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8.

The defence relationship is ambiguous.

It is true that the

Hong Kong garrison constitutes a last ditch strategic reserve,

for which Hong Kong are paying a third of the cost. But the

garrison is expensive to us; while they are in Hong Kong they are

not available for anything else; and the Ministry of Defence

maintain that if it was not for Hong Kong we would not want to

keep the Gurkhas at all.

9. This leaves only Air Services. Hong Kong airport is certainly

valuable as a bargaining counter for British Airways. But the use

of this counter is apt to be resented in Hong Kong.

10.

In his final paragraphs the Governor touches on this question

of friction and resentment. His theme is that the underlying

relationship is sound and the contradictions ephemeral. There is

truth in this. In London we are apt to become buried in the

contradictions.

But it helps if the fundamental unity sometimes

has practical results, for example in the award of the mass transit

contract.

11.

At the end of the day I believe it is in our interest to stay

in Hong Kong because it is there and because we have a responsibility

to the four million Chinese who choose to live and work there.

would not today have chosen to create Hong Kong it it did not

exist.

Nor would the Chinese have let us. But this is not

relevant.

We

12. I am inclined to think that we should not circulate the

Governor's despatch further or send it for printing. He argues the

case well, as always. But reading this despatch, those not

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/familiar

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