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unrealistically low in the past and that there will now have to be a very substantial increase, he has advised that attempts te bring about a complete correction of the situation from one year to the next, particularly at a time when Hong Kong is suffering in its own way from the general trade recession, is likely to produce a crisis which would be to everyone's disadvantage.
Possible Courses of Action
4.
to
There appear to be three possible ways to proceed: seek to impose our own settlement on Hong Kong; to reduce the garrison still further to a size at which Hong Kong would be prepared to pay 75% of the costs from the beginning; and to work for an agreement on the basis of the size of the garrison proposed. The first course is not practical politics. Any attempt to make use of the Governor's right to ignore the advice of his Executive Council and to use his official majority in the Legislative Council, for which there is only one shaky precedent going back to 1946, would provoke a constitutional crisis, bitter resentment against Britain and, possibly, disorders. On the second possibility, a further reduction in the garrison, the Secretary of State told the Governor in April that Hong Kong would either have to pay an increased contribution or go short. The snag is that the Hong Kong Government know that the Chiefs of Staff regard the already reduced level of the garrison as the minimum possible necessary to carry out agreed tasks. Consequently, if we were to accept an even smaller garrison, it would be taken as a sign that HMG was not prepared to meet its long-term commitment to Hong Kong. This could have a damaging effect on confidence. Given these difficulties, there seems no alternative but to work for an agreed settlement. The difference between the two sides is clearly very wide. Hong Kong will have to make what they will regard as major concessions, but seme flexibility in HMG's position seems essential if the gap is to be closed.
Recommendation
5.
I recommend that the Secretary of State concur in the Defence Secretary's proposal. I submit a draft minute to the Prime
Minister.
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