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SECRET
12
Mr Youde
Agnel
36/4
(now attacked)
HONG KONG DEFENCE AGREEMENT
1.
You saw the telegram we sent yesterday about a possible
technical review of the Defence Agreement arising from increased
capital costs. I attach a draft letter from me to the Governor
for the bag on 27 April. This has been cleared with the MOD
technical departments, though it is still with the Defence
Secretariat for a final check.
2.
I am not very happy about raising the subject at all at
this moment. The new defence arrangements will require very
careful handling. It would be absurd to increase the Hong Kong
contribution for capital works and then very shortly reduce it
again because of the withdrawal of a major unit. I would have
expected even a technical review to cause difficulties in Hong Kong.
But the ground has been rather cut from beneath me by the apparently
anicable discussions which the Quarter-Master-General had in Hong
Kong (without consulting us). According to the MOD, these
discussions included the Governor. This is borne out by two letters
to me of 5 March and 4 April from the Hong Kong Secretary for
Security. Moreover the MOD seem convinced that technical
discussions are (a) essential and (b) not incompatible with the
defence review.
3.
In these circumstances, and if the Governor still agrees
after we have put as many of the cards on the table as possible, I
do not think we can continue to stand in the way of a technical
review. Do you agree?
26 April 1974
SECRET
fess
A C Stuart
Hong Kong & Indian Ocean Dept.