TNAG-0182-FCO40-218-Defence-contributions-1969 — Page 148

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9.

You will recall that the possibility of having a fighter unit stationed in Hong Kong was discussed at a Chiefs of Staff meeting which you attended in April 1968. According to our record of that meeting two points in particular were raised, both of which have a direct bearing on the question of costs. The first point was expressed as a hope that the charge to Hong Kong could be limited to operating costs and that it would not be necensary for that Government to purchase the aircraft. There is no indication of the source of the comment which may have been you yourself! You mentioned to me last October your view that the aircraft should be provided without charge. The second point is a statement attributed to you in the record from which (if you are correctly reported) it is clear that you expected Hong Kong to have to pay the whole of the recurrent costs of operating the unit. The actual rords attributed to you were (the reference being to a unit making maximum use of backing by Auxiliary Air Force personnel) : "Such a unit would seem adequate to meet the requirement, and it would be cheaper for the Hong Kong Government who would have to meet the cost. I am afraid that this may well be no more than the truth: however, we should be grateful for your views on the question of running costo. You will no doubt satisfy yourself as far as you can that the estimates of recurrent costs cover every possible aspect of operating the unit (in discussion here with Todd we wondered whether accommodation of personnel is an aspect fully taken into account.

10. As regards the capital cost of the aircraft, the fact that more than half the proceeds of their sale have to go to Amerića is one of which we intend to make the fullest use in pleading your case for a free gift, but we should appreciate any additional ammunition with which you can provide us. There is, we feel, very little chance that the Ministry of Defence can be persuaded to forego a. credit of £140,000 in their defence budget (having regard to the tight ceiling within which they are required to operate) and it may well be that we shall have to plead Hong Kong's cause in other quarters.

11. One final point, the existing defence contribution agreement with Hong Kong does not expire until March 1971. The question of how the costs of the Hunter detachment are to be met will therefore need to be settled in advance of negotiations on the post-1971 defence contribution. I mentioned this possibility to you when you were over herein October and I understood you to any thất from presentational point of view you would not wish the cost of the fighter unit to be treated separately (at any rate in Hong Kong) from the general defence contribution, although it might have to be negotiated separately within that contribution. It would be very helpful to us in our approach to the Ministry of Defence if you would say exactly how you would wish us to deal with this point, and particularly with the question of the timing of the actual payment for the fighter unit in respect of the one year's overlap with the current defence contribution agreement (March 1970 - March 1971).

(W. S. Carter)

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