TNAG-0309-FCO40-345-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 17

CYPHER/CAT A

FM F C O 291245Z

SECRET

TO PRIORITY GOVERNOR

SE CRE T

RECORD IN

REGISTRY No.51

- 2 AUG 1971

LAST

REF.

NEXT

-11110/4. (1944)

Parts.

125

TOP COP LØP

192

126

HONG KONG TELNO 553 OF 29 JULY.

YOUR TELNO 367: DEFENCE CONTRIBUTION.

1. MINISTERS HAVE NOW CONSIDERED THIS. AGAINST THE BACKGROUND OF

RISING DEFENCE COSTS FOR HMG IN HONG KONG AND THEIR VIEW THAT IT

WAS WHOLLY UNREASONABLE THAT THE COLONY'S FUTURE CONTRIBUTION SHOULD AMOUNT TO A SMALLER PROPORTION OF ITS REVENUE THAN PREVIOUSLY, THEY PREFER A SCHEME AS OUTLINED IN PARA 2 BELOW TO THE PROPOSALS WHICH YOU PUT FORWARD DURING YOUR VISIT HERE IN

JUNE.

2. HMG WOULD BE PREPARED TO ACCEPT AN ARRANGEMENT WHICH WOULD

PRODUCE AN AVERAGE ANNUAL CONTRIBUTION OF POUNDS 8 MILLION OVER

A PERIOD OF 5 YEARS. THIS WOULD GO SOME WAY TOWARDS MEETING THE

VIEWS OF THE UNOFFICIAL MEMBERS OF YOUR EXECUTIVE COUNCIL. FOR EXAMPLE, IF THE FIGURE FOR MAINTENANCE AND MINOR WORKS WERE LEFT AT POUNDS 2.2 MILLION A YEAR, IF THE CONTRIBUTION TOWARDS CAPITAL - WORKS WERE PUT AT POUNDS 2.5 MILLION A YEAR FOR THE FIRST 2 YEARS,

POUNDS 3.0 MILLION FOR THE THIRD YEAR AND POUNDS 3.5 MILLION FOR THE

FOURTH AND FIFTH YEARS, AND IF THE CASH CONTRIBUTION'' WENT FROM POUNDS 2.3 MILLION IN THE FIRST YEAR TO POUNDS 2.8 MILLION IN THE SECOND, THIRD, AND FOURTH YEARS AND POUNDS 3.3 MILLION

FOR THE FIFTH YEAR, THE ANNUAL TOTAL WOULD RUN FROM POUNDS 7 MILLION IN THE FIRST YEAR INCREASING BY POUNDS ONE HALF MILLION EACH YEAR

TO POUNDS 9.IN THE FIFTH YEAR.

3. SUCH AN ARRANGEMENT WOULD BE SUBJECT TO THE FOLLOWING CONDITIONS:- (A) REVIEW AT ANY TIME-

(1)

IF THE COSTS OF CAPITAL WORKS AT APRIL 1970 PRICES WERE TO GO UP OR DOWN BY 50 PER CENT OR MORE, OR

(11) IF THERE WERE AN INCREASE OR DECREASE IN THE SIZE OF THE GARRISON BY MORE THAN ONE MAJOR ARMY UNIT OR THE EQUIVALENT, CR (111) IF THE ECONOMY OF HONG KONG WERE TO SUFFER SUCH A SERIOUS

ADVERSE CHANGE THAT THE CONTINUED PAYMENT OF A CONTRIBUTION AT

THIS LEVEL COULD BE SHOWN TO BE AN UNREASONABLE BURDEN ON THE

COLONY'S FINANCES.

(B) THE POUNDS 2.2 MILLION FOR MAINTENANCE AND MINOR WORKS WOULD

BE A NOTIONAL FIGURE ONLY. THE HONG KONG GOVERNMENT WOULD BE

RESPONSIBLE FOR ALL MAINTENANCE AND MINOR WORKS OVER THE

PERIOD OF THE AGREEMENT, NO MATTER WHAT THE COST.

/(C)

THERE

SECRET