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48A
FEN 182/400/01
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Mr. Thomas,
Defence Policy Department
The Governor has seen CINCPE's letter and study circulated behind (52) on previous papers - and has confirmed to me in discussions last October the statement in paragraph 5 of CINCFE's letter (and stated again in COS 1883/17/12/68 at (1) ) that he supports the recommendation for Scheme B. CINCE'S study provided estimates of local costs only. I imagine that the full costing figures now provided in the Air Force Department study at E/1 have not yet been made available to CINCPE and therefore, through service channels, to the Governor. But I have no reason to believe that these figures as they have now emerged will make any difference to his views.
2. I mentioned to the Governor in October that, since the fighters were likely to be stationed in Hong Kong some time before the defence contribution agreement expires in March, 1971 we would in all probability be approached with a view to Hong Kong making a supplementary contribution during the currency of the existing agreement, He did not demur, but made two points :-
3.
(a) that the cost of the fighter element in the garri son
should not be considered to be separate from the general defence contribution, although it should be negotiated separately within that contribution;
(b) that the aircraft should be provided without charge.
(b) is touched on in paragraph 13 of the Air Force Department study: it provides no clue as to M,O,D's. thoughtco on this point. We shall have to see what proposals they make.
4. As for (a), I have always anticipated that M.O.D. would seek to recover the costs of the fighter element for the period overlapping the current defence contribution agreement and this would accordingly involve the separate calculation of the contribution in respect of this element: paragraph 4 of (1 appears to indicate this intention. I do not think we can contest the principle involved, Hong Kong has specifically agreed to contribute to the cost of this addition to the forces constituting the garrison, and I see no grounds to urge against the proposition that the obligation should be assumed as soon es the fighters are once again in position in Hong Kong. As to the extent of the contribution we must avait M.O.D's. proposals; and that will also be the time to argue, if necessary, that the additional contribution is wrapped up in the general defence contribution.
5. There is one point in the papers at (1) that needs correction. The existing agreement governing the defence contribution runs for "four financial years commencing 1967/68"; it expires therefore in March, 1971 and not at the end of 1970 (as stated in the Air Force study), I have checked this by reference to paragraph 2 of the governing document - namely the Memorandum of Understanding annexed to UPD(66)133 which was approved by Ministers on 19 December, 1966 (CPD(66)49th Meeting)
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