TNAG-0308-FCO40-344-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 154

Treasury Chambers

Great George Street, London S.W.I

Telephone: 01-930 1234, ext.

555

24

Our reference:

2DM 415/01 C

SE CRE T

Your reference:

12 February 1971

A Gaminara Esq

Hong Kong Department

Foreign and Commonwealth Office

London SW 1

اح

Done

Dear Gaminiere

NE**

REF.

HONG KONG DEFENCE CONTRIBUTION

You asked for comments on the Governors's Tel No 85.

2 As regards paragraph 11 there is, from our point of view, no flexibility whatsoever in HMG's position. £8m a year is the absolute minimum sum acceptable to Treasury Ministers. We could not recommend a lower figure to them. We would the Governor to be told clearly now that there is no hope of HMG accepting anything less than £8źm. I understand this is also the Ministry of Defence's

view

3

Wis

I would not object to the principle contained in paragraph 10 if it is agreed by MOD and DCE - ie that capital works should be borne in kind on Hong Kong votes like the maintenance thereby reducing DOE expenditure; (I understand MOD are content that this would not cause difficulties in 1971-72 for which year the Estimates are now closed.) But I would expect this principle to apply not to "£3m worth of capital work in each year" but to

but to "those works not exceeding £3m in value in any one year which are identified as constructions which under the terms of the new agreement would become the property of the Hong Kong Government if no longer required by HMG" There may well be less than £3m of such works in some years, and of course it should be quite clear that in a year when the agreed works in kind estimate was, say, only £2.5m, the cash contribution would be £3.8m: this is what we all understand by virement I believe.

•

4 It would have been very much better if we could have had the agreed new figure in the Hong Kong Estimates rather than the "old one" but I suppose the latter cannot now be avoided. I hope the footnote will be such as to enable the necessary additional provision to be taken satisfactorily later.

5

The opening part of the Governor's telegram is rather pessimistic. I do hope (and I understand Thorp has mentioned this to you) that the Governor will in due course be deploying all the arguments at his command; (eg that £8.5m is only the equivalent of £5m in 1967 yet the offer is for 5 years; the levels of UK local spending in Hong Kong; the works programmes; the value of the garrison in the 1967 disturbances etc etc).

etoramme

6 I hope you will circulate a draft of your reply before it is sent.

7

I am copying this letter to Thorp and Smith.

SECRET

Jaws sincerely

Thrunk

T J BRACK