TNAG-0475-FCO40-540-Contributions-of-Hong-Kong-for-costs-on-maintaining-military-1974 — Page 69

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NOTHING TO BE WRITTEN IN THIS MARGIN

Registry

No.

ECURITY CLASSIFICATION

CONFIDENTIAL AND PERSONAL

DRAFT LETTER

To:-

Top Secret.

Secret.

Sir Murray MacLehose KCMG MBE

Confidential& PERSONAL

HONG KONG

Restricted.

Unclassified.

PRIVACY MARKING

In Confidence

Type 1

+

FROM

A C STUART Telephone No. Ext.

Department HKIOD

DEFENCE AGREEMENT

1.

The Deputy Quarter-Master-General, Sir William

Jackson, came to Hong Kong recently for discussions

on the fact that the trigger point under

Article 3(i)(a) of the Memorandum of Understanding

had been reached, with inflation raising costs over

50% of the base line level. (Incidentally we did

not know of this visit in the FCO until it had taken

place.)

2. We understand from the Ministry of Defence that

your general reaction was that this was a technical

question; that the agreement provided for a review

if costs rose to this degree; and that the

suggestion of discussions leading to an agreement

on supplementary contributions was fully acceptable.

This is borne out by the Secretary of Security's

letter to me of 5 March.

First,

On

3. I think there are two questions at issue.

are discussions on Article 3(i)(a) appropriate and

timely in themselves; and second, what are the

implications for other concurrent developments.

the first question, I understand that it is common

ground that the trigger point has been exceeded.

has been bearing the escalation of capital costs up

to 50% and it seems not unreasonable, in view of the

/terms of

HMG