SECRET
IMMEDIATE
3. The Defence Secretary however agreed that officials should
cost the Treasury proposals. The outcome is that the MOD now
acknowledge that the Treasury proposal to return the UK Battalion
from 1 April 1995 would indeed save
30 million for the MOD
budget. But the MOD have continued to argue that no decision
should yet be taken, pending the outcome of the current PES Round
and the Defence Costs talks. The Chancellor is pressing for a
decision now: partly on the grounds that it would not make sense
to conclude the Defence Costs talks with the Hong Kong
Government, and then to introduce this large new factor shortly
afterwards.
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32
Foreign
4. We believe that the time has now come for the
Secretary to intervene. As you will appreciate, the FCO are
caught in an awkward position. Both the Treasury and the MOD
would regard it as a breach of faith for us to bring you into the
internal Whitehall debate, the outcome of which would
theoretically be a further negotiation between MOD and the Hong
Kong Government about costs. On the other hand, it is clearly
essential that you are fully and properly consulted before any
decisions are made, on the basis of a detailed account of costs
In the circumstances, I propose that
we should invite the Foreign Secretary to make the following
points:
which might accrue to HKG.
The whole basis for the decision by OPD (K) to go for faster
run down of the Garrison was your judgement that it would not
be possible to secure Leg Co agreement for continued funding
under the DCA unless the costs of the Garrison to HKG
diminished year on year;
Since then, the MOD have announced with considerable fanfare
the faster reduction of the Garrison. Acceptance by LegCo of
cost savings have grown accordingly;
There is no question of your being able to secure LegCo
for distribution order see Page
Catchword.
agreement
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