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than the full recurrent cost having to be included in the calculation leading to the now defence contribution: although it is a point I would still like to argue if the door is not entirely closed.
I dare say that H.M.G. would look at it otherwise, and would take the view that what the contribution really amounts to is a proper contribution towards the internal security element in total defence costs, assessed in fact as the cost of three battalions, and that they are not thereby precluded from raising an additional charge if Hunters are stationed here.
The above is not the view of the defence contribution taken here, as you will recall. The basis on which the £5 million was agreed by Executive Council was that it was proper for Hong Kong to pay what they could towards the cost of the garrison; and that this amount was all that could be reasonably afforded. It was then up to H.M.G. to provide whatever garrison was needed.
To revert therefore to your three points :
(a) do the Chiefs of Staff necessarily have the last word on this ? Can it not be re-opened with them ?
(b) I am virtually certain that if we were asked not only to pay the running costs but also to make a capital payment opinion here would be outraged. The Commander British Forces for his part has written to the Vice-Chief of the Defence Staff expressing strongly the view that a demand for capital payment would have very adverse effects upon the position of the Forces in Hong Kong
I enolose an extract from his letter on this subject. If there really is no way of avoiding some capital payment we might, I suppose, make it more defensible if it could be related, say, to permanent works (for instance by taking over responsibility for RAF works which are at present excluded from the agreement) rather than to the purchase of obsolescent aircraft.
(c) I do not believe it would be practicable to go to Finance Committee at this stage to ask for any increase in the current contribution, and in addition to do so would almost certainly raise the question of the post-1971 contribution prematurely. Would it not be possible for the whole cost of stationing the Hunters here during the first year to be borne elsewhere, provided that these costs might be noted as an item to be taken into account with other factors on both sides in the future negotiations on the
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