CONFIDENTIAL
Annex A to HKCS3/1/7/1 dated 27 Nov 90
HONG KONG RN PATROL CRAFT
1. In the light of political developments in Hong Kong, the planned withdrawal of the three remaining Hong Patrol Craft was re-examined earlier this vear by the UK Government. Notwith- standing the severe financial pressures then facing the Defence Budget Ministers agreed to consider retention of the Patrol Craft subject to negotiation of a satisfactory financial arrangement which would recognise that retention would be primarily to meet the political requirements of the Hong Kong Government rather than military needs. Any such arrangement would need to ensure that the cost to the Defence Budget was kept to the absolute minimum and offset the unplanned costs the UK Government would otherwise have to incur between 1992 and 1997.
2. The financial pressures on the Defence Budget and the Roval Navy's manpower problems have worsened significantly during the course of the year and it is therefore necessary to place the issue before Ministers again.very shortly. In the event that a satisfactory financial settlement cannot be reached. Ministers would be recommended to re-affirm their earlier decision to withdraw the craft as planned in 1992.
CONFIDENTIAL
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