NOTHING TO BE WRITTEN IN THIS MARGIN

Registry No.

| SECURITY CLASSIFICATION

Top Secret.

Secret.

Confidential.

Restricted.

Unclassified.

PRIVACY MARKING

-------- In Confidence

BEČIC

DRAFT LETTER

To:-

The Rt Hon Roy Mason MP

Type 1 +

FROM

Secretary of State

Telephone No. Ext.

Department

DEFENCE REVIEW: HONG KONG

1.

You wrote to the Prime Minister on 8 July

about the future contribution of Hong Kong to the

cost of the garrison there.

2.

The joint Working Party did a useful job. I agree that the reduced garrison you describe should be accepted as the basis for the Cost Agreement negotiations and that our first aim should be to get Hong Kong to pay a 75% contribution from the start of the new agreement. At the same time, I am glad you recognise that this may be hard to achieve; and that our negotiators will require a margin of flexibility. I agree that our tactics should be as described in your paragraph 5.

3.

I am sending copies of this letter to the Prime Minister, to our other OPD colleagues, and

to Sir John Hunt.

SECRET

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