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SECRET
Mr Wilford,
Sir Lonson
Mr Logan
The Private Secretary
HONG KONG DEFENCE CONTRIBUTION
PROBLEM
Dreft Gyre d
6/7
1. It is proving extremely difficult to reach agreement
on the size of the defence contribution from Hong Kong over
the next few years.
BACKGROUND
2.
Ministers agreed in February that if the Governor were
able to negotiate with his Executive and Legislative Councils
an annual defence contribution of £8.5 million for the next
5 years such a contribution subject to certain conditions
would be accepted by HMG. Ministers also decided that if
the Governor failed to secure agreement locally to these
proposals the matter should be resubmitted to them.
3. After long and difficult negotiations the Governor has
been unable to persuade the Unofficial Members of the
Executive Council to go beyond an offer to recommend to the
Legislative Council a contribution of £7 million per annum
for 7 years.
The Governor thinks however that he could
probably negotiate a settlement based on a contribution of
£7.5 million per annum for 7 years.
ARGUMENT
4. It has been agreed with officials from the Treasury,
the Ministry of Defence and the Department of the Environment
to recommend that this question should now be considered in
SECRET
/the Defence