SECRET
7.
UK EYES A
represented a doubling in cash terms (though not in real terms) of the present average annual contribution
of about £8.5M and about half the cost (about £34M)
of the "reduced" garrison expressed at the LTC 1974
li.e. september 1973) price level assumed by the
little Governor when he made his judgment. But it was no
more than 40% of the cost of the "rcauced" garrison
expressed at september 1974 prices (£41M). On the
other hand the Governor has not disputed the
proposal that the annual sum eventually agreed as the
Hong Kong contribution at September 1974 prices
•
should be increased during the period of the successor
Agreement to take account of movments in the level
of pay and prices.
There was therefore a gap of some £14M between the
estimated cost of the garrison on the one hand (£41M) and
the sum of the UK contribution deciued upon by UK Ministers
(£10M) and the Hong Kong contribution offered by the Governor
¡ (£17) on the other. This could be reduced only by one or a
combination of the following means:
(a) trimming the estimated cost of the "reducca"garrison;
) removing from the costing any elements that might
be considered to serve UK rather than Hong Kong
interests;
(c) a further cut in the size of the garrison and
consequently in its cost;
d) an increase in the size of the UK's contribution
to the cost of the garrison;
(e) an increase in the size of Hong Kong's contribution
to the cost of the garrison.
A summary of the discussion that took place unuer these heads
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-11-
UK'EY!
UK EYES!