TNAG-0310-FCO40-346-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 66

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and £600,000 towards a

programme of capital works. This agreement came about largely as a result of

proposals formulated unilaterally by Her Majesty's Government and we were asked to agree the sums involved. Although agreement was eventually reached on the contribution after protracted discussion, there was no agreement on the basic criteria on which a defence contribution should be assessed. This agreement expired on 31st March, 1971.

As honourable Members are aware, the negotiations for a new agreement have been difficult and complex. At the outset matters were delayed by uncertainty over the size of the garrison to be maintained here consequent upon changes of the policy to be pursued by Her Majesty's Government regarding the stationing of forces east of Suez. With the changes introduced by the present Government in the United Kingdom, it has now been settled that the garrison here should consist essentially of 6 2/3 major units. A major unit, I should perhaps explain, is one battalion or an equivalent unit in other

arms.

In the United Kingdom, it was initially hoped and expected that our contribution would amount to some £12 million per annum for the next five years.

You, Sir, of course, quickly pointed out that agreement to a contribution of this magnitude was quite out of the question, and quite unreasonable: particularly in relation to the very heavy calls which we shall have on our resources over the next few years and which will, I fear, begin to be apparent when honourable Members come to consider the draft Estimates for 1972-73.

There is, in our view, as was made very clear by you, Sir, in London, only one line of argument which can be said to justify the making of any defence contribution. That is that, since the presence of the garrison contributes very materially to the stability and prosperity of Hong Kong, Hong Kong should make some contribution towards the £28 million or so, inclusive of capital expenditure, which it costs United Kingdom taxpayers annually to support the garrison here. As to the amount, it should be neither niggardly, on the one hand, nor