GRS 380
IMMEDIATE
CYPHER CAT/A
FM HONG KONG 240246Z
SECRET
SECRET
RASIND N
24 NOV 1975
HKLIG
31
TO IMMEDIATE F C O TELEGRAM NO 1178 OF 24 NOVEMBER.
FOLLOWING FOR ANDREW AUS M O D FROM DAVIES.
385)
YOUR TELEGRAM NO 896 OF 20 NOVEMBER.
DEFENCE COSTS.
3801
NORT
REF.
386)2 (387
WE MUST HAVE A BREAKDOWN OF THE COSTS INTO THE 10 INFLATOR CATEGORIES LISTED IN ANNEX B OF THE DRAFT MEMORANDUM OF UNDER- STANDING BEFORE WE CAN COMPLETE THE M.O.U.
2. THEREFORE WE CANNOT WAIT FOR NORMAL STAFF INSPECTIONS AND FINANCIAL SCRUTINY OR FOR SAVINGS FROM THE RELOCATION OF
HEADQUARTERS IN 1979..
3. THE TOTAL OF 'COSTS AT ANNEX B TO THE MEMORANDUM OF UNDER- STANDING MUST NOT EXCEED DOLLARS 450 M. THE LATEST FIGURES WHICH WE HAVE SHOW A TOTAL OF DOLLARS 457 M. WE SUGGEST THAT THE EXTRA DOLLARS 7 M. BE DEDUCTED FROM ITEMS 1 AND 4 1.E. PAY AND ALLOWANCES AND LOA/FSA FOR U.K. PERSONNEL. PLEASE ADVISE AS TO HOW THIS DEDUCTION SHOULD BE DIVIDED BETWEEN
THESE TWO ITEMS.
4. WE ARE NOT SATISFIED THAT PARAGRAPH 12 OF THE M O U ENTITLES THE HONG KONG GOVERNMENT TO REQUIRE A RE-EXAMINATION OF COSTS AND COMPLEMENTS OF THE WHOLE OR ANY PART OF THE GARRISON. WE WOULD LIKE TO PUT THIS BEYOND DOUBT AND THEREFORE SUGGEST THAT PARAGRAPH 12 SHOULD BE REDRAFTED AS SET OUT IN THE NEXT PARAGRAPH.
SECRET
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