CONFIDENTIAL
A
MOD's budgetary difficulties, we have pressed the Hong
Kong Government to contribute a greater proportion of the
costs. The Governor has concluded that there is no
way to do so without reverting to the Finance Committee.
He sees no prospect of the Finance Committee agreeing to
further funding, and warns that to do so would precipitate a major row, with damaging consequences for HMG's position in Hong Kong. It would reopen the whole sensitive question of the Defence Costs Agreement. You
may recall that Hong Kong made a contribution of £15
million to the Gulf War effort - a gesture which aroused
controversy in the territory at the time.
5.
He has however suggested reducing the number of
vessels from three to two, which would produce savings of about £3 million over the five year period. Tom King has concluded, however, that this is not enough.
6.
As you will have seen from my minute of 15 July, in an effort to identify a way of retaining the craft despite the MOD's budgetary difficulties, I have considered the issue alongside our other out of area responsibilities, including HMS Endurance and the defence
of our Dependent Territories as a whole. I have
concluded that the highest priority should be attached to the Hong Kong patrol craft and the West Indies Guardship,
followed by HMS Endurance and the Belize garrison. I do
see some scope in Hong Kong for other savings, for
example through reductions in garrison personnel or equipment, such as helicopters, but these would not meet the full extent of the savings Tom is seeking.
CONFIDENTIAL