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blessing from the Chinese authorities which went beyond the general provisions of the MOU. This was the key issue on which everyone was transfixed, and there was general
scepticism that leaving lenders to approach the Chinese direct would be sufficient.
Communication with HKG
13. Among my HKG interlocutors, there was a clear sense that something was slightly amiss in their communications with London eg over equity injection for the airport railway. They were clearly anxious to defuse problems, but did not quite know what they were. I explained how that particular case had looked from London. They readily agreed that surprises, which might be construed as attempts at bouncing, or simply of lack of grip, had to be avoided. Macleod had already decided to provide a monthly round up which would review progress on all fronts. I said that I thought this would be very helpful. However, it would be necessary to anticipate future problems as well.
14.
Subsequently, Yeung claimed that once the MTRC problem was dealt with, there would be no other contingent liability types of issue. But after Selby and I had made a few suggestions, he readily conceded that there might, in fact, be quite a few more. There were simply more urgent matters to address immediately. I encouraged them to make a list of all the issues which might fall into this category and which might concern either the Chinese or HMT. We might try doing the same, and then compare notes. I think he would be very receptive to the suggestion of a more structured dialogue on the basis of such an agenda and on the strategy for approaching these issues. Both he and Selby remarked, en passant, that it was quite difficult to deal with such matters effectively by telegram and correspondence. They also thought that the Governor would probably be unaware of many of the issues they had in mind.
15. Both Macleod and Yeung were very keen on the suggestion that Rachel Lomax should take a look at their budgetary procedures. I persuaded them that it would be better that HKG paid Mrs Lomax's expenses for what was a form of consultancy, and we have agreed that she will go there in the week beginning 16 March. We will brief her beforehand.
British Exports
16. Doubtless Messrs Heap and Hall will report fully on the Jardines lunch we attended; I anyway, had to leave slightly early. Those present appeared to be more in the dark about what was happening to their bid for the LTF contract than might be necessary to ensure propriety in HKG. They had had some contact with the Chief Secretary (who appears to have some ability to speak delphically); they thought they knew that the field had been narrowed to two bids; they did not know whether this included the Korean one; they did not know-
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