EELAGV
HKC
SECRET
062/1
RECEIVED
DES
INDE
2 MAY 1990
0661 AVW LLY
Mr
Ir Pay
Рустния
FROM:
M V Stone
Hong Kong Department
DATE:
11 May 1990
As discussed this
Homing, grateful
Cc:
Mr McLaren
Jou
Mr Pz
Paul
1
would resubunit
whenthe Governor has
Aplice to
PS/Mr Maude
tel.
yout
JBrower
1415
ROYAL NAVAL PRESENCE AFLOAT
A
1.
B
Mr Burns
RM1/5
Miss Marosch Mr Stone 14/5
14/5
Please refer to your minutes of 3 and 9 May. Mr Hatfield
returned from Hong Kong on 9 May and I attach for consideration a
draft telegram in response to the Governor's.
2. I understand from the MOD that, at the working level, HKG and
the MOD have agreed the bones of an agreement, subject to further
consultations on both sides. The agreement involves HKG paying 100%
of the crewing costs of the vessels, in exchange for an amendment to the DCA which will allow Hong Kong to recover 75% of any capital items (ie stocks) brought under the previous DCA, which are
subsequently sold, or returned to HMG. The current DCA provides for
HKG only to obtain 65%, although they would have originally paid
75%. Capital goods bought under the current DCA would still revert
65% to HKG if sold.
3. MOD tell us that under this measure Hong Kong considers they
will be able to offset the higher recurrent costs by gains in the
longer term over stocks sold. MOD are also apparently happy. Apparently, because of the way the DCA works, Hong will not have to approach Finance Committee over the deal. The Financial Secretary
likes the deal but the Governor has yet to be convinced.
We need therefore to tread carefully. The
such a deal should be a one-off and not be
precedent. The MOD are not keen for us to
main point must be that
quoted in the future as a
mention the bones of the
SECRET
23
Page 135Page 136