SECRETSECA UK EYES A
Defence Secretary's Circulation 20 10 75 OPD + CDS ·
PUS
CGS
DUS (P)
AUS (GS)
MINISTER OF STATE FOR DEFENCE
WHITEHALL LONDON SWIA 2HB
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DIMINIW4/8/4.
Den
AUS(D Staff)
Head of DS1 Head of DS6
Head of DS11
12
October 1975
You may remember that we had a brief word, before the House rose, about my forthcoming visit to Hong Kong. It had been agreed in OPD on 22 July that we should aim to secure a Hong Kong contribution of 75% of the cost of the future garrison and that I should seek to achieve this in negotiations with the colony.
I had hoped that we could have made some progress before now but we have been obliged to take into account the Governor's views on the most appropriate time to commence negotiations. These are now planned to start on 28 October.
Clearly I shall open the negotiations by making the case for a 75% contribution next year and explaining, by way of background, the present economic position of the UK and the financial pressure on the Defence Budget. But the Governor, who has been formally notified of our financial requirements, has repeated his view that these are more than the colony could meet in a single step and that such a demand, strongly pressed, could produce a crisis. He feels that, in view of the state of the Hong Kong economy and the consequences for social programmes, the most that the colony would agree to pay in 1976/77 is £17M, which is twice the present contribution of £8.5M.
Moreover he has emphasised that while the principle of cost-sharing percentages looms large for HMG, Hong Kong is principally concerned with budgetary considerations and
SECRET
The Rt Hon Denis W Healey MBE MP
UK EYES A
/consequently
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