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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 could arise if we were to seek a revision of the contribution during the currency of the present agreement: This is a factor that has had to be taken into account in deciding whether or not fighter aircraft should be repositioned in the Colony before April 1971, when the present agreement expires (see Annex B).
6.
When in May 1968 the Defence and Overseas Policy Committee approved the force levels of the post-1971 garrison, Ministers decided to defer consideration of where its costs should be borne pending a full assessment of the cost of the
Hong Kong commitment. It was nevertheless clear that the Ministry of Defence were expecting their votes to be reimbursed
to the extent of not less than the full budgetary cost of forces attributed to the internal security role of the garrison.
7.
When the Defence Secretary visited Hong Kong in June 1969, the Governor suggested to him that as a first step in preparing for the negotiations over the post-1971 defence contribution
agreement, officials of the Hong Kong Government should work
out a figure for Hong Kong's contribution, both in relation to
the size of the garrison and to what would be politically
acceptable in Hong Kong. This would then be put to the Foreign and Commonwealth Office and if the latter (after consultation with the other Departments concerned) considered the
figure to be a reasonable one, the Governor could put it to his
Executive Council at the appropriate time. If the latter agreed the figure, it could then be put forward as an offer by the Hong Kong Government, thus avoiding any appearance of its being a demand by Her Majesty's Government. Mr. Healey agreed that such an approach seemed sensible and as a result the Governor has been addressed in terms of a letter, a copy of which is attached. The terms of the letter were agreed
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