SECRET
SECRET
UK EYES A
UK EYES A
is that a garrison costing around £35M can be financed only if HMG is pre-
pared to accept a 50/50 split of costs. The Governor's personal view is
that such an arrangement is desirable, since it will maintain a position in
which Hong Kong cannot claim a dominant voice in garrison affairs, a consi-
deration to which he gives great weight. If, on the other hand, HMG consider
it important in principle that Hong Kong should bear more than half the costs
of the garrison, despite the very substantial disadvantages which he sees in
an arrangement of that kind, the only possible method of achieving such a
position is in the Governor's view through graduation, in which the Hong
Kong contribution starts at, say, 40% of the total cost and reaches 60%
after, say, 8 years.
Such an arrangement would also, of course, be governed
by provision for inflation.
20. As regards the timing of consultation within Hong Kong, the Governor's
judgment is that UMELCO could not be asked to concentrate on the issue either
before or during the Budget season (the Budget is due to be presented on
26 February) without reducing substantially the chances of a successful out-
come. His preference would be to open discussions in May. But he considers
that an early examination, involving CBF, will be needed of the options
available within a £35M force and agreement reached in good time on a pro-
posal to be put to UMELCO. The Governor hoped that approval to undertake
such studies would be given by early February.
21.
CBF Hong Kong indicated that he would be content to participate in a
study laying out the implications of a £35M force.
22. The UK team undertook to report the Governor's views but they observed
that a 50% contribution by Hong Kong to the total cost of a £35M garrison
fell far below the figure of 75% desired by UK Ministers.
Graduation from a
starting proportion of 40% would impose a yet further penalty on the Defence
Budget in the years immediately ahead which were likely to be as difficult
for the Ministry of Defence as for Hong Kong.
SEGRET UK EYES A
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