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4. From the Foreign and Commonwealth Office point of view
it would be better if any arbitration proceedings were to relate
solely to the MOD's claim against the Hong Kong Government,
at any rate in the first instance. If the decision went
against Hong Kong then we should need to decide whether to
approach Hong Kong on the subject (and in view of the state of
our relations with the Colony at the moment, and of the
substantial defence contribution wrung from them last October,
we should wish to avoid doing so if at all possible);
whether to seek Treasury authority to meet the MOD claim from
Foreign and Commonwealth Office Votes.
or
5. It would be better if we could agree with the Ministry
of Defence on the terms of a joint approach to the Treasury,
rather than that each of us should make a separate approach.
The draft letter sent to us by the MOD will not do as it stands
since it does not meet the point at paragraph 4 above; nor
does it present the Hong Kong case in full. We have accordingly
amended and expanded the draft and I recommend that a copy of
the revised version (attached) be sent to the MOD under cover
of a letter addressed to Mr Thorp in terms of the draft which
is also attached.
6.
The terms of this submission and of the attached drafts
have been agreed with Finance Department.
17 March 1972
Baina
E O Laird
Hong Kong Department
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