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Mr Male
Mr Wilford
PS/Lord Goronwy-Roberts
PS
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DEFENCE REVIEW:
Problem
HONG KONG
In his minute of 8 July to the Prime Minister, the Defence Secretary sets out his thoughts on how to approach the problem of the future contribution of Hong Kong to the cost of
the garrison there. On advice from the Chiefs of Staff he recommends that the resident garrison, as an absolute minimum, should consist of four battalions together with some support units at a total cost of £33.5 million a year (September 1974 prices); and that we should aim to get Hong Kong to pay a full 75%. Failing the latter, we should be ready to move to
a graduated scheme by which this contribution should rise from 50% to 75% over a period of five or, if necessary, seven years. He proposes that officials should be empowered to reach the most advantageous settlement possible.
Recommendation
2.
As the Defence Secretary says, we have been consulted at official level about these proposals and concur. I recommend that the Secretary of State should write in the terms set out in the attached draft agreeing to these proposals, with which Defence Department agree.
Background
The Defence Secretary's recommendations are closely in line with the Prime Minister's minute of 20 February. (The Defence Secretary's letter of 11 February and the Secretary of State's reply are also attached, together with Mr Stuart's submission of 14 February.)
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