CONFIDENTIAL
13123
MDHOAN 9074
PORTUGESE MFA ARE IN THE PICTURE. ECGD CONSIDER THAT A GUARANTEE FROM THE BANK OF CHINA WOULD BE SUITABLE FOR THEIR PURPOSES TOO, BUT BECAUSE OF THE POSSIBLE HONG KONG IMPLICATIONS, ECGD HAVE INFORMED US AND INVITED OUR VIEWS.
5.
OUR MAIN CONCERN IS WHETHER SEEKING A BANK GUARANTEE, AND ACCEPTING ONE FROM THE BANK OF CHINA IN THIS CASE, COULD HAVE ANY REPERCUSSIONS FOR THE HONG KONG AIRPORT OR FOR OTHER HONG KONG PROJECTS WHOSE CONSTRUCTION OR FINANCING MIGHT STADDLE 1997. ECAS
HAVE PROBABLY SUGGESTED THE BANK OF CHINA AS GUARANTOR
FOR THE MACAO AIRPORT NOT ONLY BECAUSE THEY ARE INVOLVED IN THE PROJECT ANYWAY, BUT ALSO AS A QUASI-SOVEREIGN RISK GUARANTEE. IT WOULD BE VERY UNFORTUNATE IF ECAS WERE TO SEEK SIMILAR GUARANTEES IN RESPECT OF THE HONG KONG AIRPORT OR IF THE CHINESE WERE SOMEHOW ABLE TO TURN THIS DEVELOPMENT IN MACAO TO THEIR ADVANTAGE IN DEALING WITH US OVER THE HONG KONG AIRPORT.
6. WE BELIEVE THAT THIS IS UNLIKELY TO HAPPEN FOR THE FOLLOWING
REASONS
HONG KONG ALREADY HAS THE MEMORANDUM OF UNDERSTANDING WHICH
PROVIDES A MECHANISM FOR THE CHINESE TO STATE THAT OBLIGATIONS RELATED TO THE AIRPORT PROJECTS ENTERED INTO OR GUARANTEED BY THE HONG KONG GOVERNMENT WILL CONTINUE TO BE VALUED, RECOGNISED AND PROTECTED BY THE SARG FROM 1 JULY 1997.
THE MOU ALSO STATES THAT THE BANK OF CHINA WILL PLAY AN ''APPROPRIATE' PART AND THUS ANY PURELY COMMERCIAL INVOLVEMENT
COULD BE EXPLAINED IN THOSE TERMS.
- ECGD HAVE ADVISED US THAT THEY WILL NOT/NOT BE LOOKING FOR
OUTSIDE BANK GUARANTEES AS SECURITY FOR POST-1997 IN THE CASE OF
THE HONG KONG AIRPORT.
7. SUBJECT TO YOUR VIEWS WE ACCORDINGLY PROPOSE TO ADVISE ECGD THAT IF THEY WISH TO STATE THAT A FIRST CLASS BANK GUARANTEE'' IS REQUIRED FOR POST-1999 MATURITIES, THIS SHOULD NOT CAUSE US DIFFICULTY WITH REGARD TO HONG KONG INTERESTS. BUT WE SHOULD PREFER ECGD NOT/NOT TO SPECIFY THAT THE BANK OF CHINA SHOULD PROVIDE THIS GUARANTEE. THIS COULD BE SEEN TO IMPLY THAT THE BANK OF CHINA WAS PROVIDING A FORM OF SOVEREIGN RISK GUARANTEE AND THUS DAMAGE CONFIDENCE ABOUT THE ECONOMIC AND FINANCIAL AUTONOMY WHICH, UNDER THE PROVISIONS OF THE SINO-PORTUGESE JOINT DECLARATION, THE MACAO SPECIAL ADMINISTRATIVE REGION IS TO ENJOY FOR 50 YEARS AFTER 1999.
8.
WE SHOULD BE GRATEFUL FOR ANY COMMENTS YOU MAY HAVE ON THIS
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