TELEGRAM FROM FCO TO HONG KONG
SECRET
PRIORITY
For Davies from Andrew.
Defence Costs Agreement.
1. I have put to the Minister of State the proposed
amendments to the Memorandum of Understanding and Press
statement which we discussed on 10 December. The Minister
was disturbed that the Executive Council wanted to make
changes in the MOU in spite of the Governor's assurances on
this point: but I understand that the Council's acceptance
of the document is not conditional on the changes being.
accepted mache.
2.
In fact, I believe that if the Agreement can be announced
in the near future the Minister will be prepared to accept
the amendments to the MOU and the proposed changes in the
reference to the Hong Kong contribution in paragraphs 2 and
4 of the Press statement; but I shall have to telegraph again
next week when I have confirmation of this. Meanwhile, on the
release of land point I confirm that if, when Hong Kong's
financial contribution for the quarter ending 31 March 1978
is calculated, it is clear that Kai Tak will not be released
by 31 March 1978 in circumstances which are the responsibility
of the UK Government, then the contribution for the first
quarter of 1978 will be at 50% and will remain as such until
the land is released. There will be no refund.
3. ün timing, the Minister is pressing the Governor to agree
that, provided there has by then been no statement-by HMG
which would place significant new restrictions on imports
from Hong Kong, the Defence Costs Agreement should be announced
on 19 December, which is the last day on which we can answer a
Parliamentary Question before the Christmas Recess. I will
SECRET,.
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