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CONFIDENTIAL
Treaty organisation
-the area of prime importance to
British and European Security must be the first and overriding
charge on our defence resources although even here significant
economies were necessary; and that our commitments outside
the NATO Alliance must be reduced.
We announced our
intention to reduce defence expenditure as a proportion of
our GNP by about 1%, to 41% over the next 10 years.
I must emphasise that in military terms these were painful
steps to take; and that our NATO allies, while sympathetic to
our economic difficulties, expressed considerable concern at
the scale of reductions we proposed. You will, therefore,
understand with how rigorously we had to review our military
commitments outside the NATO Alliance.
In the case of Hong Kong we have undertaken careful and
prolonged study of the minimum garrison required. In 1974 the
garrison comprised 5 infantry battalions, an artillery regiment,
an armoured reconnaissance squadron, engineers, a frigate and
patrol craft, and a helicopter squadron. At September 1975
prices, it would have cost about £65m, or $685m HK dollars.
Careful study showed that a reduction from this level of
forces would be militarily acceptable, and as a first step a
number of withdrawals were agreed and announced in March this
year. The important elements were the removal of the
artillery regiment (less a battery) and the armoured reconnaissance
squadron; and a reduction in the Naval presence. The remaining
garrison would have cost about £50m, or $550m HK dollars. In
further discussions with the Governor and his security advisers,
the whole problem of the security threat and the forces, both
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