DEFENCE REVIEW
1.
The Governor of Hong Kong will be returning to the UK in mid-June. Advantage will be taken by the FCO to ascertain his views concerning the effect of the Defence Review on the Crown Colony. Sir D Watson may wish to put the following points in confidence to Sir M MacLehose for his consideration prior to the discussions in London, stressing at the same time the extreme confidentiality of the discussions.
2. With anyone but the Governor himself the line will have to remain that no decisions have been taken and that it would be premature to speculate on the outcome of the Defence Review. Mr Ennals's answers to questions on 27 March and 1 April and the Secretary of State's letter to Sir A Royle (copies of which are attached) are relevant.
3. The options being examined in the Defence Review are such that, if Ministers insist on this order of stringency, virtually everything outside NATO would have to be cut altogether but we confidently expect Hong Kong to be an exception. Nevertheless, it is extremely unlikely that Hong Kong will not in some measure be affected. Our prime consideration is that any cuts there must not create a crisis of confidence. The problem, therefore, is to
assess:
4.
(a) what size of garrison is necessary on politico/military
grounds to do the job?
(b)
how a reduction could be achieved without loss of
confidence?
(c) what part of the new cost should be borne by Hong Kong
and how this can be arranged?
Not even preliminary decisions have, of course, been made about cuts, but we might have to consider a run-down of the following order:-
(a) reduction of the garrison by half to be effected by
withdrawal of the Gurkha battalions. (It is at present expected that the entire Gurkha Brigade will be disbanded within five years.)**
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SECRET
/(b)
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