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HONG KONG
GECRET
1.
Although Ministers are not expected to want to discuss Hong Kong in detail at the OPD meeting on 23 October, there is an important point about the timing of consultations which should be put to them and about which the PUS will wish to warn the Steering Committee. Ministers may also ask about progress
on discussions with the Governor.
2.
Ministers originally decided that Hong Kong should pay three-quarters of the cost. The Governor was asked to consider whether this decision should be conveyed directly to his Executive Council, or whether we should initially ask for more and compromise on 75%. He advised that he could not, with any chance of success, put this to ExCo in either form on the basis of the MOD estimate
of £38 m. annual cost; but that, if the cost could be brought down to about £30 m. a year, we would be getting nearer a viable proposition. Ministers seemed to recognise at the OPD meeting on 18 September that the Hong Kong contribution might not be more than 50%.
3.
CDS and CBF Hong Kong reviewed their force proposals in the light of this advice. They concluded that it would, just, be militarily acceptable to have a force of 5 major units, which would cost about £31 m. a year with the frigate, or £29 m. without
it.
4. We have consulted the Governor again. He has not yet been able to discuss these latest proposals with CBF. Our assessment is that they are likely to agree, (though there may be argument about the frigate). However, he still considers that a 75%/25% split would not be viable. Even at £30 m. this would mean increasing Hong Kong's contribution to about £221 m. He has previously said that the maximum should be about £17 m. contribution is £81 m. per year.
The present
SECRET
/Timing of
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