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CONFIDENTIAL

12/10

Seantamid Stuto

SECRETARY OF STATE'S BILATERAL WITH DEFENCE SECRETARY

11 APRIL 1991: HONG KONG PATROL CRAFT.

Points to make

LEG 2. HED

Thank you

There was no time to

Understand financial pressure to withdraw the three love this Peacock class patrol craft in 1991/92.

-

But strong political arguments:

point. Forgi Sarely told this Sefence Search

Nav hes raise il next time

- bad for Hong Kong confidence in UK commitment (and

bitterness after £15 m Gulf contribution). Current mood

fragile.

-

Chinese will see a trick to make it harder for them in ke

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1997 to install the PLA garrison with naval element a key political concern for them.

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practical problem of incursions by Chinese gun-boats, ignoring Marine Police instructions.

media may raise Falklands precedent.

Difficult MOD/HKG official discussions. Bad feelings over 1988 Defence Costs Agreement (DCA) row: Governor believes impossible to persuade LegCo Finance Committee to contribute

more than DCA 65%.

- Have asked Governor to reflect imaginatively on accounting

solutions. But essential that MOD also show flexibility and

imagination if we are to reach agreement.

BAGAFM/1

CC

But the Sefs did race it in the margin Cabinet. In thing indertook to see if the

anything to be flame. The band.

CONFIDENTIAL has

модо Modo court!

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