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84. There would also be considerable difficulties with our NATO
Allies, particularly the US and Italy. Our Allies attach consi- derable value to our presence in Malta, mainly because it removes any risk of Communist countries acquiring bases there. Because
of this, we succeeded in persuading several of our Allies to pay
a substantial proportion of the rental which Mr Mintoff was de-
manding. If we were now to terminate the Agreement, there would be a very strong reaction from our Allies.
85. On the other hand the Agreement is due to expire in 1979. It is Mr Mintoff's declared policy to develop the Maltese economy in the meantime to such an extent that it will no longer be de- pendent on the defence facilities. We could take him at his word,
plan to withdraw from Malta in 1979, and announce this publicly. But our Allies, for the reasons given in the preceding paragraph would be alarmed. We should therefore explain our thinking to our
Allies in detail in advance.
86. Between now and 1979, it would be possible to male some re- ductions in our forces stationed in Malta. Any reductions, how- ever, which required renegotiation of those parts of the Agreement relating to Maltese employees would create very serious difficulties with Mr Mintoff, including demands for more money from us. These in turn might lead to accusations from our Allies that we wore jeopardising the whole Agreement.
CONCLUSION: MALTA
87. We should plan to withdraw from Malta in 1979, when the
present Defence Facilities Agreement expires, but in the meantime should make only minor reductions in our forces there.
CYPRUS
88.
Apart from the air forces assigned to CENTO, our forces in the Sovereign Base Areas are there for National purposes. But although none of them are declared to NATO, their presence is re- garded as valuable by our NATO Allies, both because it denies facilities in Cyprus to the Soviet Union (though given the Cyprus Government's non-aligned stance, it is most unlikely that the Russians would in any circumstances be offered facilities there),
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/and