TNAG-0475-FCO40-540-Contributions-of-Hong-Kong-for-costs-on-maintaining-military-1974 — Page 71

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CONFIDENTIAL AND PERSONAL

the Defence Review are unlikely to be known until

several months later; and that, since most of the

programme is married quarters, these are buildings which you would want if ever the army did

relinquish any of them. Second, they say that if, against expectations, the Defence Review did result

in really drastic decisions, the capital works

programme could be stopped before any new money had actually been spent (i.e. the middle of next year). Thirdly they estimate (and this is more of a guess than the other two) that whatever the results of the

Defence Review, it would be unlikely, if only for

practical reasons, to result in the removal of

significant numbers on the ground until 1976. They

argue therefore that the defence agreement would most

probably expire before the second trigger point

could be reached.

6.

་

But,

In view of this there would seem to be no

technical reason against a review now, under the

cost escalation clause, and some harm in delay.

given the general sensitivity of the defence

contribution question in Hong Kong, we would be very grateful for your personal assessment (with CBF if

you think it desirable) of whether this is the right

moment to begin a review under that head with the

other possibilities looming ahead of us.

7. Assuming that we do decide on discussions under

3(1)(a), the next question would be the sums involved.

The present MOD estimate is that the extra funds

needed to carry out the existing programme will be about HK$80 million. This would be over and above

the 50% increase in costs already incurred, all of

/which