SECRET - UK EYES A
Yesi
and The counqueras in opinion here
PM
use all available means to obtain a 75% Hong Kong contribution from the start of the new Agreement. This would, however, represent an increase, with inflation, of some 200% in one step; and I expect the Governor would have the greatest difficulty in carrying UMELCO this far, particularly given the current recession in Hong Kong and the much greater spending on social services, which Ministers here strongly support. It is only realistic, therefore, to provide a fall back position under which we would obtain the maximum possible (over and above 50%) if we do not achieve a full 75% at the outset. It would be unwise to reduce the garrison further than that recommended by the Chiefs of Staff because of risks of instability which might prove more expensive in the long run e.g. in preserving our position there or, if this proves impossible, in resettling large numbers of refugees. We must also have regard to possible pressures in Hong Kong to reduce social spending to meet increased defence costs which also carries risks to stability.
7. A personal message as suggested by the Prime Minister would be a useful means of bringing pressure to bear but, to have any effect, it would need to be in a form which the Governor could show
to UMELCO as evidence of our determination in this matter. Implied suggestions of further cuts in the garrison in such a message might affect confidence in the Colony. The Governor himself is conscious, from the Secretary of State's remarks on 11 April, of the possibility of further cuts and needs no reminder.
8.
Both we and the Governor need to retain a certain
flexibility in our negotiating tactics. It may be necessary to send a Minister in due course e.g. to break an impending deadlock. For the present it is probably wiser to treat this matter on a lower, less visible, level. We may also have views in due course on which Minister might need to go. It might be appropriate for an FCO Minister; but equally it might be in the longer term interests of our relations with the Colony to leave this difficult matter
SECRET UK EYES A
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