SECRET ÉÉ*Z
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budgetary situation in 76/77 & 77/78. Hong Kong could perhaps start at 40% increasing at the end of 8 years to 60% and this might have attractions for the United Kingdom since it implied that thereafter Hong Kong will continue to pay 60%.
9. It did not appear possible for Hong Kong to pay a 50/50 share of the cost of a 52/3 rds garrison, but this might be a possibility with a 4 2/3 rds garrison, especially if examination was given to initial payments of 40% increasing to 60%.
10.
w
Mr. Bryars felt that, in the light of His Excellency's assessment his team should seek approval of MOD to undertake a costing of a 4.2/3 rds garrison. This and other additional factors would have to be considered before the actual negotiations start. His team had noted some items, the cost of which was not strictly attributable to Hong Kong (e.g. Chinese Language School, JSIS); and other items which do not appear readily quantifiable but should nevertheless be taken into account (e.g. transitional expenditure, income tax). The paper he would put to Ministers might be mainly interrogative, and would pose such questions as whether the 75% proportion should be reconsidered; and whether further consideration should be given to the implications of a smaller garrison.
11.
His team had been authorised to discuss a minimum acceptable garrison of 52/3 rds; so he had been hesitant to produce figures for smaller garrisons. The figures for these which had been produced were illustrative and not definitive.
On return to London the team would make its report and it was likely that it would receive directions and reactions by early February.
12. In answer to a question by Commodore Perowne His Excellency stated that he attached more importance to the frigate than the patrol craft, but if this became a crucial factor, this assessment would have to be reconsidered.
13. Mr. Hansford guessed that Ministers would be rather disappointed at the graduated scheme suggested.
14.
In reply to a question by Mr. Stuart, His Excellency thought it might be possible for Hong Kong to meet 50% of a 4 2/3 rds garrison still contributing 217 m. Commander British Forces, confirming that he still thought that the 5 2/3 rds garrison was the correct size, nevertheless felt that it was appropriate that a costing of a 4 2/3rds garrison be undertaken.
15. His Excellency, summarising stated that Hong Kong needs HMG's advice on :
(a)
(b)
(c)
(a)
the economies mentioned in the Defence Review team's discussions with the Hong Kong Government.
Clearance for, and costings of, the 4 2/3 rds garrison, both on an all Girkha, and a mixed Gurkha/UK basis.
Reaction to the Hong Kong Government's proposals for payments to start at 40%, rising to 60%.
Whether the Hong Kong Government's "inflator" proposals are acceptable.
16. His Excellency was reluctant to submit a proposition to UMELCO which might prove unacceptable, at a time when there is more social tension than Hong Kong had known for many years. As the Hong Kong budget is due to be presented on 26th February, and it was unlikely that Unofficials could be brought to agree to increases in the Defence Contribution of the order nedessary in the time available before the budget, the final negotiations, for which UMELCO support must be necessary, should be postponed until after the budget had beer finalised at the end of April 1975.
G.F. 316
SECRET 高度機密
/17.