GPS 260
PRIORITY CYPHER/CAT A
П FCO 02175CZ
CONFIDENTIAL
BECHIVED IN ARCISTRY No. 50
- 3 JUL 1975
(HKK 10/1)
200
CONFIDENTIAL
TO PRIORITY HONG KONG TELMO 524 OF 2 JULY, 1975.
PERSONAL TO GOVERNOR FROM O'KEEFFE.
OUR TELNO 488: DEFENCE COSTS.
REE
204
1. WE EXPECT MINISTERS TO CONFIRM CHIEF OF STAFF'S VIEWS ON FORCE
LEVELS AND TAKE A DECISION ON HMG'S LINE ON COST-SHARING WITHIN THE
NEXT FORTNIGHT, AS SOON AS THEY HAVE DONE SO WE SHALL TELEGRAPH. 2. 1 FEAR THAT, IN VIEW OF THE PRESENT ECONOMIC CLIMATE HERE, MINISTERS' PROPOSALS ON COST-SHARING WILL DIFFER FROM THOSE YOU THINK YOULD BE IMMEDIATELY SALEABLE UMELCO AND AND IT LOOKS AS IF THERE WILL NEED TO BE A PERIOD OF NEGOTIATION ON THIS WHICH MAY TAKE SOME TIME, PREFERABLY BY TELEGRAM.
3. THERE ARE ALSO A LARGE NUMBER OF MINOR BUT SUBSTANTIVE DIFFERENCES BETWEEN THE TWO SIDES ON THE TEXT OF THE MEMORANDUM
163) OF UNDERSTANDING. DESPITE THE VIEW IN YOUR TELNO 512 ON THE NEED
TO CONSULT UMELCO IN THE LIGHT OF THE AGREED TEXT OF THE MEMORANDUM, THEREFORE, IT LOOKS AS THOUGH WE SHALL HAVE TO TACKLE THE COST-SHARING PROBLEM BEFORE THE EXACT TERMS OF THE MEMORANDUM ARE 182) AGREED, THOUGH WE SHALL SEND COMMENTS ON YOUR TELS NOS 592 AND 183) 593 AT THE SAME TIME AS THE MINISTERS' PROPOSALS. THE DETAILS OF THE MEMORANDUM MIGHT BEST BE SETTLED BY FACE-TO-FACE NEGOTIATION AND THERE IS A FEELING IN DEPARTMENTS HERE THAT THIS MIGHT TAKE PLACE IN LONDON SINCE UK TEAMS HAVE ALREADY BEEN OUT TWICE TO HONG
KONG THIS YEAR.
4. ALL THIS SEEMS TO IMPLY THAT WE SHALL, IN FACT, NOT BE ABLE TO COMPLETE NEGOTIATION BY 1ST AUGUST. HOWEVER REGRETTABLE FROM THE POINT OF VIEW OF THOSE WHOSE LEAVE PLANS HAVE BEEN AFFECTED, I SEE NO GREAT HARM SINCE THERE WILL STILL BE SOME TIME TO GO BEFORE THE PRESENT AGREEMENT EXPIRES,.
CALLAGHAN
FILES HRIOD (4) DEFENCE
MR WILFORD SIR D WATSON
MR MALE
MR THOMSON
CONFIDENTIAL