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increases now required are very largely a consequence of our
decision to withdraw from Singapore.
14. If it is considered that the dual role of our forces in Hong
Kong should in some way be reflected in Defence votes we might
consider whether, in the special circumstances of Hong Kong, a
proportion of the expenditure could be met from Commonwealth Office
(and eventually Foreign Office) votes. But the usual doctrine
(that has stood the test of time) is that a Colony should contribute
to its own defence according to its capacity to pay; and it is on
this basis, I consider, that Hong Kong should continue to contribute.
15.
In cash and in services Hong Kong at present makes an annual
defence contribution of the order of £5 million a year under an
agreement concluded in December 1966 which runs until March 1971.
The contribution will be due for re negotiation in 1970, an appro-
priate time to consider what might be Hong Kong's contribution
to the military requirements there after our withdrawal from
Singapore is complete.
Because
16. I must advise against any attempt how to obtain an advance
commitment from Hong Kong to a higher contribution.
devaluation has led to a loss of some £30 million in the value of
Hong Kong's official reserves (a factor that could well affect
the pace of development of the social services), this is not a
propitious time to be seeking a higher contribution to H.M.
Exchequer, Nor can we now determine what Hong Kong will be in a
position to pay after 1971; for example one of the factors we
shall have to consider is the resources that the Colony may then
have to devote (as much from political necessity as from reasons
of enlightened policy) to the improvement and expansion of much
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