SECRET
Secretary of State for the Environment, agreed that
the Governor should be informed that if he was able
to negotiate with his Executive and Legislative
Councils an annual defence contribution on the above
of paragraph 5 abar
basis, such a contribution would be acceptable to
asish
HMG.
It was at the time made clear to the
Governor that although the figure of £8.5 million
was the maximum that he saw any hope of
negotiating with his unofficial advisers, it was at
the same time the minimum sum that would be
acceptable to HMG. The Governor was therefore
asked to make it clear to his Executive Council that
HMG had hoped for a substantially larger
contribution, particularly having regard to the
healthy state of the Colony's finances, but that
taking into account the heavy future financial
commitments facing Hong Kong, HMG were ready to
accept £8.5 million as the very minimum contribution
to which they could reasonably agree. This was
particularly the case since (despite the fact that
the new agreement would be for five years) such a
contribution would do no more than restore the
situation (as regards the proportion of total costs
which it would represent) which obtained when the
previous contribution was negotiated in 1966.
Moreover a very substantial proportion of the
expenditure would be local expenditure on capital
works of direct and lasting benefit to Hong Kong.
10. The Governor accordingly put the proposals to
his Executive Council on 9 February. They met with
a totally unfavourable reception from the Unofficial
Members of that body who subsequently submitted
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