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9.
You will recall that the possibility of having a fighter unit stationed in Hong Kong was discussed at a Chiefs of Staff meeting which you attendod in April 1968. According to our record of that meeting two pointa” in particular vere raiced, both of which have a direct bearing on the question of costs. The first point was expresned as a hope that the charge to Hong Kong could bo limited to operating costs and that it would not be necessary for that Government to purchase the aircraft. There is no indication
of the source of the comment which may have been you yourself? You mentioned to mo lant Cctober your view that the aircraft should be provided without charge. The second point is a statement attributed to you in the record from which (if you are correctly reported) it is clear that you expected Hong Kong to have to pay the whole of the recurrent cogta of operating the unit. The actual words attributed to you were (the reference being to a unit moking maximum use of backing by Auxiliary Air Force pernonnel) : "Such a unit would seem adequate to moet the requirement, and it would be cheaper for the Hong Kong Government who would have to meet the cost." I am afraid that thie may voll be no more than the truth: however, wo should be grateful for your vieva on tho question of running costs. You will no doubt satisfy youreele 23 fer na you can that the entimates of recurrent costa cover evODY possible aspect of operating the unit (in discussion hore with Todů we wondered whether accommodation of perconnol to an amoct fully taken into account.
10. As regerdo the capital cost of the aircraft, the fact that moro then half the proconds of their sale have to go to America is one of which we intend to make the fullest use in pleading your case for a free gift, but we should appreciate any additional ammunition with which you can provide us. There is, we feel, vory listão chance that the Ministry of Defence can be persuaded to forego a credit of £140,000 in their defence budget (having regard to the tight ceiling within which they are required to operato) and it may well be that we shall have to plead Hong Kong's cause in other quarters.
1.2. One final point, the existing defence contribution agreement with Hong Kong does not expire until March 1971. The question of how the costs of the lluntor detachment are to be met will therefore nood to be settled in advance of negotiations on the post-1971 dcfenco contribution. I mentioned this ponsibility to you when you were over herein October and I understood you to say that from a presentational point of view you would not wish the cost of the fighter unit to be treated separately (at any rate in Hong Kong) from the general defence contribution, although it might havo to bo negotiated separately within that contribution. It would bo very helpful to us in our approach to the Ministry of Defence if you would say exactly how you would wish us to deal with this point, and particularly with the question of the timing of the actual p nymont For the fighter unit in respect of the one year's overlap with the currant defence contribution agreement (March 1970 - March 1971).
(W. S. Carter)
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