!
of a reduced garrison in the Colony. However, he went on to say that officials should also examine the possibility that the Hong Kong Government's contribution would not exceed half the cost of the garrison. The decision to seek a 75% contribution is therefore a firm one for the negotiations with Hong Kong. But Ministers clearly envisage the possibility that this goal may not be achieved and that we may have to settle for something less.
4.
Ministers' intentions were announced in a Parliamentary Statement by the Defence Secretary on 3 December: "We intend to keep our forces in Hong Kong, although we propose to make some reductions in them and to seek from the Hong Kong Government a larger percentage of their cost when the present cost-sharing agreement runs out in 1976".
Dilemma
5.
The Governor, at a meeting with the Ministry of Defence on 18 December, exposed the dilemma, the three elements of which are the British contribution, the Hong Kong Government contribution and the cost of the garrison. The sum of the first two must in the last analysis be equal to the cost of a garrison which is judged militarily adequate to meet the two objectives outlined in paragraph 1.
Hong Kong Contribution
6. The Governor stressed that doubling the present Hong Kong defence contribution was the maximum that he considered the Hong Kong Government could bear. The cost of the reduced garrison is estimated at about £40 million at September 1974 prices and it is clear that there is still a considerable gap between the Governor's ceiling figure of £20 million and the 75% contribution that Ministers would like. The Governor has emphasised that the contribution could not be trebled at once and he considers that if Her Majesty's Government insists on Hong Kong paying 75% there could be no alternative to cutting the size of the garrison still further.
SECRET
}
/Future Action