چر
Sir T Da
Daunt
CONFIDENTIAL
нка 063
RECE
1624
FROM:
PF Ricketts
Hong Kong Department
DATE:
25 October 1993
CC:
Sir J Coles
Mr Hum o/r
Mr Lever NPDD
pa.
a. 063/1.
'STRY
7 DEC 1993
TA
CISTRY Letion Taken
HONG KONG:
1.
THE GARRISON
You will recall that some months ago you kindly intervened with the MOD to encourage them to sort out their differences with the Hong Kong Government over the funding of the garrison, and in particular to try to build up a better working relationship through increased openness and forward planning.
2.
I thought that I should let you know that things have not been going too well. A Hong Kong Government team led by their new and rather direct Secretary for the Treasury, Donald Tsang, was in town last week. Tsang had lunch with Roger Jackling at the end, to review the position. In case Mr Jackling raises this with you, the main points of the dispute are as follows.
3. You may recall that part of the problem earlier in the year was that HKG were unable to pay their full dues under the Defence Costs Agreement (DCA) for the current financial year, because these costs had considerably exceeded the original estimates. They are anxious to maintain a smooth downward trend in the costs, bearing in mind the reducing size of the garrison, and high public expectations in the Legislative Council that this will yield early cost savings. The first problem is that, as one might have feared, the costs of reducing the garrison, including some redundancies, are high. MOD are asking for a figure from HKG considerably above the figure for the current year (as a rough order of magnitude about £180 million, as against £150 million in the current year). HKG maintain that this is politically impossible. The Legislative Council would refuse to vote an increase of this size. And once the issue becomes a political football in LegCo, they might refuse to vote any funds at all. HKG have offered a payment of about £135 million.
daunt25.10/MIN/NJH
CONFIDENTIAL