TNAG-0182-FCO40-218-Defence-contributions-1969 — Page 63

SECRET

strength these costs could be upwards of £11 million a

year, and I regard this as an unrealistic figure.

I consider £8-9 million to be the maximum the

Governor is likely to be able to persuade his unofficials

to accept. This would represent an increase of 60-80%

in the contribution. It would lift expenditure on

Defence and Internal Security from about £20 million p.a.

to £23-24 million (§.e. from about 15% of the budget to

17-18%). A contribution of this order happens to

equate with the current estimate of "local costs" of that

part of the garrison designated by the MOD as having an

internal security role. In spite of our dislike of

the designation formula (and its unreality), this seems

to be the only "rational" basis that can be devised for

calculating a contribution of the order likely to be

negotiable.

But at this stage I am very doubtful about putting

any proposition to the Governor. We can hardly do so

without appearing to take up a negotiating position from

the start- and this could build up undesirable resistance

at official level before these preliminary exchanges

get off the ground. My strong inclination therefore is

to leave the Governor to put forward his own ideas about

"rationalising" the basis of the contribution. His lack

of the necessary costs data will almost certainly detract

from the value of his first proposals; but equally

it could provide us with val id and reasonable grounds for

questioning them and offering our own counter-proposals.

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