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MONTHS OF BRITISH ADMINISTRATION.

SOONER?

02500 MDHIAN 1677

COULD IT NOT HAPPEN MUCH

(D)

ANOTHER POSSIBILITY WHICH I SUGGEST SHOULD BE CONSIDERED IS THE USE OF ONE BATTALION ON DUTIES OVERSEAS. WOULD IT BE POSSIBLE FOR EXAMPLE TO MAKE SOME OF OUR CONTRIBUTION TO UN FORCES FROM THE GARRISON? WHEN FORCES ARE OVERSEAS, HKG IS NOT REQUIRED TO PAY FOR THEM.

8.

AN UNPALATABLE FACT WE MUST FACE IS THAT EVEN IF ALL OF THESE POSSIBLE MEANS OF ACHIEVING CUTS WERE INTRODUCED, THEY WOULD BE UNLIKELY TO BRING ABOUT SIGNIFICANT DECREASES IN ACTUAL EXPENDITURE UNTIL 1994/95. WE WOULD THEREFORE RUN THE RISK THAT, ONCE ANY CARRY-OVER FROM 1992/93 HAD BEEN SETTLED, THE BALANCE REMAINING IN THE ESTIMATES FOR 1993/94 WOULD NOT BE ENOUGH TO SETTLE HONG KONG'S SHARE OF GARRISON EXPENDITURE AS CURRENTLY PLANNED FOR THAT YEAR. RETURNING TO LEGCO FOR SUPPLEMENTARY PROVISION WOULD RISK DEFEAT. A WAY MUST THEREFORE BE FOUND -IN CONSULTATION WITH THE MOD- TO SMOOTH OUT THE PLANNED FLOW OF EXPENDITURE UNTIL THE SAVINGS WE WILL BE SEEKING START TO BITE IN 1994/95.

9. I SHOULD VERY MUCH WELCOME FCO VIEWS ON ALL OF THIS. SUBJECT TO THOSE, I INTEND TO WRITE TO MR RIFKIND TO FOLLOW UP MY DISCUSSIONS WITH HIM IN JANUARY. I WILL OF COURSE COPY MY LETTER TO THE FCO AND IF YOU WERE ABLE TO CHIP IN YOUR SUPPORT THAT WOULD BE VERY HELPFUL. I ALSO HOPE THAT SIR T DAUNT AND THE DEFENCE SIDE OF THE OFFICE, AND HKD, CAN BE FULLY INVOLVED IN THE MOD REVIEW PROCESS. MAINTAINING SUPPORT FOR THE BRITISH MILITARY PRESENCE HERE OVER THE COMING YEARS IS NOT GOING TO BE EASY.

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SIR J COLES

SIR T DAUNT

MR HUM

MR LEVER

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