SECRET
Agreement on this is unlikely without a constitutional crisis which would harm HMG's
interests in Hong Kong.
9.
A way round the difficulty might be a graduated agreement, with the contribution rising to the preferred level over an agreed period. (In addition to the escalation clause for inflation).
10.
Ministers are therefore asked: -
(a) to take note of the present position and
of the proposed timetable;
(b)
to decide whether studies of a 43
(c)
unit force should now be made;
to consider whether the possibility of
a graduated agreement wit
AFBalation clause for inflition) should
now be explored.
L