HKE 10/9
RH Turner Esq Bank of England Threadneedle Street DONDON RO2
CONFIDIAL
Hong Kong Department
168
8 October 1971
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You asked on the telephone this afternoon if we could let you have details of the new arrangements recently concluded Letucen ourselves and Hong Kong providing for a contribution by ong Kong to IMG towards the cost of the defence of the Delony and of the assistance which HK's forces provide for internal security.
As I mentioned on the telephone a resolution was introduced into the Legislative Council in Hong Kong last Wednesday (6 October). It was passed unanimously, The Governor has pronised to send us a report on "press and public reaction" in a day or so.
The agreement will run for a period of 5 years from 1 April 1971. The Hong Kong contribution will be at the rate of 28 million per annum (compared with £5 million per annum over the period 1967/71). This £8 million will be made up of £2.2 million for maintenance and minor works, an average of £3.4 million a year for capital works with the balance of £2.4 million as a cash contribution.
The arrangement will be subject to the following conditions:-
(a) Review at any time
(i) if the costs of capital works at April 1971
prices go up or down by 50 per cent or more; Or
(11) if there is an increase or decrease in the
size of the garrison by more than one major Army unit or the equivalent; or
(111) if the economy of Hong Kong suffers such a
serious adverse change that the continued payment of a contribution at this level can be shown to be an unreasonable burden on the Colony'a finances;
COM'IDENTIAL
/(b)