21 of the 39 elected seats in Legco. The UDHK states their

aim to:

and

fronting of our

swereights

"reduce the proportion of funds that Hong Kong provides for the stationing of United Kingdom troops in the territory".

There can be no question of their supporting an increase in the proportion which Hong Kong pays: to propose this would play into their hands, greatly complicate the relationship

between HKG and LegCo and might precipitate a financial and constitutional crises.

the success of

which ineritably has an Com

4.

The Foreign Secretary continues to believe that the

ameras craft perform an important military role as well as a.

spm-rt political Chinese incursions over the last two years

delibentely have shown the liberties they are prepared to take with the

the Royal Hong Kong Marine Police. Without ko Navy there as-back-up,

it is inevitable that this flouting of (Hong Kong's

intensity boundaries would worsen. In such circumstances Peliee

escalatis merale would drop and we would face other/serious security problems, and pomis morate would day.

5.

impotem

Constant

challenge

to

Stephen Wall's letter to you of 24 July, recorded

that the Prime Minister wished the question of finance to be pursued in the current PES round. I hope that this definitive advice from Hong Kong, that they cannot find

extra money above the normal 65%/35% cost sharing

arrangement, will enable you to secure the additional funds you need either in this PEJ

this PEJ round or in 1993.

6. I am copying this letter to Simon Wall (No 10),

Nicholas Holgate (Chief Secretary's Office) and Sonia Phippard (Cabinet Office).

we would

be

unable

to defend

But ish rights withmt абедрат

haral assets.

In

addition

NOCACD/2

CONFIDENTIAL

Simon Gass

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