(
Mr Jackson, Defence Dept.
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MOD CHARGES FOR SERVICES TO THE FCO
1.
On my return to the Office today, Mr Dinwiddy told me that you are submitting a draft letter from the PUS to Sir D Henley which will not explicitly refer to the question of whether we could expect Hong Kong to pay the full cost of the special expenditure involved in any future IS operation. This is in line with my comment on your minute of 13 August.
2.
For the record, it is perhaps worth recalling that following the 1967 disturbances the Hong Kong Government reimbursed virtually all the additional costs, not already carried on UK Defence Votes, which were indisputably associated with the IS operation. The total repayment was £88,677. On the other hand, there was a protracted wrangle on who should pay for a snake-fence erected along the Chinese border,
since Hong Kong maintained that this was concerned with the Colony's external defence while MOD argued that the fence was for the purpose of controlling refugees and that, situated some distance behind the actual border, it did not protect the frontier. The cost was finally split 50-50, with the UK Defence Vote and the Hong Kong Government each providing £121,170.
3. The current Defence Agreement provides for a review of the Hom Kong contribution "if there is an increase or decrease in the size of the garrison by more than one major army unit or equivalent", while the corresponding clause in the draft Memorandum of Understanding for the new Agreement is a catch-all providing for a review if the composition or size of the garrison alters "materially". Under either agreement, and irrespective of whether the garrison was reinforced, I do not think it would surprise Hong Kong if we asked them to meet the full additional cost of any future IS operation. However, I do not know of any explicit understanding on this point and circumstances might possibly arise in which we would wish to ask the Treasury to agree to a softer line.
CODE 187?
27 August 1975
CC
Mr Lewis,
G&GD
Mr Smith, Finance Dept.
Mr Preston, Caribbean Dept. Miss Rycroft, Planning Staff PS/PUS
Mr Sykes Deputy Chief Clerk)
+
PL O'Keeffe
Hong Kong & Indian Ocean Dept.
PA
BD
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