TNAG-0308-FCO40-344-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 125

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be

therefore needs all the foreign exchange

surpluses which it is currently earning and also

needs to maintain such surpluses in the years

to come.

3.

Ministers fully realise that Hong Kong

faces large financial commitments in the years

ahead. It is for this reason that HMG have

said that they would be prepared to accept

MoD Views

£8.5 million as the very minimum contribution to

which they could reasonably agree. Although

in response to Co's inquiry

NOTHING TO BE WRITTEN IN THIS MARGIN

this sum appears at first sight to represent a

substantial increase on the current contribution

of £5 million, in real terms it represents no

greater proportion of the total costs involved

than did the current contribution when it was

negotiated in 1966. It represents in fact some

4.7 per cent of Hong Kong's revised estimated

Yevenue

recurrent review for 1970/71, as compared with

4.6 per cent in 1966/67 and with 5 per cent when

the Colony's first post-war contribution was

fixed. Moreover, unofficial members will be

aware that in 1966 HMG initially sought to obtain

a contribution of the order of £11 million which,

would cover the whole of the overseas expenditure

on the Garrison; however in view of Hong Kong's

own economic difficulties at the time HMG agreed

to a contribution of less than half that sum.

The sum of £8.5 million which HMG would now be

prepared to accept is therefore substantially less

than that sought five years ago despite the very

large increase in expenditure on the Garrison

(which is now envisaged

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