TIEDIATE
CYPHER CAT A
4 FCO 9118152
SECRET
SECRET
÷
(HKD)
TO IMMEDIATE HONG KONG TELNO, 96 OF 1 FEBRUARY
PERSONAL FOR GOVERNOR.
YOUR TELNO. 49: DEFENCE CONTRIBUTION.
LARY
REF.
NEXT
REF.
FOLLOWING IS CONFIRMATION OF YOUR TELEPHONE CONVERSATION WITH
MONSON
1.. SUBJECT TO WHAT FOLLOWS, WE HAVE SUCCEEDED IN REACHING
INTER-DEPARTMENTAL AGREEMENT AT OFFICIAL LEVEL ON THE BASIS
OF YOUR OFFER TO ATTEMPT TO NEGOTIATE A TOTAL CONTRIBUTION OF
20 1/2 MILLION ANNUALLY FOR FIVE YEARS.
2.
ABOVE AGREEMENT IS SUBJECT TO AGREEMENT ALSO BEING REACHED ON
FOLLOWING POINTS:
(1) YOUR PARAGRAPH 5. DEPARTMENTS HERE WOULD PREFER IT IF FIGURE TO DE USED FOR CAPITAL WORKS DID NOT EXCEED A MILLION, SINCE TO QUOTE A FIGURE OF $2 MILLION FOR THIS PURPOSE WOULD REDUCE AMOUNT FOR RECURRENT EXPENDITURE TO AN UNACCEPTABLY LOW FIGURE TO DEFEND
IN ABSHER TO QUESTIONS HERE, ARE WE RIGHT IN THINKING THAT LOWER
FICURE WOULD NOT PRESENT YOU WITH DIFFICULTIES ?
EFUL
(C) YOUR PARAGRAPH 3. GRATEFUL FOR CONFIRMATION THAT FIGURE OF 62.2 MILLION INCLUDES MINOR WORKS AS WELL AS MAINTENANCE. MAY
WE TAKE IT THAT IN THE EVENT OF ANY UNDER-EXPENDITURE OR OVER-
EXPENDITURE ON THIS FICURE, SAVINGS OR EXCESS EXPENDITURE WILL LIE
KHERS THEY FALL ?
(3) YOUR PARAGRAPH 7. WE THINK IT WOULD BE REASONABLE TO SUGGEST
A SIMILAR PROVISION FOR REVIEW IN THE EVENT THAT CAPITAL WORKS COSTS INCREASED BY MORE THAN 50% ABOVE APRIL 1970, PRICES. (SUCH AN
INCREASE COULD HARDLY DERIVE TO ANY DEGREE FROM INFLATION IN THE
U.K.) WOULD THIS BE ACCEPTABLE ?
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