CONFIDENTIAL

B

4.

The Secretary of State has asked to see a paper

addressing all our out of area defence commitments including

Hong Kong, by 11 July. Work on this is in hand. In the meantime, it would be advisable to send a holding reply to

Mr King, so as to head off a unilateral decision by the MOD,

who are now most anxious to resolve the matter one way or

the other.

5. The draft letter also flags up the need to consider the

patrol craft issue in the wider context of the defence of

Hong Kong. The MOD are working on a review on the Garrison Withdrawal Plan, the main thrust of which is that, following

the events of June 1989 and the increased uncertainty about

the future, the Garrison should remain "stronger for

longer", ie the withdrawal should be delayed and phased more

slowly. It is not however clear how the costs of this

"stronger for longer" presence would be met. Final decisions on the Gurkhas are also pending. These too will

have very significant implications for Hong Kong.

ARPanc

A R Paul

BENAGQ/2

CONFIDENTIAL

Andrew.

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