Secret
3.
Comment
(6)
We can accept that the size of the contribution should
not be determined solely by the direct economic gain to
Hong Kong from the presence of the Garrison. This was in
fact one of the considerations included, with the agreement
of MOD, in our original letter to the Governor of October
1969. The offer of £7.5 million is £870,000 more than
the local costs at 1970 prices of HM Armed Forces for
internal security and related pruposes. The offer of
£8 million per annum was £890,000 more than the corres-
recurrent ponding costs at 1969 prices. These local/costs have
gone down by £.48 million;
the offer has gone down by
£.5 million, but this of course takes into account the reduction in capital costs as well as recurrent costs. that local costs have gone up and not down. In any case
11
the Governor had suggested a figure which he may be able
to put over locally without regard to any other considera-
tions."
Comment
MOD are apparently thinking in terms of the local costs
of the entire Garrison (which show an increase of
£300,000) whereas the Governor is referring only to that
element in the Garrison required for internal security
purposes (the estimated costs of which show a decrease
of £480,000). The fact remains that when the Governor
made his original offer he was thinking in terms of 73
major Army units. An increase in the size of the
Garrison would have given him a most important card to
/play
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