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4. IT HAS BEEN MY CONSTANT ADVICE TO YOU AND TO THE COUNCILS HERE

THAT HONG KONG'S DEFENCE CONTRIBUTION IN THE PAST HAS BEEN

UNREALISTICALLY LOW AND THAT THERE MUST BE A VERY SUBSTANTIAL

INCREASE THIS YEAR, AND THIS IS NO LONGER SERIOUSLY CONTESTED

BY UNOFFICIALS HERE. BUT THE LEVEL OF PRESENT CONTRIBUTION WAS

AGREED BY H.M.G., AND H.M.G. MUST SHARE RESPONSIBILITY FOR THE SITUATION TO WHICH THEY NOW OBJECT SO STRONGLY, AND IT IS NOT REASONABLE TO EXPECT THE PRESENT GOVERNMENT OF HONG KONG TO MAKE A COMPLETE CORRECTION OVERNIGHT AND IN CURRENT CIRCUMSTANCES,

5. I HAVE ALSO CONSISTANTLY ADVISED YOU THAT THE SITUATION COULD BE CORRECTED GIVEN TIME AND THE MAINTENANCE OF A MINIMUM OF

GOODWILL: THIS IS STILL MY OPINION, I DO THEREFORE TRUST THAT

HAVING REGARD TO THE COMPARATIVELY SMALL AMOUNT OF MONEY INVOLVED FOR H.M.G. THIS MATTER CAN BE HANDLED WITHOUT PYROTECHNICS AND IN

A SPIRIT OF MUTUAL CO-OPERATION IN THE FACE OF A MUTUAL PROBLEM.

WE MUST TRY AND FIND A FORMULA WHICH WILL DISPOSE OF IT FOR GOOD

AS A RECURRENT IRRITANT TO U.K./H.K. RELATIONS. GIVEN THIS

APPROACH MR RODGERS WILL FIND THIS GOVERNMENT ANXIOUS ENOUGH TO

HELP AND TO KEEP THE TEMPERATURE DOWN.

6. BEFORE MR RODGERS CAN DO ANYTHING HERE THERE ARE VARIOUS

POINTS OF DETAIL WHICH MUST BE CLEARED UP. THESE ARE SET OUT IN

MIFT. I HOPE THIS CAN BE DONE FAST.

7. THE QUESTION ARIGES WHETHER IT WOULD BE HELPFUL FOR OFFICIALS

TO MEET IN ADVANCE OF MR RODGERS' VISIT. I SHOULD LIKE TO ADVISE ON THIS AFTER WE HAVE CONSIDERED THE MATERIAL ASKED FOR IN

PARAGRAPHS 1 3 OF M.I.F.T.

MACLEHOSE

FILES

HKIDD (3)

DEF. D

SWPD

PS

PS/LEAD TO RONNY- ROBERTS

SIR. 3. WATSON

MA LAR AG VA

MA SYKES

MR TBMSIN

MR MALE

Cofies

MR ANDREW. AUSS MOD

MR HANSFORD, TREASURY MR. BAYARS,

CABINET OFFICE

MR AGGLESTON, PSA - DOE

2 SECRET

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