TNAG-0310-FCO40-346-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 142

SECRET

ANNEX B TO XCS(71)1 2

18th February 1971

DEFENCE CONTRIBUTION

Further to our recent conversation, when I informed you that, as indicated at the Executive Council meeting at which this subject was discussed, I had endeavoured to ascertain whether the contribution of a sum in excess of £ 8.5 million p. a. would be required by HMG and had gained the impression that it would not, I now have further information on the subject which I would be grateful if you would pass to Honourable Members as appropriate.

2

I am informed by the Secretary of State that Ministers have confirmed that this sum would be acceptable, subject to the conditions I have already conveyed to you. I am however to make it clear that HMG had hoped for a substantially larger contribution, particularly having regard to the healthy state of the Colony's finances; but that, even taking into account the heavy future financial commitments facing Hong Kong, this was the very minimum contribution to which they could reasonably agree. This, I am to say, is 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 repre- sent) which obtained when the current contribution was negotiated in 1966. Finally, I am to add that Ministers wish to point out that a very substantial proportion of the expenditure would be local expenditure of direct and lasting benefit to Hong Kong.

3

I remain ready, of course, to assist Honourable Members in this matter by discussion or in any other way desired by them.

R. W. Primrose Esq., MBE, JP

SECRET

D. C. C. TRENCH