3
CONFIDENTIAL
PQ 1873 B
BACKGROUND NOTE
1. On 18th December DUS(P) chaired an informal meeting
between the Governor of Hong Kong and Whitehall officials
to discuss the financing of the proposed Hong Kong garrison,
The Governor stressed that his offer of doubling the present
Hong Kong Defence Contribution (c.10p.a) was the maximum
that he considered the Hong Kong Government could bear.
cost of the reduced garrison is estimated at about £40M at
September '74 prices and it is clear that there is still a
considerable gap between the ceiling figure of £20M which the
Governor considers the Hong Kong Government could find and
the 75% contribution that Ministers would like.
2.
The
The Governor emphasized that the contribution could
not be trebled at once and considered that if IMG insisted
on Hong Kong paying 75% there would be no alternative to cutting
the size of the garrison still further. It was agreed that
as the next step a team of MOD officials should visit Hong
Kong in early January to explain, in detail, the cost and
composition of the proposed garrison and to explore all means
of bridging the gap between what Hong Kong could afford and
what the proposed garrison would cost.
3.
Talks have now been arranged for 8-10 January but they
will be exploratory in nature and the team will not be empowered
to settle matters; further consultations will be necessary
in due course. The Governor has already stated that premature
public discussion of IMG's proposals would only serve to complicate
the consultations and it would also seem unwise to mention these
talks specifically as the team will not have time to report before
Mr Jones' PQ is due for answer,
CONFIDENTIAL