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6. IT IS ALSO A FACT THAT THE LOCAL SPENDING POWER OF THE FORCES HAS RECENTLY BEEN INCREASED BY AN ESTIMATED £1 MILLION ANNUALLY AS A RESULT OF THE MILITARY SALARY AWARD.
7. HMG APPRECIATE THAT, FEW IF ANY OTHER DEPENDENT TERRITORIES HAVE CONTRIBUTED TO THE COST OF THEIR OWN DEFENCE BY HM ARMED FORCES ON THE SAME SCALE AS HONG KONG HAS DONE OVER THE YEARS. BUT THIS SHOULD NOT BE ALLOWED TO OBSCURE THE FACT THAT MANY TERRITORIES HAVE NOT PALD DEFENCE CONTRIBUTIONS TO HMG BECAUSE THEY HAVE BEEN DEFENDED BY ESSENTIALLY LOCAL FORCES PAID FOR FROM THE LOCAL BUDGET.
8. HONG KONG IS NOT UNIQUE AS A DEPENDENT TERRITORY IN THAT IT RECEIVES LITTLE AID FOR DEVELOPMENT PURPOSES FROM HMG. THE BAHAMAS AND BERMUDA ARE BOTH IN A SIMILAR POSITION.
*. IT IS TRUE THAT HONG KONG'S STERLING BALANCES ARE LARGE AND THAT
TRAFFIC RIGHTS AT KAI TAK AIRPORT REPRESENT A VALUABLE BARGAINING COUNTER IN INTERNATIONAL AIR SERVICES NEGOTIATIONS. HOWEVER, THE ADVANTAGES OF THE FINANCIAL AND COMMERCIAL RELATIONS BETWEEN THE UK AND HONG KONG ARE BY NO MEANS ONE-SIDED MOREOVER IT SEEMS UNLIKELY THAT THE POLICY OF CONTROLLING TRAFFIC RIGHTS AND EXCHANGING THEM WITH OTHER GOVERNMENTS IS WORKING AGAINST HONG KONG'S DUAL INTEREST IN ENCOURAGING THE GROWTH OF AIR TRAFFIC AT KAI TAK AIRPORT AND SUPPORTING CATHAY PACIFIC AIRWAYS.
10. IF YOU WISH TO COMMENT ON DEVALUATION OF THE POUND YOU COULD
SAY:
"IT IS TRUE THAT HONG KONG SUFFERED A LOSS WHEN THE POUND WAS DEVALUED IN 1967: BUT SO OF COURSE DID EVERY OTHER OVERSEAS HOLDER OF STERLING. IT WAS AS A CONSEQUENCE OF THIS THAT ARRANGEMENTS WERE SUBSEQUENTLY AGREED WITH THE HONG KONG GOVERNMENT WHEREBY VIRTUALLY 90 PERCENT OF ITS OFFICALLY HELD STERLING NOW ENJOYS A DOLLAR VALUE GUARANTEE, SO THAT IN THE EVENT OF A FURTHER STERLING DEVALUATION HONG KONG WOULD SUFFER VERY LITTLE, ALMOST THE WHOLE OF THE ADVERSE EFFECT BEING BORNE BY THE UK. THE POTENTIAL LOSS FROM THIS COURSE IS THEREFORE NOT A SERIOUS FACTOR TO BE TAKEN INTO ACCOUNT TODAY IN ASSESSING THE DEFENCE CONTRIBUTION''.
11. YOU COULD ALSO POINT OUT THAT WHEREAS IN NOVEMBER 1968 (SHORTLY AFTER THE STERLING AGREEMENT WAS SIGNED) HONG KONG'S STERLING RESERVES STOOD AT £358 MILLION (OF WHICH £322 MILLION WAS GUARANTEED), IN JANUARY 1971 THEY STOOD AT £554 MILLION (OF WHICH £493 MILLION WAS GUARANTEED),
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