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UK EYES A
transitional costs of the run-down (about £3) in order to xcep
the figure down to £40M from the start.
Hong Kong's contribution
5. The Governor's firm advice is that he could not get the
agreement of Executive and Legislative Councils to a proposal to
contribute more than £17M a year (Estimates 1975/76 prices). Such
a contribution would in cash terms be about double the annual
average contribution under the present Agreement. The Governor
believes that a higher contribution would be unnegotiable in
present economic and political circumstances in Hong Kong, which
will have to close a budgetary gap of a bout £200M (30% of total
revenue) in 1975/76. He agrees that the present contribution is
unreasonably low, but advises that to do more than double the
contribution for a reduced force would be unacceptable to public
opinion in Hong Kong, which is already resentful of other policies
imposed by HMG, e.g. on the death penalty. Even a contribution
of £17M might be acceptable only if it was seen that the maximum
economies had been obtained. This might mean cutting total costs
below £40M. The Governor accepts that Hong Kong's contribution
should be adjusted annually for changes in pay and prices.
Courses open
6.
The Governor's advice leaves four courses open:
(a)
To plan for the reduced garrison costing 240M and,
despite the Governor's auvice, to continue to press
Hong Kong to contribute 75% of the cost, i.e. £30M.
currently assessed This would conform with the/minimum defence requirement
to meet the full commitment and with Ministers' preferred
option. But it would be likely to be rejected by long
Kong's Finance Committee, a wholly unofficial body.
To override the self-supporting Hong Kong Government
in a financial matter would be without constitui onal
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* EYES A
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