TNAG-0309-FCO40-345-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 109

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Dear Hansford,

SECRET

BANK OF ENGLAND,

London BC2R 8AH

18th June 1971.

Οι

Rong Kong - Defence Contribution

I refer to Brack's note of 15th June addressed to hay and copied to me, about the proposal by the Governor of Hong Kong to deal with any shortfall in the defence contribution.

In his fourth paragraph Brack asks, in effect, whether h.k.0. ought to accept this offer, if Ministers decide not to press for the full 18.5 mm. per annum on which they have hitherto been insisting.

Although I recognise that an arrangement of the kind that the Governor is proposing would be of some benefit to the exchequer, I consider that this solution would be neither appropriate nor desirable in our dealings with Hong Kong. The benefits - which are likely to be comparatively small would, to my mind, be outweighed by the disadvantages; primarily the possibility that details of the arrangements would become known, either in Hong Long or here. Even if the details do not leak out, there is the danger that our readiness to conclude a bargain of this sort might be quoted against us in future negotiations with Hong Kong.

I hope, therefore, that it will be possible to reach agreement on a defence contribution without resorting to this rather pointless device.

If the decision were in fact to go the other way, it would be possible so to arrange matters that the transaction would not be apparent from published figures; but I suggest that this is something which could be discussed at a later stage if necessary.

I am copying this letter to Hay and Gwynn at H.M., and to Ganimara at F.0.0.

Yours sincerely,

(Signed) R. H. TURNER

J.E.Hansford, Esq.

(H.M.Treasury,

Great George Street, S.W.1.)