CRS 240
PRIORITY
CYPHER CAT/A
FM HONG KONG 110931Z
SECRET
SECRET
RECEIVED IN
འའའ་་
STRY NO. 57
368
TOP COM
12 NOV 1975
HIN10/1
TO PRIORITY F C O TELEGRAM NO 1144 CF 11 NOVEMBER.
MIPT.
DEFENCE COSTS.
३४०)
I AM UNDER AN OBLIGATION TO SUBMIT THE REPORT OF THE JOINT WORKING PARTY ON KAI TAK AND VICTORIA BARRACKS TO UNOFFICIALS, WHICH I HOPE WILL BE AT THE BEGINNING OF DECEMBER. WHEN THIS IS DONE, WE SHALL BE CLOSELY QUESTIONED PARTICULARLY ON PROGRESS ON A NUMBER OF OTHER MATTERS, AND LIMITING THE COST TO HONG KONG OF DIFFERENTIAL INFLATION (ITEM (B) IN ANNEX TO THE HEADS OF AGREEMENT). THIS HAS, OF COURSE, BEEN A MATTER OF CONCERN TO OFFICIALS ALSO AS WE HAVE CONSISTENTLY EMPHASISED IN OUR DISCUSSIONS.
2. BEFORE WE ARE IN A POSITION TO CONCLUDE THE MEMORANDUM OF UNDERSTANDING, WE MUST HAVE
(A) THE FINAL BREAKDOWN OF THE DOLLARS 450 M., WITH THE LATEST
CUTS (PRESUMABLY IN THE UK UNITS) IDENTIFIED
(B) AGREEMENT BY M O D TO A DETAILED EXAMINATION OF COSTS AND
COMPLEMENTS AT THE END OF THE FIRST YEAR OF THE AGREEMENT, WITH A VIEW TO ACHIEVING FURTHER ECONOMIES, PARTICULARLY IN THE UK ELEMENT: (SEE PARA 3 BELOW)
(C) A DEFINITIVE CALCULATION OF THE AMOUNT OF TOTAL EXPENDITURE
WHICH IS ACTUALLY SUBJECT TO UK INFLATION (AN ESTIMATE OF 30% WAS MENTIONED IN OUR DISCUSSIONS)
SECRET
/(D)