4. It is in the context of this longer term

situation that we have considered carefully

the arguments for a permanent fighter presence

set out in the Governor's Saving despatch.

He gives three main reasons:-

(a)

maintenance of confidence and

morale of the local population;

(b)

prevention of Chinese intrusion

(which might take the form of leaflet

raids);

and

(c)

security for operations of

airlines, which is essential if the

value to H. M. G. of Hong Kong traffic

rights is to be maintained.

If I may deal with point (c) first, I

rather doubt whether a mere lack of capacity

to challenge Chinese aircraft would deter

airlines from using the extremely valuable

and profitable rights they enjoy in the

Colony, for so long as Hong Kong were not

subjected to intrusions. But if China

felt that her aircraft could intrude with

more or less impunity into Hong Kong's

air space, and such intrusions were to

start, then I would judge that the picture

could become quite different. In such

circumstances some airlines might well

become mervous about operating to and

through Hong Kong, in which case there would

undoubtedly be ill-effects on the tourist

trade, traffic rights at Hong Kong would

become a less valuable bargaining counter

in the hands of H.M.G., and there would be a

general loss of confidence.

5. I believe there is also force in the

point at (b). It is true that the Chinese

have shown no disposition to intrude up to

now

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