TNAG-0043-FCO40-79-Future-Sovereignty-of-Hong-Kong-Defence-Review-Working-Party-1968 — Page 156

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Treasury Chambers

Great George Street, London S.W.I Telephone: Whitehall 1234, ext. 193

12th February, 1968

193

Our reference: Your reference:

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Deur Carter

92

I refer to your letter of 30th January to Murray at the Foreign Office about the long term study on the future of Hong Kong. We have the following preliminary comments on the draft paper which you

enclosed:-

(1) paragraph 6, page 2 and conclusion (c) the words "in the

event of a world trade recession" should I think be deleted we are not expecting such a recession but it would create major problems which would not be limited to Hong Kong if it arose;

it might perhaps be desirable to substitute the following words: "in the event of a disruption of productive activity caused by political disturbances";

(2) paragraph 9, page 11: the first sentence seems to understate

the economic value to China of Hong Kong being in our hands; I suggest that after "but" the sentence might read as follows: "its contribution would probably not be regarded as indispensable to those in China who regard political "purity" as priority."

of Furt

(3)

we are clear that the material on defence costs (paragraph1, page 4 and conclusion (a)) needs to be considerably expanded. To call our foreign exchange costs our "gross expenditure on forces in Hong Kong" is rather misleading. The budgetary costs of maintaining our military presence must be very much higher, because they would take into account the full pay of our forces there (which the foreign exchange costs do not) and make some allowance for the full logistic backing and for weapon and equipment costs. This point is the more important in that, as our withdrawal from the Far East proceeds, so must the military cost of Hong Kong increase. I hope that the Ministry of Defence will be commenting on this point.

2. I am sending copies of this letter to the recipients of yours.

You file the

(S.H. Wright)

W.S. Carter, Esq., Commonwealth office, Curtis Green Building, LONDON, S.W.1.

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