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SECRET
ITEM I
ACCOMMODATION OF MEDITERRANEAN AND NON-NATO COMMITMENTS WITHIN THE CRITICAL LEVEL
1
At the OPD meeting on 18 September, the Chancellor of the Exchequer indicated that he could not agree that the cost of non-NATO commitments should be additional to the cost of our NATO contribution. Ministers accordingly asked officials to:-
"examine the implications of meeting the cost of our residual non-NATO and Mediterranean commitments from within the currently estimated cost of the Critical Level this examination should cover the possibilities either that we might have to accept only a partial withdrawal from Cyprus or that the Hong Kong's Government's contribution would not exceed half the cost of the garrison, or both."
This study has been conducted within the Ministry of Defence, without consultation with other departments. The Steering Committee will have before them a lengthy Chiefs of Staff paper and a shorter draft OPD Faper based on it, on which they will want to concentrate.
The line which the paper takes is broadly acceptable to the FCO. It recognises that it would be implausible to argue that economies of some 30-55 million p.a. could not be accommodated within the Critical Level, and it does not therefore argue that we must give up all our non-NATO and lediterranean commitments if no additional funding is available for them.
However, it has clearly been an embarrasment for the Chiefs of Staff to have to admit that some further economies could be found within the Critical Level, since the Critical level itself was presented to Ministers in the first place as the irreduceable minimum British contribution to NATO. They have therefore thought it necessary and perhaps expedient in view of possible Treasury calls for still greater economies to set out in rather dramatic terms in the draft the possible, consequences of having to save some £30-55 million p.a. more. This is somewhat diluted in the draft 01D paper, and since the list of consequences is described only as being illustrative of the "kind of measures that would have to be taken" and is clearly not prescriptive, the US might feel that it
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HECRET