SECRET
Ministers do not understand what, except
convention, is preventing the Hong Kong Government from raising those rates substantially.
7.
In your talks here, and particularly with the Secretary of State and the Ministry of Defence we should bring the two figures of cost and contribution together and try to get the first political basis for an agreement. In the absence of your advisers and a negotiating team you will obviously want to avoid full negotiations or detailed questioning. But we should be able to explore with you the underlying realities, including the possible consequences of failure to reach agreement.
8.
On the whole I would advise against further concrete proposals from you at this stage except as a basis for your London discussions. There is too great a present risk of rejection out of hand.
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