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(C) SOME OTHER DETAILS TO BE EXPLORED INCLUDING SOME MEANS OF LIMITING THE COST TO HONG KONG OF ANY DIFFERENTIAL IN THE RATES OF INFLATION THAT MIGHT DEVELOP BETWEEN THE TWO
ECONOMIES.
ABOVE MAY BE UNACCEPTABLE TO H.M.G., AND
9. I REALISE THAT (A) THAT SOMETHING ON (B) THAT WOULD BE SATISFACTORY TO THE HONG KONG GOVERNMENT MAY BE EXTREMELY DIFFICULT TO AGREE WITH THE SERVICES FOR A GARRISON AS AT PRESENT CONCEIVED.
10. NEVERTHELESS, SINCE IT IS IN MY JUDGEMENT THE BEST THAT HONG KONG COULD POSSIBLY DO, I HAVE SECURED THE RELUCTANT CONCURRENCE OF THE SENIOR MEMBERS OF EXECUTIVE AND LEGISLATIVE COUNCILS, AND WILL PUT IT TO UNOFFICIALS THIS AFTERNOON. I AM FAR FROM SANGUINE OF SUCCESS BECAUSE CRITICISM OF THE JUMP IN DEFENCE COSTS AND OF THE NECESSITY FOR A GARRISON OF THIS SIZE, AND OF THE PRINCIPLE OF ACCORDING DEFENCE EXPENDITURE PRIORITY IN COMPETITION WITH SOCIAL PROGRAMMES HAS BEEN MOUNTING. IT IS NOT CLEAR AT THE MOMENT HOW FAR THIS WILL DEVELOP, BUT THERE IS THE MAKINGS OF A LINE-UP IN OPPOSITION INCLUDING GROUPS INTERESTED IN DIFFERENT SOCIAL PROGRAMMES, SOME URBAN COUNCILLORS, THE CHINESE MANUFACTURERS' ASSOCIATION, AND I SHOULD EXPECT SOON THE KOWLOON GENERAL CHAMBER OF COMMERCE. THIS IS BOUND TO AFFECT UNOFFICIALS' OPINION.
11. I WILL REPORT AGAIN IN THE LIGHT OF THE MEETING, BUT IF I FAIL TO SECURE AGREEMENT, OR IF PARAGRAPH 8 IS UNACCEPTABLE TO H.M.G., IT SEEMS CLEAR, THAT WE MUST CONSIDER RADICAL MEANS OF REDUCING THE COST OF THE GARRISON, INEVITABLY AT THE EXPENSE OF SOME DEGREE OF SECURITY.
MACLEHOSE
FILES
HKIOD (3)
DE DEPT
SVPD
PS
PS/LORD GORONWY-ROBERTS
STR D WATSON
MR THOMSON
MR MALE
COPIES TO:
MR WARD DS6 MOD
MR HANSFORD TREASURY MR BRYERS CABINET OFFICE MR AGGLETON PSA/DOE
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