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SECRET
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PS/Lord Goronwy-Roberts
28
HONG KONG:
1.
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DEFENCE COSTS AGREEMEN In my submission of 4 November, I recommended that the Secretary of State should endorse the agreement which the Minister of State for Defence has reached with the Hong Kong Government on the size of the garrison and the division of costs between the two governments. In the event, I understand that the meeting of the OPD on 4 November took no formal action on the agreement.
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2.
I now understand that the Minister of State for Defence 'hopes that it may be possible for the Ministers concerned to endorse the agreement without formal action in OPD. The Defence Secretary's minute of 3 November gives a detailed explanation of the agreement so far reached and the Chief Secretary's minute of 6 November to the Prime Minister records the Treasury's acceptance of it subject to certain conditions.
3.
Most of these present no difficulty from our point of view. But his condition that the agreement should not run for more than five years initially (with a possibility of a two year extension) seems unnecessarily restrictive. Our interest lies in an agreement of the longest possible duration. The present negotiations have proved at least as difficult as those preceding the previous five year agreements and the strain on relations with Hong Kong has been considerable. There is much to be said for not committing ourselves to a repeat performance in five or even seven years time. The Defence Secretary has evidently not made up his mind on the point (para. 5 of his minute of 3 November) and he rightly points out that the Hong Kong Government would prefer a ten year agreement.
4.
Provided there is the satisfactory inflator mechanism stipulated by the Chief Secretary, HMG's interests seem to be
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/sufficiently