Flag F
lag G
SECRET
4.
Mr Jackson, Head of Defence Department, was a member of the joint UK/Hong Kong Government Working Party which studied the possibility of a further reduction in the strength of the garrison. The Governor thinks the Unofficial Members of his Executive and Legislative Councils (UMELCO) will accept official advice on this point (para. 4 of Hong Kong telno. 304). In my view it is right that if the Hong Kong Government wish in addition to retain Naval patrol boats or an Artillery battery they should bear the full cost.
5.
On cost-sharing, the Governor reported that he thought the maximum UMELCO would agree to was a 50% contribution of not more than £17 million (para. 12 of Hong Kong telno. 304). However, on 10 April he told Mr Rodgers that it might be possible to negotiate a graduated contribution, perhaps rising to 75% over seven years (para. 6 of Note for the record).
Argument
6.
In view of the further economies being sought in the field of defence spending, it is hard to question that HMG's first aim should be to persuade Hong Kong to pay 75% from the start of the new Agreement. However, this would entail an increase in Hong Kong's present contribution of some 200% at one step; and I expect the Governor would not be able to carry UMELCO this far, particularly given the current recession in Hong Kong and the much greater spending on social services which Ministers here strongly support. But even if the aim of 75% from the outset proves unattainable, it will tactically be helpful to the Governor to have been presented with this as our opening bid since he can present any solution more favourable to Hong Kong as a hard-won concession. From the overall point of view, the more the Hong Kong Government pay the less will be the pressure on other parts of our Defence Budget. However, if we have to make concessions, I recommend that the UK negotiators should be allowed, as the Defence Secretary suggests, some
;
SECRET
/flexibility
!
ป