TNAG-0254-FCO40-290-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 6

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Note for Sir Stewart Crawford's meeting with Mr. Haddon-Cave, Financial Secretary Designate,

Hong Kong

Hong Kong Defence Contribution

Hong Kong has paid an annual contribution to "imperial"

defence since 1863. In 1958 the contribution was fixed at

£1 million per annum. The current Defence Contribution

Agreement between Her Majesty's Government and the Hong Kong

Government was negotiated in 1966 and expires in April, 1971.

Under the terms of the Agreement Hong Kong makes an annual

contribution of £1 million plus a special additional annual

contribution of £32 million towards the "local costs" of the

Garrison ( which were assessed at £9 to £10 million out of a

total annual cost of about £16 million

2.

The defence contribution has always been a sensitive

issue in our relations with Hong Kong, since the Colony has

been the only one to have made regular and substantial

payments. The 1966 negotiations were carried through by the

then Secretary of State with great difficulty and the Agreement,

when announced, aroused unanimous opposition in Hong Kong.

3. When the then 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....

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