CONFIDENTIAL
GRS 310
PRIORITY
CYPHER CAT A
FM FCO 091755Z
RECEIVED
REGISTRY No.52
11 JUL1975
LJKK 10/1
TOP COPY
REF
CONFIDENTIAL
NEX
RCF.
2014
(209)
TO PRIORITY HONG KONG TELNO 540 OF 9 JULY.
PERSONAL FOR GOVERNOR FROM O'KEEFFE.
YOUR TELNO 653: DEFENCE COSTS AGREEMENT.
(182)
183
1. WE DISCUSSED YOUR TELS NOS 592 AND 593
INTERDEPARTMENTALLY ON
1 JULY BUT CONCLUDED THAT WE COULD NOT REPLY SUBSTANTIVELY UNTIL MINISTERIAL VIEWS ON COST-SHARING WERE KNOWN.
2. THIS WAS BECAUSE YOUR COMMENTS AND DRAFT MEMORANDUM ARE BASED ON 50/50, AN ASSUMPTION VERY MUCH IN QUESTION HERE. WE EITHER START BY NEGOTIATING THE COST-SHARING PROBLEM FIRST: OR WE NEGOTIATE THE TERMS OF THE AGREEMENT WITHOUT COST-ASSUMPTIONS ON EITHER SIDE. I PERSONALLY THINK THAT IN VIEW OF THE TIME FACTOR AND THE IMMINENCE OF HOLIDAYS WE MIGHT GET ON FASTER THE FIRST ROUTE(WITH THE OFFICIALS MEETING PERHAPS IN SEPTEMBER) BUT I WOULD BE GLAD TO PUT YOUR VIEWS ON THE QUESTION TO THE NEXT INTER-DEPARTMENTAL MEETING HERE. ANY SUPPORTING ARGUMENTS FOR THE SECOND ROUTE, SHOULD YOU PREFER THIS, WOULD BE HELPFUL: MOST DEPARTMENTS HERE THINK IT DIFFICULT TO SETTLE ALL THE DETAILS OF THE MEMORANDUM IN THE ABSTRACT.
3. IT MAY BE HELPFUL TO YOU MEANWHILE TO HAVE SOME PRELIMINARY COMMENTS ON TWO PARTICULAR DIFFICULTIES OVER THE DRAFT MEMORANDUM. 4. THERE IS AN UNDERLYING DIFFERENCE OF APPROACH BETWEEN THE TWO DRAFTS IN THAT OURS PRESUPPOSED AN OVERALL HONG KONG CONTRIBUTION WITH A FINANCIAL PAYMENT (AFTER DEDEUCTIONS FOR ACTUAL CAPITAL WORKS ETC. EXPENDITURE) OF A VARIABLE AMOUNT CALCULATED SO AS TO MEET THE REQUIREMENT THAT THE CASH PAYMENT PLUS CAPITAL WORKS EXPENDITURE
TOTAL GARRISON COST. -WOULD BE EQUAL TO THE AGREED PERCENTAGE OF THE TOTAL THE FORMER SYSTEM INCORPORATED IN PARA 6 OF YOUR DRAFT WOULD NOT APPEAR TO BE CONSISTENT WITH THIS.
CONFIDENTIAL
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