UN AYAS A
of Hong Kong the Army element of the garrison could be reduced
to about 5% units, without a rapid reinforcement capability and
that there could be some reduction in the RN squadron. The
revised cost of a reduced garrison on this basis would be about
£40M a year (Estimates 1975/76 prices). Details are at Appendix 1.
4.
The Governor of Hong Kong agrees in principle with this
level of forces, and the discussions have revealed no substantial
disagreement on the costs, apart from the possibility of
excluding transitional costs of the run-down (about £3M) in
order to keep the figure down to £40M from the start. It has
also been agreed to set aside for the time being the question
of how the costs of building new Patrol Craft should be borne.
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, whose
Government will have to close a budgetary gap of about £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
SECRET
A 2
SECRET UK RYUK EYES A