SECRET
LORD CAITHNESS' MEETING WITH MR ARCHIE HAMILTON : ROYAL
NAVAL PRESENCE AFLOAT IN HONG KONG
fa MrStone
(19)
Points to make
HKB 063/1
91
/12/2
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Concerned that MOD and HKG have been unable to reach
agreement on how to finance the cost of retaining the Royal
Naval patrol boats in Hong Kong after 1992. Sir M Quinlan's
letter leaves very little scope for compromise.
But
Do not underestimate MOD's budgetary difficulties.
we must not allow this book-keeping concern to obscure the
strategic issues at stake for HMG.
The problems facing the Governor are very real. Witness
the major political effort to secure a contribution to the
Gulf War. We have plenty of allies in Hong Kong, but any
polarisation between the pro-British and the pro-Chinese in Hong Kong is very damaging. Hong Kong are likely to come up
with £15 million.
No direct link; but surely some account
can be taken of this.
The DCA is a sensitive issue in Hong Kong. Governor has
bent over backwards to accommodate MOD, providing DCA is not
called into question. Most regrettable if every time there are any changes to the withdrawal plan, there should be a reopening of the DCA financial arrangements.
Sums involved not large: MOD's share (35% of the running costs) likely to be £7.5 million to 1997. But most unlikely that Governor will judge that Hong Kong interests will be
served by reopening DCA issue.
But point I want to add is that UK has its own military
as well as political interests at stake.
SECRET
Political.