SECRET
2
7.
The Garrison in Hong Kong is there for the defence of the Colony and to assist in the maintenance of law and order. Its presence is of direct economic benefit to the Colony both by reason of the confidence it engenders in the eyes of overseas trading partners and investors and by virtue of the local spending that it generates. Its maintenance involves HMG in very considerable annual expenditure which during the next few years will be at least £17 million, even if allowance is made for a contribution of £8.5 million from the Colony. This represents a form of direct assistance to Hong Kong of a far higher order than that given to any other territory of comparable size, dependent or independent.
The
8.
With reference to paragraph 8 of your Memorandum I have been informed that no record can be traced of any such undertaking. However the fact that HMG were unable to help with the extension of Kai Tak Airport should certainly not be taken as an indication of a lack of interest on their part in the well-being of the people of Hong Kong. That this is far from being the case was shown in the assistance rendered by the Garrison in dealing with the disturbances in 1967. truth is that the calls for financial aid upon HMG are such that they can only be met on a system of priorities based on need, and, as you will appreciate, Hong Kong cannot rank high in such a system. It is incorrect to say that HMG do not expect reimbursement for sums expended on aid contributions. More than half of HMG's overseas economic aid takes the forms of loans not grants.
9.
HMG are in entire sympathy with the desire of the unofficial members faithfully to discharge their duties to the general public of Hong Kong. HMG are concerned only to ensure that any contribution from Hong Kong towards the cost of the Garrison is reasonable in the light of the financial and economic situation both in the Colony and in the U.K. They have concluded that the figure of £8.5 million is the . minimum that could be so justified.
10.
HMG would like to think that the relationship between Britain and Hong Kong is not one which can or should be viewed in terms of the advantages or disadvantages accruing to either party, but as a relationship which has been developed over the years and which, despite inevitable differences of opinion and occasional clashes of interest, works for the ultimate benefit of both parties. It is true that in the last resort HMG are in a position to impose a contribution by the use of the official majority in the Legislative Council. But Ministers share the dislike of the unofficial members for such an approach and would certainly have no desire whatever to adopt it unless no acceptable alternative course remained open to them.
11. desired.
I remain ready to discuss the matter further at any time, if
SECRET
D.C.C. TRENCH