SECRE
EYES A
DRAF
phat
MMG's posilcón
on the benes
1. The purpose of my visit to Hong Kong is, as you know,/ to conclude a new
defence costs agreement to succeed the present arrangements which expire on
1 April 1976. The Government of Hong Kong has made a financial contribution
to the cost of the Hong Kong garrison for many years in a succession of agreements
Se
and you will rightly have concluded that, the practice being well established.
HMG would not have sent a Minister of State to discuss these matters with you
now were it not necessary to ask the Hong Kong Government to make a substantially
increased contribution; and that HMG viewed this matter so seriously as to warrant
our position being put at the highest position level.
2. Before explaining our position on the future cost sharing arrangements I
believe I must first explain the reasons for our Defence Review decisions of which
this position is an important part. This Government came into office at a time
when the British economic situation was more serious than ever before.
For many
years our annual average growth rate had lagged far behind that of our major
European Allies for example, it was only half that of France or the Federal
Republic of Germany. The roots of economic growth- and this needs no
explanation in Hong Kong are industrial investment and a strong trading position;
and efforts had to be made to release resources to these ends. This had to be
defence programme, then
ん
our first priority and the UK fore
Fran
planned to absorb a higher proportion
of GNP how those of
measures of economy. We came into office, therefore, with a common-interant to
achieve substantial savings on Defence while maintaining a modern and effective
defence system.
i or Germany, could not be excluded from the general
Commitment
3. When previously in office we had made clear our intention to concentrate
our defence recources on Europe, but the successor Government continued to place
emphasis on a world-wide military capability. On reassuming office, therefore,
we found ourselves confronted with a defence programme of world-wide military
and political commitments, forces stretched to meet the commitments, and a
SEORE UK
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