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(e) It might therefore be necessary to use the reserved
powers to overcome Legislative Council opposition
even if the proposals were accepted by Executive
Council.
But in that case we should be in a much
stronger position to use those powers.
(f) Rather than risk being forced to retreat from the
proposals in Annex II it would surely be better to
go for a quick settlement on the basis of the
proposals in Annex I. This could be represented as
a compromise between the £8.5 million and the
£7 million with a bias in favour of Hong Kong.
(g) Acceptance of the proposals in Annex I could prove
very profitable for HMG if capital works costs
in Hong Kong during the next 7 years rose substantially
but did not reach the 50 per cent increase required
to trigger off the review provided for under
paragraph (b) (i) of the proposals.
(h) Any suggestion that the size of the garrison should
be reduced is bound to lead the Unofficial Members
to withdraw or at least reduce their offer of £7
million.
(i) It may be suggested in DOPC that any departure from
the £8.5 million will lead to a shortfall on MOD
votes and that this shortfall should be accepted
on FCO votes as representing a subsidy to a dependent
territory. However, the Treasury have already
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/stated