NOTHING TO BE WRITTEN IN THIS MARGIN
W(B)L 51-7406
SECRET
period of the agreement.
This is, therefore,
a point which we might well put to the
Governor. It was in fact put to him during
the negotiations over the current contribution
and he accepted the idea as reasonable in
principle but pointed out that control of
increased costs (including purely local
costs) would be completely out of Hong
Kong's hands. But there seems no reason why
a fixed annual percentage increase based
on the original rate of contribution should
not be included in the agreement, although
there would doubtless be argument about the
rate at which the percentage increase should
be fixed. The idea might be put to the
Governor as an alternative to increasing his
offer of £8 million.
5. We cannot lose sight of the fact that
whatever decision is reached in this matter
will have to be a political decision. It
was in recognition of this fact that we,
agreed
the MOD and the Treasury with the Governor
the line of approach set out in paragraph 6
of the attached note. When the negotiations
for the current defence contribution were in
progress, the then Secretary of State for
the Colonies, who visited Hong Kong for the
purpose of those negotiations, received the
impression that " "there was a very real
possibility at one stage that Unofficial
Members would feel obliged to tender their
resignations but fortunately, and under the
strong leadership of the Governor, a
majority of the Unofficials accepted the
need for an increase and evolved the offer
to contribute £5 million a year for a period
of 4 years."
/6.......