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SECRET:
(a) Is it accepted that we aim for an agreement not
earlier than May, with a holding reference only
being included in the Defence whit e Paper?
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(b) Should we be prepared to concede the transitive
costs in negotiation (see paragraph 6)?
(c) Is the risk that Hong Kong would attempt to play
a decisive role in defence matters to be accepted
reason for not seeking a contribution of more
than 50% from them?
(d) Should a study be carried out with Hong Kong of
the implications of a garrison costing about £35M,
on the basis that it might form an element in a
compromise agreement?
(e) Should the implications of even cheaper garrisons
be studied?
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(f) Is the Governor's view accepted that Hong Kong
should not be asked to pay more than £17M, at least
in the early years?
(g) Should we indicate to Hong Kong that the UK would be
prepared to pay more than 25% of the cost of the
garrison if the cost of the garrison were reduced
below £40M or if Hong Kong were prepared to pay more
than £17M, possibly under a graduated arrangement?
Subject to the Committee's views on these points,
with Hong Kong the military implications of a £35M garrison will be studied
(and of cheaper garrisons if the Committee so wishes) and
formal negotiations will be opened. We would aim (subject
to the Committee's view on timing) to report back by April.
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-6- SECRET