HKK 10/9
Reference
3
Mimite
SECRET
Mimary 4813
Finance
Mr Stephenson (efence Department)
You last saw these papers at (2). I am not sure if you were sent a copy of (3) as you asked, but if not perhaps you would take a copy together with a copy of MOD's reply and of the letter at (5).
2.
You will see. that the MOD are now proposing that the Treasury should be asked to arbitrate in this matter and we should be grateful for your views on this su gestion.
"Snake" fence
3. So far as this particular issue is concerned I suspect that any arbitration would be as between FCO votes and Hong Kong Government votes. Regardless of the merits or demerits of the Hong Kong case it would be extremely difficult politically for us to ask them to pay the bill. The reasons for this have been explained in earlier minuting.
Border works
4. I do not think that the MOD case here is nearly so strong and if only we could dispose of the snake fence issue there might be a chance of persuading them to drop this particular claim. The MOD case as set out in para 2(b) of the draft enclosed with (4) would require some comment from us if we were to agree to go to arbitration. The Hong Kong case is set out in paras 5-7 of the draft memorandum flagged (Z) on the previous file. We could well argue the toss over this particular issue if necessary.
5. We should be most grateful for any advice that you could give us on our next step in this difficult matter.
2 March 1972
A Gaminara
Hong Kong Department
SEE OVER
SECRET
DD 896639 140609 500M 7/71 GM 3643/2
Page 75Page 76
Mr Gaminara
Hong Kong Department