Redacted under FOI exemption 27(1)
29
AMO
FALT MAT, FULLOWING FEET OF June 1989,
e changed perception of
the Hong Kong government that the retention of the RN presence is important in demonstrating British political commitment and
He The substitution of
preserving confidence. //similarly, while The
Bird class vessels for the Peacocks would have offered a
BUT NOT WOULD MAKE UPRE cheaper way of maintaining a presence, we recognise this would SENSE ON GYULA RIVAL GROUNDS, AND IT WELLe ʼn koaST SUCH A
oreate major political difficulties for the HKG// On the clear OBLASION CONVINCINGLY IN HONG KON☺).
understanding which you confirmed-on-Priday that the Hong Kong Government for political reacons now wishes to retain the
RN afloat presence, it has been agreed in principle to
recommend to Ministers that the Peacocks be retained in Hong
Kong waters until 1997, subject to satisfactory financial
arrangements being agreed and the availability of manpower.
4. The financial arrangements are of course for MOD to
negotiate on behalf of HMG given that we are talking about
defence expenditure and resources. As we said at Friday's
meeting, the logic of the preceding paragraphs points to 100%
of the costs of the run on being met by the HKG. But we
recognise the political difficulties this would cause for you
and we are therefore prepared to discuss ways in which we
might put together an overall financial package which would
meet both our needs. For our part, we need to find some way of
offsetting any additional running cost expenditure post 1991/2
in what will in any case be a very difficult budgetary period.
Rather than adjust the terms of the DCA itself it might be
more productive to concentrate on the arrangements contained
SECRET
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