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BACKGROUND
Hong Kong has paid an annual contribution to "Imperial" defence since 1863. In 1958 the contribution was fixed at
The current defence contribution
£1 million per annum. agreement between Her Majesty's Government and the Hong Kong Government was negotiated in 1966 and expires in April 1971. Under its terms Hong Kong makes an annual contribution of £1 million plus a special additional annual contribution of £3 million towards the "local costs" of the garrison (which were assessed at £9-10 million out of a total annual cost
of about £16 million).
2. The defence contribution has always been a sensitive issue in our relations with Hong Kong since the Colony has been the only one to have made regular and substantial pay- nents. The 1966 negotiations were carried through by
Mr. Fred Lee (then Secretary of State) with great difficulty and the agreement, when announced, aroused unanimous public
opposition locally.
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Unofficial members have, in the past, been prone to argue that defence is an imperial responsibility, ignoring
the doctrine that has been applied since the last century that Colony contributes to its own defence according to its capacity to pay, and overlooking the fact that many territories have not paid defence contributions because they have been defended by essentially local forces paid for from the local budget (to which Her Majesty's Government has
contributed as necessary).
Another of their arguments is
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