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(b) The MOD requirement for extra money from Hong Kong if the Patrol Craft are to continue has moved from say 50% of the extra amount last year when talks began, to a substantially higher percentage. MOD were not prepared to commit themselves but it sounded to me like they were holding out for something like 80% of the cost.
HKG
(c) Hong Kong's position is that they do not accept there is not a military need or role for the vessels. They therefore consider that in principle the normal DCA funding arrangements should apply.
Hong Kong continue to be gravely concerned that any approach to Finance Committee, even if it involved Hong Kong not paying more, would give that Committee the opportunity to unravel the DCA which they would take. For this reason
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and for practical and operational reasons, Hong Kong do not believe that the latest idea from the MOD that Hong Kong should take over the vessels and run them over the White
Ensign is runner.
3.
I agree with Hong Kong that it would be extremely unwise and dangerous to have to go back to Finance Committee on the question of Patrol Craft. I think Hong Kong is correct in judging that if we do so Finance Committee will take the
opportunity to try to unraval the whole of the DCA. I do not believe this is something that we should put to the
test.
4. It seems to me that there will be no agreement on how these vessels should be funded. The MOD have made it
extremely clear that in these circumstances MOD Ministers will recommend/confirm the decision that the vessels will be withdrawn. If we wish to challenge this, the matter will have to go to Cabinet colleagues.
Assessment
ROZAXB/2
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