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0.
If the contribution were of a fixed amount as in the present agreement, this would mean that its value would decrease in real terms over the five years. The Governor should therefore be asked to consider a contribution at constant 1970 prices – or alternatively a contribution which increased by a predetermined amount each year.
d. The contribution proposed was small in relation to GNP
For the FCO Sir Leslie Monson said that there would be difficulties in relating the amount of the contribution to Hong Kong's GNP; and he would be surprised if the Governor was able to improve on the £M8 which he had proposed.
3. It was agreed that the MOD would draft a letter to the Governor of Hong Kong giving the revised running costs for the IS element of the Hong Kong garrison and putting to him the points at (a), (D) and (c) above. The draft should also refer to HMG's problems in containing public expenditure and meeting the costs of Defence, ana invite the Governor to consider the possibility of getting agreement to a higher contribution. This draft would be circulated for the agreement of those concerned.
4. The meeting noted that it would be necessary to make a report to Ministers in the light of the Governor's reply.
Distribution: Those present
Copy to: Mr E H A STRETTON (MPBW)
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