DESLBY 2701002 HK
PERSONAL FOR GOV
CONFIDENTIAL
DRAFT TELEGRAM FROM FCO TO HONG KONG
MY TELNO []: FUTURE RN PRESENCE IN HONG KONG
1. Further to TUR, this is to confirm that the Prime Minister supports the retention of three RN patrol craft in Hong after 1992, though it has not yet been agreed how the additional
costs to the defence budget should be met.
2. The Defence Secretary is prepared now to plan on retaining
the three vessels in Hong Kong until 1997 and the steps necessary to withdraw them next year have been suspended. This is however on the clear understanding that compensation for
the defence budget will be forthcoming from somewhere. The
only realistic sources are the Treasury or the Hong Kong government. It would be unwise to assume that the former will
necessarily co-operate and the Prime Minister and I agree that
we should continue to pursue the option of seeking funds from
the Hong Kong government. You should therefore take advantage
of the breathing space granted by the Defence Secretary's
decision, to take a further and considered look at how the sum
involved £15m at today's prices - could be found from Hong Kong government funds without causing major political difficulty with LEGCO. The MOD have made it plain that they
are entirely flexible about when such a sum could be paid between now and 1997 and the means by which it might be paid: there is for example no overriding reason for it to be paid
through the mechanism of the Defence Costs Agreement.
3. I appreciate the difficulties involved, but we now have the
opportunity and the time to apply whatever lateral thinking is required to come up with a solution which does not impose
unacceptably on the very hard pressed defence budget which
might still lead to the withdrawal of the patrol craft. You should therefore take full advantage of it.
CONFIDENTIAL