TNAG-0310-FCO40-346-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 199

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to increasing the capital element to £17 million and

reducing the recurrent cash element of the contribution

as indicated in paragraph 2 of your telegram No 528

provided that the total annual contribution remained at

£8 million over the five year period. ( You are

doubtless aware of

fact that included in capital

element of £17 million is some £1.3 million worth of

work being executed direct by Department of

Environment.

5.

However, in accepting this HMG would need some

modification of the condition suggested in paragraph

3 (B) of your telegram No 528. It is accepted that

are to the extent that HMG is in any way responsible for

any shortfall in the capital expenditure of £17 million

over the five year period there should be no increase

in the cash contribution.

On the other hand to the

extent that responsibility for any shortfall could be

placed at Hong Kong's door (eg see paragraph 2 (B) of

your telegram No 266) then we would expect the balance

to be made up in cash. Virement in capital works

expenditure between one year and another would remain

an essential feature.

6. We confirm that conditions in your paragraph 3 (A)

and (B) (subject to paragraph above) are accepted.

Paragraph 7 of your telegram No 528 is noted.

7.

If unofficial members question the validity of the

argument referred to in second sentence you should ask

them to give their specific reasons for doing so.

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