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that these aircraft might be manned and serviced from local resources". Subsequent studies indicated that local resources could be used for servicing but that local manning would not produce significant economies and was undesirable on the grounds of efficiency. The Ministry of Defence accordingly produced
estimates of the costs of establishing and operating such a unit, with R.A.F. manning, which, in round figures, envisaged capital expenditure of £300,000 for the purchase of the air- craft and recurrent annual expenditure of £335,000.
7
Difficulties arose over the provision of the necessary
funds to meet this expenditure. The Chiefs of Staff and the Ministry of Defence maintained that no part of the costs should be accepted against defence votes since there was no military case for establishing a fighter unit in Hong Kong and that any argument for so doing must therefore be based on political
grounds.
8. On the other hand the Governor made it clear that any requirement that Hong Kong should pay for the capital cost of the aircraft would so affront public opinion in the Colony, and more particularly the opinion of the unofficial members of his Executive and Legislative Councils, that it would almost certainly lead to the abandonment of the whole project. The Governor would also see serious difficulties in meeting the recurrent costs of the scheme if this were to involve any increase in Hong Kong's defence contribution during the currency of the existing agreement between the Hong Kong Government and Her Majesty's Government, which expires in 1971. In the words of the Governor "unless the fighters can be provided wholly
free in the first instance and within the present contribution
for the first year, I am afraid we shall have to forego them.
If this can be done then there is some hope thereafter of "burying" them in the new negotiations" (for the renewal of the defence contribution agreement).
9. Lord Shepherd discussed the matter with the Governor when he visited Hong Kong at the beginning of June. At the request of the Minister, the Ministry of Defence agreed to let the
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