Mr. Cable
SECRET
Defence Review
The Secretary of State has seen your minute of 23 May on the Defence Review. He has minuted:-
"I am much obliged and broadly agree with 45(a) (i) & (ii) hoping that the flexible force under (ii) will be able to operate not only in different parts of the world, but also if necessary in NATO. It goes against the grain to put all our goods in the NATO shop window and not back them with stock on the shelves, but assuming no war in Europe, I suppose it makes some psychological sense!
I am in favour of cutting R & D and releasing the manpower and resources there for other uses. (Would cutting this affect our arms sales adversely?)
We must have full consultation and I see every reason why we should argue that our predecessors announced cuts - announced but not implemented should count as part of the reductions to which we are committed. We ought to look at the figures and find out whether, if we count the £170 m. it would be better to go over to a GNP proportion or to stay with a figure in the £1 millions?
As regards Hong Kong, they could certainly be asked to pay.
The Gulf is of importance because of the opening of the Suez Canal.
SECRET
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