GRPS 228
IMMEDIATE
CYPHER/CAT A
FROM F C O 281900Z
SECREI
RECEN EP IN REGISTRY
(HIC)
90
- 6 MAR 1975
SECRET
TO IMMEDIATE HONG KONG TELNO 155 OF 28TH FEBRUARY, 1975.
YOUR TELNO 178: DEFENCE COSTS.
LAM
88
120
1. YOUR 2(1).
''ESTIMATES 1975/76 PRICES MEANS ACTUAL
SEPTEMBER 1974 PRICES. THE DEFINITIONS ARE THEREFORE THE SAME.
2. YOUR 2(11). THERE IS NO MISUNDERSTANDING BETWEEN US. THERE IS
AN UNFILLED GAP BETWEEN WHAT MINISTERS WANT (75 PER CENT) AND YOUR OFFER (POUNDS STERLING 17 M./ONE-HALF, IN 1976). MINISTERS HAVE AGREED THAT, AS ONE POSSIPLF MEANS OF CLOSING THIS GAP THE TEAM WILL EXPLORE THE POSSIBILITY OF A CHEAPER FORCE AS IN (A) AND (B) OF THE TERMS OF REFERENCE. IF ANY SUCH FORCE
•
WERE IN THE EVENT AGREED, THIS WOULD BRING US WITHIN DISTANCE OF YOUR POSITION, BUT NOT OF HMG'S FIRM OBJECTIVE OF 75 PER CENT. THE REMAINING GAP WILL HAVE TO BE CLOSED LATER IN NEGOTIATIONS. ONE
WAY OF ACHIEVING THIS, WHICH WOULD HAVE TO BE EXPLOPED AT THAT LATER STAGE, WOULD BE SOME FORM OF GRADUATION.
•
3. YOUR 2(111) THE OBJECT OF THE STUDY IS TO ESTABLISH WHETHER THERE IS ANY VIABLE MILITARY/SECURITY OPTION WITHIN THE LOWER FINANCIAL LIMITS SET OUT IN THE TERMS OF REFERENCE, WHICH YOU AND CBF CAN RECOMMEND. WE DO NOT EXCLUDE THAT THE REPORT COULD, IF UNAVOIDABLE, ALSO IDENTIFY OPTIONS ABOVE POUNDS STERLING 35 M. THE WORKING PARTY MAY WISH TO IDENTIFY THE FINANCIAL IMPLICATIONS FOR
HONG KONG OF VARIOUS POSSIBLE GARRISONS AND YOU MAY WISH TO COMMENT ON THEM. BUT WE DO NOT SEE THE FUNCTIONS OF THE WORKING PARTY AS
ONE OF MAKING PROPOSALS E.G. ON GRADUATION. THIS WOULD BE A MATTER
FOR SEPARATE AND SUBSEQUENT CONSIDERATION.
;'ཀྑུ
". JACKSON NOW PROPOSES TO ARRIVE ON 7 MARCH TO HELP IN THE
FINAL PREPARATION OF THE REPORT.
CALLAGHAN
FILES HICIOD (4)
DEFENCE D MR THOMSON M&MALE SI« DWATSON
SECRET
COPIES TO:
MR. J.D. BRYARS AUS (GS) MOD CDR PEROWNE POFDP (E) MOD
MR. HANSFORD TREASURY