TNAG-0308-FCO40-344-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 92

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such that, even though substantial repayments of

debt have been made, a very large burden of short

and medium-term official debt remains outstanding.

These debts have to be repaid in the next few years

The need for the UK to maintain a substantial and

continuing surplus on current account not only to

repay remaining debt, but also to cover large capital

outflows associated with aid, overseas investment

and trade credit, and to achieve a more sustained

economic growth than in the past, has not therefore

diminished.

3. It is fully realised that Hong Kong faces large

financial commitments in the years ahead.

It was

precisely for this reason that HMG informed me, in

reply to my enquiry, that they were ready to accept

£8.5 million, but only as the very minimum contri-

bution to which they could reasonably agree.

Such

a contribution would do no more than restore the

situation (as regards the proportion of total costs

oh it would represent) which obtained when the

current contribution was negotiated in 1966. It

would represent some 3.9 per cent of Hong Kong's

estimated revenue for 1971/72; in 1967/68 the

corresponding figure was 4.25 per cent;

after the war it was 5.5 per cent.

immediately

4. It has long been HMG's policy that the govern-

ments of dependent territories should provide for

their own internal security (on the grounds that the

maintenance of law and order must be one of the

first priorities of any government) and that they

should also provide as far as possible for their

own local defence.

(8430) Dd.033246 600m 9/66 G.W.B Ltd. Gp 863

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