SECRET UK EYES 'A'

"19.

But even if such a garrison proves acceptable, thore will still be a gap of 13 m., with a 40 m. force, and 11 m., with a £35 m. force, between Ministers' preferred option of a 75% contribution and the Gov rnor's best estimate of what Hong Kong can pay. Do Ministers agree that an attempt should be made to bridge the cap from both ends? There are several possible ways of achieving this. For example:

(a)

(b)

to increase both the UK and Hong Kong offers, e.g. to 1 and 3 of the cost ($12 m. and 223 m. respectively for a 35 m. force, or 213 m. and $26 m. for a £40 m. force); or

to graduate the Hong Kong contributions, with the UK bearing the whole cost above Hong Kong's 217 m. at the beginning of the period, and Hong Kong paying the bulk of the cost at the end.

With the changes suggested above, your para. 10 is perhaps unnecessary?

1.

I would also like to propose the following detailed amendments, some of them to my own earlier draft:

5.

(a)

(b)

Para. 5, line 8. Delete "faces"; insert "will have to close'

Fara. 6(a), line 10. Delete "any attempt to coerce the self-supporting,

insert "to ove ride the self-supporting

(c) Pera. 7, line 4. Delete the last sentence "But ho

would be reluctant ... in the early years. As I understood it, this was no more then illustrative of the Governor's position. Instead I would like to make the point that a graduated approach gets over the real Hong Kong difficulty of a sudden tripling of the contribution for a smaller force. I would therefore suggest adding the following sentence to the end of para. 7, as amended: "This would have the advantage, from Hong Kong's point of view, of avoiding too sudden an increase in the cost to them of a reduced force."

In conformity with your minute, I have taken no action to clear either your draft or these proposed amendments within the FCO, pending the completion of an agreed draft by the team.

SECRET

Усхану сьём

Andrew,

AC Stuart

Hong Kong & Indian Ocean Dept.

UK EYES A

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