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9.
You will recall that the possibility of having a fighter unit ctationed in Hong Kong was discussed at a Chiefs of Staff meeting which you attended in April 1968. According to our record of that meeting two points in particular were raised, both of which have a direct boaring on the question of costs. The first point was expressed as a hope that the charge to liong Kong could be 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 ccement which may have been you yourself? You mentioned to me last October your view that the aircraft should be provided without charge. The second point lo 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 coata 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 personnel) : "guch a unit would seom adequate to meet the requirement, and it would be cheaper for the Hong Kong Govermont who would have to meet the cops." I am afraid that thie may well bo no more than the trutht however, we should be grateful for your views on the question of running costa. You will no doubt Batisfy young@16 en fer as you can that the entinatos of recurrent costs cover every possiblo aspoot of operating the unit (in discussion here with Todd we wondered whether accommodation of perconnol is an ampect fully tokon into account.
10. As regards the capital cost of the aircraft, the fact that moro then half the proceeds of their sale have to go to America is one of which we intend to malte the fullest use in pleading your caso for a free gift, but we should appreciate any additional ammunition with which you can provide us. There is, we feel, very little chance that the Ministry of Defence can be persuaded to forego a credit of £140,000 in their defence budget (having regard to tho tight ceiling within which they are required to operate) and it may voll be that we shall have to plead Hong Kong's cause in other quartero.
3.1. 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 Hunter detachment are to be met will thereforo nood to be bottled in advance of negotiations on the post-1971 dofanco contribution. I mentioned this possibility to you when you were ovaz hozein 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 have to bo nogotiated separately within that contribution. It would bo very helpful to us in our approach to the Ministry of Defence if you could say exactly how you would wieh uo to deal with this point, and particularly with the question of the timing of the actună p nymont for the fighter unit in respect of the one year's overlap with the current defence contribution agreement (March 1970 - March 1971).
(W, S. Carter)
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