TNAG-0309-FCO40-345-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 98

From:

A. F. Thorp OBE,

SECRET

Head of F1(Air)

Our reference: Head of F1 (Air)/8437 Your reference:

MINISTRY OF DEFENCE Main Building, Whitehall, LONDON S.W.1

Telephone: WHItehall 7022, ext. 7189

105

X1 - Mr Thorp confirms that he means,

recurrent costs of which he reckons offhensi that some 70 % - 80% would be pay & allowances.

怔

E. 0. Laird Esq. CMG, MBE Hong Kong Department Foreign and Commonwealth Office King Charles Street LONDON SW1

RECEIVED IN 36,7'.

REGISTRY No.51

CUN 1971

22 June 1971

Kira kaina,

акк

10/9

LAST

REF.

NEXT

Ref.

Voy

Following our meeting yesterday about the Hong Kong Defence Contribution, I have been thinking about the condition which should be attached to the Governor's latest compromise solution to cover the possibility of a review after five of the seven years have elapsed. This is the form to be taken of the condition to safeguard UK's interests as referred to in (ii) of paragraph 6 of your letter of 9917 June.

시

2. I believe we must have something which is extremely straight-

forward and it seems to me there is no better way than to say that

review should take place at the end of five years if the cost of the

garrison has gone up by more than 7% since the beginning of the period

i.e. since April 1971. The figure of 7% is appropriate because the

amount of the contribution over the five years increases by only this amount under the Governor's proposal i.e. from £7M to £7.5M.

Thus, if it were to be shown that our forces in Hong Kong had become appreciably more expensive we could reasonably expect the figure for 1976/77 to be something in advance of £8M. I do not believe that there is any better way of dealing with this problem.

3. Considering the same point against what we will call the "Officials' compromise solution" i.e. starting at £7M in 1971/72 and increasing by £M per year to £9M in 1975/76, going on to £91M and £10M in the next two years if necessary, we are here budgeting for an annual increase of between 6% and 7% per annum. Putting it another way it amounts to an increase of 28% over the five year period. this case I would think that we would only want a provision for review after five years if it were shown that the 28% figure had been exceeded.

In

4. It might help you to know that there appears to be a reasonable prospect of the "Officials' compromise solution" being acceptable to the Ministry of Defence. We shall be prepared to recommend to our Minister that in the light of the present situation this would be a not unreasonable outcome. We should of course wish a paper for the DOPC to show all four options as we agreed but I think you can take it that we shall not press for rigid adherence to the £8.5M per annum as agreed previously by Ministers.

SECRET

15.