SECRET
LOCSEN
compounded by different price levels, different exchange rates, and the anticipated "life" of the items given our intention to "run on" as well as "run down" stores etc. in the period up to 1997.
Our preliminary calculations, based on the very limited financial information that has been made available to us in respect of the volume, breakdown and value of stores, suggest that such an arrangement, limited to the 1981 Agreement alone, would not provide the level of cash you require, and that an extension to include the 1988 Agreement might be necessary if our thinking in this regard is to be taken forward.
I would be grateful to have your views on the above. It would be helpful if, at the same time, you could let us have an MOD estimate of the value of stores and equipment to be purchased over the life of the 1988 Agreement and of the credits which might be received for items purchased under the 1981 and 1988 Agreements and backloaded or disposed of in the period up to June 1997.
Yous as eve
(Ian Strachan)
Deputy Secretary for Security
SECRET