Mr Youde
23
1.
SECRET
For Stript (HKIOD)
22/5
DEFENCE REVIEW:
HONG KONG
I hope I may be able to help you with some of the points raised in your minute of 20 May.
2. First of all, it has been agreed that we will not answer Lord Rothschild's questions separately. All the points he raises will be covered in the DSWP report, thus ensuring that they are seen in their proper context.
3. I see no sign that Ministers are contemplating giving up our military presence in Hong Kong altogether. Apart from the Secretary of State's letter which you quote, the Prime Minister has indicated that he assumes that Hong Kong will probably be an exception (to some extent) to reductions overseas.
4.
You will have seen from the draft brief for Sir D Watson which I sent you yesterday that I agreed generally with paras 5 and 6 of your minute.
I have, however, a procedural reservation. I do not think it is feasible or sensible to make such a clear-cut distinction between military judgements and political judgements as is done in the first three sentences of your para 5. What is needed for internal security is to a considerable extent dependent upon the degree of political confidence or otherwise. Thus in the brief for Sir D Watson I have referred to "politico/military grounds".
5. As to the costs, I am not sure exactly what is included in the £42 million which refers to the annual average expected in the years 1978/9 1983/4, but it is a functional cost and it is the net cost after the Hong Kong Government contribution of £8 million per year. It is difficult, if not impossible, to determine real costs and the savings that can be achieved until Ministers have taken broad decisions, eg to disband the Gurkhas and cut the air transport force. It seems to me that the approach to the Hong Kong Government for an increase over the £8 million contribution should be seen first in the context of the confidence question. For example, one will have to weigh the case of cutting the troops by 50% over "X" years with no increase in the financial contribution against the equally hypothetical case of cutting the troops by 30% over "Y" years with a 50% increase in the contribution. This is the sort of point on which we need to consult the Government. What I think is beyond dispute is that the proportion of the total cost, however calculated, which the Hong Kong contribution constitutes in 1974 is lower than it was in 1968.
21 May 1974
CC
Sir D Watson Mr Cable
Phoneon
J A Thomson
SECRET