SECRET
UK EYES A
12. After this plenary session it is expected that
negotiations will continue behind the scenes. The
Governor will take soundings to discover how far the
Executive Council and Finance Committee are prepared to
go to meet HMG's demands. There may be a series of
meetings between the Minister and the Governor or between
the Minister and groups of Unofficial members of the
Council and Committee. There may also be meetings between
UK officials and the Governor's official advisers,
13. If an agreement can be reached it will be embodied
in a Memorandum of Understandi ng. This has already been
drafted by officials of the two sides meeting in Londen
and is complete except for the vital details of the
composition of the garrison and the size of Hong Kong's
It includes a provision for
financial contribution.
inflation.
UK Negotiating Tactics
14. Our negotiating tactics will have to be reviewed
in the light of the reply to the Minister of State's
letter to the Chancellor of the Exchequer of 12 October
and of discussions on arrival in Hong Kong with the
Governor,
CBF and Mr. O'Keeffe of the FCO. At this
stage it is possible only to offer the following tentative
suggestions.
15.
The Minister's address to the Executive Council and
Finance Committee will provide an opportunity to describe
the UK's economic difficulties, the Defence Review leading
to the concentration of our limited resources on NATO
and the reduction of overseas garrisons, and the comparative
prosperity of Hong Kong which makes it appropriate for the
colony to make a larger contribution to its defence.
SECRET
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UK EYES A