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Department
DEFENCE REVIEW: HONG KONG
1. The Governor of Hong Kong was asked to consider whether Ministers' decision, that Hong Kong should pay three-quarters of the cost of its defence forces, should be conveyed directly to his Executive Council, or whether we should initially ask for more and compromise on 75%. He has advised that he could not, with any chance of success, put this to Executive Council in either form, on the basis of the present estimate of £38 m. annual cost for the forces in Hong Kong. This would mean asking the Hong Kong Government to pay at least £28.5 m. per year an increase of 350% over their present £8.5 m. contribution. In the Governor's judgment
this is not negotiable.
2. Even if the cost could be reduced by further economies to around £34 m., he considers that three- quarters ofthis (£25.5 m.) is more than Hong Kong could pay.
3. He therefore concludes that the cost must and could be reduced to less than £30 m., largely by reducing the garrison from 6 to 53 major units.
Three-quarters of the cost of such a reduced force would be nearer a viable political and budgetary proposition in Hong Kong.
4. The FCO agree with the Governor's assessment of the situation in Hong Kong. If Ministers' requirement of a 75% contribution is to be met, the cost of the Hong Kong forces, will therefore need to
by the Ministry of Defence. be reviewed and reduced- We recommend that we should
SECRET
/inform
:
1