From: A. F. Thorp OBE,
Our reference: Head of F1(Air)/8497 Your reference:
SECRET
Head of F1(Air)
MINISTRY OF DEFENCE Main Building, Whitehall, LONDON S.W.1
Telephone: WHItehall 7022, ext. 7189
RECVED IN
E. 0. Laird Esq. CMG, MBE
Hong Kong Department
Foreign and Commonwealth Office King Charles Street
LONDON SW1
REGISTRYN 51 3000 1971
HKKI0/2
нк
105
28 June 1971
LAST
PT
(104)
Nev
REF.
Ким Когал
Thank you for your letter HKK 10/9 of 24 June about the Hong Kong Defence Contribution.
2.
Taking your paragraph 3 first, I do of course fully appreciate that what I call "the Officials' compromise solution" is not a solution accepted by the FCO. I use the term solely to give that particular option some kind of title. I think we are all quite clear where we stand as regards the various options.
3. As regards your paragraph 2, I would agree on reflection that my suggested 7% as the trigger for review after five years is not reasonable since the works costs are in a different position from the rest of the contribution. However, I could scarcely agree that your 50% is justifiable since this centres around the cash contribution element only. As you know, we find this element with the absence of virement between it and capital works an inherent disadvantage in the Governor's proposed scheme. This brings us to the point where we more or less have to pluck a figure out of the air and anything that is put forward would be difficult to defend on the grounds of pure logic. I would say that we ought to expect Hong Kong to improve on its contribution if the cost of the garrison goes up by more than 25% by the end of the fifth year. That is the best I can suggest.
4.
Copies go to Brack and Smith.
Jan
Senecally
SEGRET
uut