TNAG-0348-FCO40-384-Costs-of-extra-services-provided-by-armed-forces-of-UK-in-Ho-1972 — Page 61

CONFIDENTIAL

4. From the Foreign and Commonwealth Office point of view

it would be better if any arbitration proceedings were to relate

solely to the MOD's claim against the Hong Kong Government,

at any rate in the first instance. If the decision went

against Hong Kong then we should need to decide whether to

approach Hong Kong on the subject (and in view of the state of

our relations with the Colony at the moment, and of the

substantial defence contribution wrung from them last October,

we should wish to avoid doing so if at all possible);

whether to seek Treasury authority to meet the MOD claim from

Foreign and Commonwealth Office Votes.

or

5. It would be better if we could agree with the Ministry

of Defence on the terms of a joint approach to the Treasury,

rather than that each of us should make a separate approach.

The draft letter sent to us by the MOD will not do as it stands

since it does not meet the point at paragraph 4 above; nor

does it present the Hong Kong case in full. We have accordingly

amended and expanded the draft and I recommend that a copy of

the revised version (attached) be sent to the MOD under cover

of a letter addressed to Mr Thorp in terms of the draft which

is also attached.

6.

The terms of this submission and of the attached drafts

have been agreed with Finance Department.

17 March 1972

Baina

E O Laird

Hong Kong Department

CONFIDENTIAL

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