TNAG-0103-FCO40-139-Briefs-and-background-notes-for-Lord-Shepherd-1967 — Page 102

SECRET

9. The defence contribution has always been a sensitive issue in our

relations with Hong Kong since the Colony has been the only one to have

nade regular and substantial payment. The 1966 negotiations were carried

through by Mr. Fred Lee (then Secretary of State) with great difficulty and

the agreement, when announced, aroused unanimous public opposition locally.

Serious political consequences would arise if this matter were to be raised

again during the currency of the present agreement.

this was a

10. It also proved possible in 1966 to negotiate a settlement of issues

connected with the Services' holding of lands and buildings;

subject that, since the turn of the century, had engendered much ill-feeling.

It is hoped that the settlement now reached strikes a fair balance between

the civil and military interests in Hong Kong.

Hong Kong Department,

October, 1967.

SECRET