SECRET
5. WE THINK THE FIGURE OF FOUNDS STERLING 35 MILLION WOULD BE MORE SIGNIFICANT, IF THERE WAS ALREADY AGREEMENT THAT HONG KONG SHOULD ONLY PAY HALF THE COST, SINCE THIS WOULD BE DIRECTLY RELEVANT TO YOUR POUNDS STERLING 17 MILLION. BUT THAT IS NOT, OF COURSE, THE PRESENT NEGOTIATING POSITION. MINISTERS' PREFERRED OPTION OF A 75 PER CENT CONTRIBUTION REMAINS UNCHANGED, THOUGH THEY ARE PREPARED TO CONGIDER THE POSSIBILITY OF SOME GRADUATION.
CALLAGHAN
FILES AKIOD (4) DEFENCE X
SiR D WATSON
MR MALE
MR THOMSON
-2- SECRET
COPILES TO
MR JD BRYARS
AUS (GS) MOD
COR PEROWNE
Д
D OF DP(C) Moy
MR RJE ABRAHAM
DS 6 MOD