GRS 135
IMMEDIATE
CYPHER CAT/A
FM HONG KONG Ø20940Z
SECRET
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- 2 DEC 1975
JOKIC 10/1
53
TOP COPY
TO IMMEDIATE F.C O TELEGRAM NO 1215 OF 2 DECEMBER.
YOUR TELEGRAM NO 913: DEFENCE COSTS.
FOR ANDREW FROM DAVIES.
(413)
(402)
YOUR PARA 5(C) (111). FOR EQUIPMENT EX U.K. A FORMULA BASED
ON EITHER THE U.K. INDEX OR THE HK INDEX IS ACCEPTABLE TO YOU AND, AS A MEANS OF LIMITING DIFFERENTIAL INFLATION, YOU HAVE OFFERED THE LATTER.
2. WE ARE, THEREFORE, PREPARED TO ACCEPT (FOLLOWING WORD UNDER- LINED) EITHER ACTUAL VARIATIONS IN THE COST OF EQUIPMENT (DEEMED TO BE MOVEMENTS IN THE MONTHLY INDEX OF WHOLESALE OUTPUT PRICES OF MANUFACTURED GOODS IN THE U.K.) (FOLLOWING WORD UNDERLINED) OR, AS A MEANS OF LIMITING DIFFERENTIAL INFLATION AND THUS ONLY APPLICABLE WHERE THIS WOULD RESULT IN A LOWER PAYMENT, MOVEMENTS IN THE MONTHLY CONSUMER PRICE INDEX (B) IN HONG KONG,
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13. IF THIS