CONFIDENTIA¦,

already.) On the evidence of telegrams seen to date the only feasible option is to allow Hong Kong to make other savings in the Garrison costs and to use these to cover the

patrol boats rather than surrendering these savings to MOD. This would not be easy for Hong Kong and the figures may not add up. But it could help to retain a naval presence until 1997.

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-

At

If neither we nor the MOD can absorb the extra

costs which we cannot and unless the Treasury can agree to an additional PES allocation then we must allow Hong Kong maximum flexibility to juggle the expenditure.

present the threat to Hong Kong's security is maritime

(Chinese naval incursions, smuggling, criminal raids on

central Hong Kong) rather than from the land border.

shall be pursuing this further with the MOD.

Vietnamese migrants

We

I took the opportunity of my visit to discuss this

issue with the Governor, relevant Hong Kong Government

officials and Peter Williams (up from Hanoi for the Heads

of Mission Conference). The pressure is not quite so

intense at the moment, but it remained the No.1 topic for many, including the press,when talking to me. I fear that this is the lull before the storm. We went through

the preparations that the Hong Kong Government are making in some detail. Their planning for the repatriation of

double-backers is well on course. They envisage, sensibly in my view, co-operating with the press and providing them with photo opportunities in an attempt to pre-empt hostile coverage. They will not succeed entirely but it might help. The Governor is rightly concerned not to prejudice US agreement to Internationally Managed Centres (IMCs) by provoking the Administration with a mandatory return of

We therefore agreed not to proceed with a

mandatory return in mid August but to re-assess the

situation in early September.

double-backers.

CONFIDENTIAL

/8.

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