TNAG-0255-FCO40-291-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 37

W(B)L 51-7406

NOTHING TO BE WRITTEN IN this MARGIN

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Nor can we yet be sure that we shall succeed

in obtaining for Hong Kong what we believe to

be her rights in connexion with the UNCTAD

Generalised Preferences scheme. This

together with the risk of further uncertainty

for Hong Kong's interest as we move from

quotas to tariffs on 1 January, 1972, in

the field of cotton textiles, persuades me

that we should be reasonably generous to

Hong Kong in this matter of a defence

contribution and not seek to extract the

last pound of flesh.

9. The evident heavy capital needs of the

Colony as described in paragraph 7 above and

the threats to its future prosperity as

described in paragraph 8 are the background

to the risk of popular opposition to any

imposition of a defence contribution from

outside.

10.

In all the circumstances therefore,

I do not think it unreasonable that Hong

Kong should meet its defence debt to H.M.G.

on the basis of the 50% increase in its

current contribution which the Governor has

proposed. I therefore recommend to my

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colleagues that we should authorise him to

do his best to obtain from his Legislative

Council authority to pay a defence

contribution of £7.5 millions per year

for the next five years. In view of the

uncertainty as regards building costs, I

propose he should also be authorised to

endeavour to obtain agreement that, if

building costs increase or decrease over

the period of the agreement, such increase

or decrease should be shared equally between

H.M.G. and the Hong Kong Government.

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