ATC and other civil aviation navigational and communications equipment contracts in Hong Kong, Malaysia,

If we were to Thailand, mainland China, Korea and Indonesia. lose out to the French on this initial contract, our credibility and future propects would suffer and the French influence would increase dramatically.

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I note that ECGD have already opted for the security outlined in your para 2(a) and the Chairman of their Advisory Council has endorsed this view. The only remaining problem would, therefore, seem to be whether it is acceptable in political terms to seek a guarantee from the Bank of China for the period after 1999.

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I think we should not confuse too much the attitude of the UK to Macau post 1999 with Hong Kong post 1997. While there are undoubted parallels, the economy of Macau in no way compares with that of Hong Kong. It would stretch credulity for the Chinese to read into our concern over the repayments on a contract in the Macau a lack of faith in their future attitude towards Hong Kong. Furthermore, the French have already been offered a Bank of China guarantee, and seem likely to accept

We should therefore merely be seeking parity of treatment between the ECAS concerned with the project.

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