SECRET
DEFENCE REVIEW
1.
The Ministerial statement on 3 December will contain the
following passage on Hong Kong:
"We intend to keep our forces in Hong Kong, although
we propose to make some reductions in them and to seek from the Hong Kong Government a larger percentage of their cost when the present cost-sharing agreement runs out in 1976."
The garrison will probably be reduced as a result of the Review by about one major unit/battalion. This will leave 5 units, three or four of which will be Gurkha battalions. The Ministry of Defence estimate that this is the minimum required for internal security purposes in the Colony. The main problem is the division of costs between HMG and the Hong Kong Government. The present Hong Kong contribution is £82 million a year against a total cost of about £40 million at September 1973 prices. The current Defence Agreement expires in March 1976. The cost of the smaller
force by that time is not likely to be less than £40 million and may be £50 million. DOPC have considered that Hong Kong should pay up to 75% of the total cost. This might mean a defence contribution from the Colony of more than £30 million, almost four times the present figure. The Governor has advised that
such an increase for a smaller force would not be viable in
Hong Kong. Among other things it would jeopardise the social programme which is strongly supported by UK Ministers. Discussions continue.
SECRET
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