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We
9. Nevertheless it seems likely that the MOD will be seeking an arrangement which goes beyond the agreements in the 1981 side-letter
and that this could cause political difficulties for Hong Kong.
understand that one suggestion made informally to Sir Piers Jacobs
at his meeting with the MOD on 16 March was that the operating costs
of the Patrol Vessels might continue to be split on the normal 65:35
basis but that the vessels should revert entirely to HKG in 1997
(rather than 75% of the market value going to Hong Kong). This
would cause difficulties for the Hong Kong Government because the LegCo Finance Committee are aware of the disposal arrangements agreed in the 1981 side-letter. Hence the Governor's concern to try
to head off a bruising accountant's argument is probably still
justified.
10. If Mr Maude wishes to speak to Mr Hamilton before Mr Hatfield
leaves for Hong Kong on Monday evening we would propose to warn MOD officials in advance so that they can brief their Minister.
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Koalied Manche
R M Marsden