208)
REED IN
REGIGT
No. 61
15 JUL 1975
HIKIO/I
SECRET
UK EYES 'A'
CHIEF SECRETARY TO THE TREAS
MON
HK200
Bu
241
14 PS/L Grmowy Roth's
Mir Wigon Our tronson Dejana Desene Degt
212
PRIME MINISTER
82
DEFENCE REVIEW: HONG KONG
The Defence Secretary sent me a copy of his minute to you of 8 July about the Hong Kong Government's contribution
towards the cost of the UK garrison.
2.
While I welcome the fact that it has been found possible
to reduce the size of the garrison, I am afraid that I could
not agree that we should be prepared to contemplate any arrange- ment which would result in our receiving a Hong Kong contribution
of less than 75% of the cost from the outset. Since we last
considered this question in February, our economic circumstances
which conditioned our approach to the Defence Review have
deteriorated still further. We need more than ever to maximise
the offsets to the burden of our defence expenditure. Moreover
it seems to me that Hong Kong should be well able to bear the
greater part of the cost of her internal security, which the
garrison is primarily there to maintain: 75% of the cost of a
£33.5 million garrison is only some 1.2% of Hong Kong's GDP.
And surely Hong Kong should be prepared to pay adequately for
the essential contribution afforded by the garrison to the
stability and confidence on which its prosperity depends.
3. In my view therefore we should seek a full 75% contribution
from Hong Kong from 1 April next year. If there proved to be
serious difficulties over this, I think we should need to look
again at the size of the garrison. Unless my colleagues are
prepared to accept this view, we shall need to discuss this
matter in OPD.
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