TNAG-0182-FCO40-218-Defence-contributions-1969 — Page 120

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Mr. Carter

In May 1968 the Defence and Overseas Policy Committee approved proposals put forward by the Ministry of Defence (with our support) for the future strength and structure of the Naval and Army elements of the Hong Kong Garrison having regard to the withdrawal of British Forces from Malaysia and Singapore in 1971. At the same time they approved a proposal to station Hunter air- craft in the Colony subject to further examination of the possibility that these aircraft might be manned and serviced from local resources. The Committee also decided that consideration of where the costs of the Garrison (presumably including the fighter unit) should be borne should be deferred. As a result, The Ministry of Defence carried out examinations, both in Hong Kong and in Whitehall into the total estimated costs of operating the proposed fighter unit. On the basis of these examinations the Ministry of Defence have calculated that the estimated re- current costs of operating the unit would be £325,000 - £335,000 per annum. In addition, a net capital sum of £140,000 would need to be found for the purchase of the aircraft. In conveying this information to us the Ministry of Defence said that since the requirement for the fighter unit was based entirely on political and psychological grounds and since there was no Military justification for a permanent fighter presence in the Colony, the Chiefs of Staff had stipulated that the costs of the detachment should not be borne on the Defence Budget. The Ministry accordingly looked to us to meet the costs and enquired what arrangements we envisaged for reim- bursing them the actual running costs of the unit and the capital amount required for the purchase of the aircraft.

2. In February we wrote to the Governor enclosing details of the estimates prepared by the Ministry of Defence and explained to him the attitude being adopted by the Ministry over the financial issues involved. We have now received the Governor's reply to our letter.

3.The financial commitments involved in this exercise are inevitably bound up with Hong Kong's defence contribution. The current agreement governing the size of that contribution expires in 1971 and will then need to be renewed.

However,

the situation is complicated by the fact that it is proposed to move the fighter unit from Singapore to Hong Kong in March 1970, the date when the Hunter Squadron in the Far East Air Force is due to be disbanded. The aircraft would then be simply re- deployed from Singapore to Hong Kong and the expense of returning them to the United Kingdom and subse- quently flying others out to Hong Kong would thus be avoided. This introduces the added complication that the costs of the unit would need to be found from somewhere during the last year of the current Defence Contribution Agreement; thereafter they would presumably be taken into account when the new Agreement is negotiated.

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