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Your Ref. D.M.147/326/01
Draft
My Ref. FED.418/403/02
21st August, 1957.
Would you please refer to your letter of 11th June, 1957, about the question of aid to Hong Kong in squatter resettle- ment arising from the refugee influx and the allied question of the level of Hong Kong's contribution towards the cost of Imperial defence.
2.
We talked this over with the Governor during his recent visit to London and I think that it was generally agreed that no case could be put forward at present for a direct financial contribution from H.M. Government in the United Kingdom to the Hong Kong Government on a strict basis of need, in the sense that Hong Kong would be unable to pay its way unless given money for squatter resettlement. That does not however solve the political problem, which is to maintain the confidence of the population of Hong Kong that H.M. Government is concerned for their interests, aware of their difficulties, and not inclined to write them off; it can hardly be over-emphasised that any such loss of confidence would make it virtually impossible for us to maintain the British position in Hong Kong for any length of time. It is indeed already in danger of being weakened through reductions in the garrision (which cannot long be concealed), reductions in the size of the base services and consequently in opportuni- ties for civilian employment, and the continuing pressure (which H.M. Government has so far resisted) for the restriction of imports into the U.K. from Hong Kong in the interests of U.K. industrialists. If people in Hong Kong are left with the
LT.cofage 52 of 85
LT.COL.W. RUSSELL EDMUNDS, 0.B.., T.D.
/impression
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