TNAG-0309-FCO40-345-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 111

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Tremaury Chambers Greit George Street LC DON SW1

SECRET

Hong Kong Department

99

17 June 1971

1. At our meeting in my room last monday I undertook to pass on to you an account of oar disc ssion with Mr Royle, our Parliamentary Under-3ecretary of Chate, about the Hong Kong defence contribution,

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2. At the meeting, which was held this morning, Sir D Trench nóvized the Minister atron ly that HMG should not impose a contribution on Hong Kong without making some further attempt to reach agreement with the Unofficial kember.. He spoke at length in favour of his alternative proposals (the £7.5 million per annum ever a period of 7 years of which we gave you details at our meeting on the 14th) lie argued that the Červices would in fact have difficulty in spending as much as 819.5 million over the period of 7 years and when we suggested thet hie proposals took no account of any further capital worke that might be required in years 6 and 7 he thought that there would in fact be very little more by way of capital expenditure that the garvice authorities would need during that period.

1 though he did not say so, I got the impression that he had discussed this question with the Commander of the British Porces in the Colony.

D

3. Sir Trench went on to repeat that the figure of £2.2 mållion per annum for maintenance and miner works would be a notional figure only; the Hong Kong Government would in fact be completely responsible for all maintenance and miner works over the period of the agreement, no matter what the cost; and there could be virement in capital expenditure as between one Veer and another. He then compared the 'cash" contribution C2.5 million per annum for 7 years under his proposals as agidant 62.9 million per annum for 5 years under ours. He esrad again was it worth risking a major political crisis for the auto of £400,000 a year, part 12 not all of which might in any case be absorbed by an increase in the cost of maintenance on minor works.

SECRET

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