relevant Hong Kong political facts, and particularly the need
for close and private consultation with you before even preliminary
conclusions are approached. My purpose is not to pre-empt all this,
or to spark off a reaction on the general question, which I think
would be premature. But it does at least seem possible that,
at the end of the day and when all precautions about presentation
etc. have been taken, we could not rule out the possibility of a
change which would trigger the second review provision of the
Memorandum of Understanding (Article 3(1)(b)), ie the removal of
more than one major unit.
5. We have questioned the Ministry of Defence experts on whether,
with this possibility in mind, it would be appropriate or desirable
to go ahead with a review of the defence contribution under the
cost escalation cause. Their answer has been three-fold. First they
say that planning of the capital works must continue if there is
not to be a serious hiatus in the programme; that decisions have
and to be taken by June for the reasons I have explained; while the
results of the Defence Review are unlikely to be known until several
months later. Second, they say that if the outcome of the Defence
Review was to affect any item in the programme significantly, the
letting of contracts for capital works could be stopped before any
new money had actually been spent (ie the middle of next year).
Thirdly they estimate that whatever the results of the Defence Review,
it would be unlikely, if only for practical reasons, to result in
the removal of significant numbers on the ground until 1976. They
argue therefore ithat it would be very late in the current agreement
before the second trigger point could be reached.
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