6195 D073528 400M 2/74 Cr.P.C. 839/3
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Registry No.
SECURITY CLASSIFICATION
Top Secret.
Secret.
Confidential.
Restricted. Unclassified.
PRIVACY MARKING
In Confidence
DRAFT
To:-
SECRET
PASSAGE FOR BRIEF FOR Type 1 +
"SECRETARY OF STATE
FROM
Telephone No. Ext,
Department
1
DEFENCE REVIEW: HONG KONG
1.
The Prime Minister has agreed that further work should be done in order to reduce the cost of the garrison in Hong Kong as much as possible, and that our firm objective should be to get Hong Kong to pay 75% of the total cost. If this proves impossible, however, he thinks that our negotiators could agree, ad referendum, to a 50% contribution from Hong Kong in the first year of the five or seven-year Agreement, rising by stages to 75% in the last year, or-to-any-variation of this percentage pattern-(erg-a-level of about 66%% throughout the period which-would-produce a result no less
favourable-to-us.
2.
As the first step in an agreement on these lines, the Ministry of Defence and Foreign and Commonwealth Office are sending a joint team to Hong Kong at the end of this month. They will explore the possibility of a viable force costing less than the present estimated £40 million a year. If this can be brought down to around £35 million, then the Governor's estimate of £17 million as the maximum that Hong Kong could pay would almost meet the Prime Minister's proposal of an initial 50% contribution. The remaining problem would then be to persuade Hong Kong to pay more in subsequent years, up to an eventual 75% contribution.
3.
Provided that Ministers agree, there is no need for further decisions for the time being. The Hong Kong discussions will be completed by the end of March with a view to substantive consultations with Hong Kong to be completed by May.
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