SECRET

IMMEDIATE

5.

agreement to any increase in the Hong Kong contribution to

Garrison costs. You have no reserve powers over finance;

The Treasury proposal would appear to swing significant extra

costs on to the

to the Hong Kong Government (although we have seen

no analysis of whether this would be the full 30 million or

only a part);

In short, no decision should be taken until you have been

fully consulted and this should be the next step. For the

reasons given above, the Foreign Secretary is certain that you would not agree to any increase in payments under the DCA

above that foreseen in the discussions between you and the

MOD on the basis of the proposal put to OPD (K) in June.

The aim would be to ensure that no decision could be taken

without you being brought fully in: but to finesse the fact

that we had already consulted you on the back channel.

17

6. Would you be content with this approach?

HURD

YYYY

ΜΑΙΝ

HD // HKD

HD//FED

HD//NPDD

PS

PS/MR GOODLAD

SIR J COLES

SIR T DAUNT

MR HUM

MR LEVER

33

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