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with the UN show no sign of reducing.
Political and presentational implications
9. [FCO to draft para on political handling, covering perceptions in Hong Kong, China and the UK]
10. The announcement and public handling of such a reduction would also require careful handling, both in Hong Kong and in the
UK. We will need to be counter claims that we are abandoning Hong
Kong and
moreover that we are doing so to relieve chronic
overstretch in the Army.
Finance
11. The Hong Kong government will benefit significantly from these proposals as a result of having to pay 65% of the costs of a sharply reduced garrison. Initial calculations indicate that this would generate savings of [] in 1993/4 compared with current
estimates and [] in 1994/5. These would be offset by the need to
pay back to MOD sums outstanding from 1992/3 (amounting to []) .
12. For HMG there would be savings from reductions in military
infrastructure in Hong Kong and the release of locally entered
manpower. However, to the extent that personnel and units are redeployed rather than disbanded, MOD would lose receipts from the Hong Kong government. Illustratively, the early withdrawal of the UK battalion will cost the defence budget an additional
£11m per annum during 1994/5, 1995/6 and part of 1996/7. It might also be necessary to spend some money to find accommodation for
the returning battalion and other units. This could amount to [],
which would need to be spent in 1994/5. Overall, assuming the
broad programme of reduction set out in paragraph 7, the likely net cost to MOD, compared with current plans, would be [] in 1993/4, [] in 1994/5, [] in 1995/6 and [] in 1996/7. These
additional costs are unwelcome, but could be incurred in any case
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