SECRET
For discussion
on 9th February 1971
ANEX A TO XC§(71) 12
XCS(71)3
Copy No....of 24
DPWO MEMORANDUM FOR EXECUTIVE COUNCIL
DEFENCE CONTRIBUTION
Introduction.roon sila
Negotiations between Hong Kong and HMG in the UK towards the end of 1966 resulted in an agreement on defence costs to cover a period of four financial years commencing 1st April 1967 and ending 31st March 1971.
It is now necessary to determine afresh the arrangements to be made regarding defence costs for a further period when the current agreement on expires.
2
Under the current agreement Hong Kong makes an annual
contribution, in total, of £5 million annually, as follows: OVER NË VUmunna wh
3(a).
enw Sebl
(b)
(c)
#
as to £475,000 for the maintenance of military buildings and installations required for a force of four major units plus their support, together with agreed minor works;
as to £600,000 towards a programme of capital works;
as to £3.925 million in cash towards the recurrent ey costs of the same force.
3
For the purpose of the above agreement and for all other purposes connected with the present paper the meaning of a "major unit" is a unit of battalion strength or its equivalent (e. g. an artillery regiment).
New Procedure
4
i
The 1966 agreement was eventually negotiated after an initiative was taken by the Ministry of Defence in London, Proposals were unilaterally formulated there, to which the Hong Kong Government was asked to agree. This resulted in lengthy and difficult discussions, out of which ultimately an agreement on a sum of money, though not on the concept of a contribution,was reached. Since then it has been possible to persuade the authorities in London that it would be more appropriate if the Hong Kong Government and its unofficial advisers were to take the initiative in determining an amount that they would be willing, having regard to Hong Kong's total interests, to tender voluntarily as a contribution towards the cost of maintaining in Hong Kong the garrison necessary for Hong Kong's security. This procedure would take into account the attitude taken by Be Unofficial Members in the 1966 negotiations, that, while not admitting that
HMG had a right to require that a contribution be made, they were prepared to accept that morally Hong Kong should be prepared to assist in defraying the cost of whatever garrison might be thought necessary. It is suggested that this is a much more proper manner in which to approach the whole problem, and it is hoped that it will be generally endorsed by Honourable Members.
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