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Their representative argued that HMG might lose heavily under
the Governor's proposals particularly if, as he seemed to
think was possible, there were cuts in the proposed capital
works programme. We firmly resisted these suggestions on
the grounds that the forecast figures given to us by the MOD
had been sent to Hong Kong and it was on the basis of those
figures that both the Unofficial Members of the Executive
Council and the Governor himself had put forward alternative
proposals. Any suggestion now that those "forecast figures"
were inaccurate would lead to a fresh look at the situation
at the Hong Kong end, which could only be to the detriment
of HMG.
4.
Eventually both the MOD and the Treasury appeared to
accept that on the assumption that HMG should not impose a
contribution without making some further attempt to reach
agreement with the Unofficial Members, we had no alternative
but to proceed as proposed by the Governor. At the same
time, the Treasury representative hoped that in the paper
for the DOP (which it was agreed should go forward in the
name of the Foreign and Commonwealth Secretary only) the
options would be set out as follows
(a) Stand firm on £8.5 million.
(b) Accept that there was an element of haggling in
the negotiations and go down only to £8 million
(over a period of 5 years).
(c) Accept the Governor's proposals (£7.5 million a
year over a period of 7 years)
•
3.
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/(a)