W(B)L 51-7406
NOTHING TO BE WRITTEN IN THIS MARGIN
SECRET
Annex D to
Note No. 6
VISIT OF DEPUTY UNDER SECRETARY OF STATE
(SIR LESLIE MONSON)
TO HONG KONG, OCTOBER. 1969
DEFENCE CONTRIBUTION
Mer Take
S Take in slyp.]
dydular
There are no particular points that we wish
to raise with the Acting Governor on this subject and this brief is mainly devoted to background
information, Our letter to the Governor of 9 October (copy attached) was designed to give him an indication of official thinking here and to elicit from him his own suggestions for establish- ing a basis for the calculation of Hong Kong's post-1971 defence contribution on which agreement might be reached at official level. We shall no doubt be discussing this matter here with the Governor in November: pending those discussions
there is little that can be done beyond listening to any views that may be expressed by the Acting Governor and his official advisers although they will have had very little time in which to study
our letter.
BACKGROUND
14.
7.
Hong Kong has paid an annual cash contribu- tion to "Imperial" defence since 1863. In 1958 this was fixed at £11⁄2 million per annum. In 1964 the Hong Kong Government agreed to contribute, in addition, up to £6 million over the next six years towards the Army and R.A.F. works programme
in the Colony. In the context of the United Kingdom Defence Review a further agreement was successfully negotiated in December 1966 (to run from April 1967) under which the Colony agreed to pay £5 million per annum for the next four years. The formula reached was that Hong Kong agreed to make an annual contribution of £11⁄2 million plus a special additional contribution of £3 million per annum towards the "local costs" of the garri- son (which were assessed at £9-10 million in a total cost of about £16 million).
15
3.
The defence contribution has always been a
sensitive issue in our relations with Hong Kong
since the Colony has been the only one to have made regular and substantial payments. The 1966 negotiations were carried through by Mr. Fred Lee (then Secretary of
/ State)
SECRET