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I also recognise the particular difficulties faced by the Hong Kong Government in terms of their relationship with the Finance Committee of LEGCO. We therefore remain willing to address the full range of options in order to find a solution which is mutually acceptable. The Governor's proposal to reduce the number of patrol craft would certainly ease the financial problem and I hope that the MOD and Hong Kong Government officials can meet quickly to discuss this. I should, however, stress that the saving of £3M, as estimated by the Hong Kong Government, from taking this step alone would still leave at least £12M of unprogrammed expenditure for the Defence budget to find and I would therefore also expect officials to take this opportunity to discuss other financial options: it is
our view that other solutions can be found which would not affect
the framework of the existing Defence Costs Agreement.
I hope that the Governor can now be instructed to despatch a team forthwith. We need to move very quickly to resolve this question one way or another given that the planned withdrawal date of April 1992 is now less than a year away.
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Tom King