TNAG-0309-FCO40-345-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 104

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(but not to the bigges

of 50%)

b)

prices would come down rather than go up). If

the Governor is right and prices do come down this

arrangement will be to the advantage of Hong Kong.

If on the other hand prices go up the arrangement

could be even more advantageous to HMG than our

original proposals.

The Governor reckoned last week that he would be

able to obtain support for his proposals from a

majority of the Unofficial Members of the

Executive Council;

he was much less certain about

the attitude of the Unofficial Members of the

Legislative Council. He suggested it might be

necessary to use the reserve powers to get the

necessary legislation through even if the proposals

were supported by a majority of the Unofficial

Members of Executive Council. I think we need

to think this matter through most carefully and

it would be helpful if we could have the views

of the Governor on the following points -

(i) If Ministers decided to give the Governor's

proposals their blessing should they be advised

to take a decision at the same time about the

use of the reserved powers? In other words,

should there be a decision here and now that

there can be no going below £7.5 million a

year for 7 years? Alternatively, should such

a decision be coupled with and dependent upon

support for the proposals by a majority of

the Unofficial Members of the Executive Council?

5.

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/(ii)