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4.
Any contribution voluntarily offered by Hong Kong
would be subject to reduction if there should be a seriously
adverse change in the Colony's economic situation.
The Governor has recommended that the reply to the
Unofficial Members should:-
(a)
cover the points which are felt not to have been
covered,
(b) go a very considerable way towards accepting the
principles to which they attach so much importance.
(c) encourage them to come into the open with some
proposal of their own.
He has suggested that the reply should follow the outline
contained in his telegram No. 250.
5. In response to our request for any further information he
could give us about the thinking of the Unofficial Members, the
Governor suggested that it might help if we extended the term
of the proposed agreement from 5 years to 7 years.
This idea
does not appeal either to the Treasury or to the Ministry of
Defence. Both Departments feel strongly that HMG should obtain
not less than £42.5 million over the next 5 years and that for
any term in excess of 5 years the average annual rate would need
to be significantly more than £8.5 million.
6. I agree with the Governor that we must now encourage the
Unofficial Members to come into the open with some proposal of
their own. The attached three telegrams (which are based on the
Governor's outline) have been drafted with this aim in view;
at
the same time it has been made clear once again that £8.5 million
a year over 5 years is the very minimum contribution to which HMG
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