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might well be parliamentary interest in Hong Kong's position. the Defence Working Party's recommendations differed substantially from his own, he hoped that his views could be quoted in any Cabinet paper too.
5.
Mr Hockaday emphasised that Ministers were determined to cut defence expenditure by several hundred million pounds, and to withdraw from non-NATO commitments as far as possible. They recognised that HMG had an inescapable responsibility for the Colony, but thought that Hong Kong had not so far contributed enough to the cost. Hong Kong should as far as possible meet the costs of a minimum viable garrison. Sir G Arthur said that some Ministers thought that Hong Kong still had plenty of money. Sir M MacLehose said this was certainly no longer true. The Colony could either meet UK pressure to improve social services or contribute substantially more to defence costs. They could not do
both. Which did Ministers want?
6.
Commodore Perowne pointed out that the annual cost of the frigate was about £3 million; the patrol boats cost about £1.5 million. This included an element for depreciation. Sir M MacLehose hoped that the costings of the garrison could be explained to Hong Kong. The Ministry of Defence representatives thought this should be possible. Sir G Arthur thought that the Steering Committee might meet on 13 August and approve a telegram to the Governor, setting out the whole matter, including itemised costs. Mr Hockaday thought it would be useful if Sir M MacLehose could quote any specific aspects of the defence establishment for which ExCo would certainly not pay because they would be seen as UK interests. Sir M MacLehose stressed that the CBF's paper was only a "think-piece" it did not have his, or Executive Council's, approval. The present Defence Agreement was due to expire in 1976. Would Hong Kong be expected to pay more during the currency of this agreement?
Mr Bayatt thought that the increase would probably be for a successor agreement. Sir M MacLehose emphasised that it would be particularly difficult to get ExCo to agree to pay more on the present agreement, especially since their contribution under it had only just been increased.
Hong Kong & Indian Ocean Dept.
12 August 1974
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