Mr Laird
SECRET Reference
with (152)
So
K.271:
This minute should on Juvrent volume of defence contribution file from M. Lourd
on in velion
re
Lacid.
25.9.7.
•
1. Since I prepared the attached draft submission I have received the attached letter from Mr Smith, Department of the Environment.
2.
He raises 3 points:
(1) The Governor's use of the phrase "capital
costs should be subject to review" in paragraph 2 of his telegram No 668 (Flag D). I had in fact already covered this point in the drafting or paragraph 1 of the draft telegram attached to my draft submission. This point therefore falls away.
(2) The question of the Public Works Department
capacity to undertake the capital works programme. I have pointed out to Mr Smith that I consider this point to be covered by paragraph 5 of FCO telegram No 592 read in conjunction with paragraph 2(B) of FCO telegram No 266 (see the 2 papers flagged on the attached files).
(3) The question of purchasing instead of
building capital works. I have pointed out to Mr Smith (a) that the estimate or £17 million for the total capital works programme was based on construction costs and not on purchasing and (b) that the purchase or accommodation in Hong Kong, even if this were possible, would not add to the total accommodation available in the Colony and might therefore to this extent not be popular with the Governor. However on the whole I did not think that the Governor would raise objections to it.
3. I have discussed Mr Smith's letter both with the Ministry of Defence and with the Treasury. All three of us are in general agreement that it would be unwise to raise these new issues at this late stage. I have passed these concerted views on to Mr Smith and have suggested to him that if he is (as I understand) meeting Mr Haddon-Cave next week, this would present an ideal opportunity or raising matters or the kind that he has mentioned in his letter. However Mr Smith stuck to his guns and asked for his points to be included in our reply to the Governor. I said I was not prepared to accept them and he then asked if you would take the matter up with Mr Stretton (telephone number 735 7611 Ext 2087). There the matter rests.
4. I think that it would be the height of folly to introduce these new and subordinate issues at a stage when we have only one more hurdle to surmount before reaching agreement with the Hong Kong Government on the major issue of obtaining a defence contribution
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