TNAG-0476-FCO40-541-Strength-of-garrison-in-Hong-Kong-1974 — Page 125

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swift reinforcement. A Westabout reinforcement route supplementing an Eastabout civil rotation route would then be all that was required. If the garrison were reduced below the level referred to above then either Ministers would have to accept risks in Hong Kong hitherto considered unacceptable, or some sort of quick reinforcement route would be essential, and even this situation would have within it the substantial risk that the troops could not be got to Hong Kong in time.

6. When the right size of the garrison is agreed, we can go on to consider cost. There is obviously room for some flexibility. It is not unreasonable that, in present circumstances, Hong Kong should pay a higher proportion of its defence costs. If the garrison is reduced and some notional costs, including support costs, removed from the equation, then some increase in Hong Kong's proportion would result merely from keeping their contribution at the present level. This is about £8 million a year, plus rather more than another annual million, which may be agreed for the remaining two years of the agreement, to cover the increase of capital costs.

7. But Hong Kong would resist a proposal that they should pay more in absolute terms for a smaller force. There is also a political point to be made. Hong Kong could not pay substantially more than their present contribution, without halting their important social programmes. The days when Hong Kong had money to spare are over. This is partly the result of worldwide economic difficulties, but also of the Governor's social programme which means (among other things) re-housing half the population within ten years. This programme has the very strong backing of FCO Ministers. It is true that social plans in the UK are having to be restricted because of the cost of defence. But Hong Kong is a long way behind UK standards, and the present UK Government would not willingly agree to any slowing of the pace of development there. only alternative would be a completely new taxation policy in Hong Kong, which could threaten the bases of the Colony's economy and thus of our administration. We should moreover meet the argument that if more revenue is to be raised in Hong Kong, that too should be applied as a first priority to raising living standards.

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8. I conclude that if, as seems probable, we agree on some reduction in the Hong Kong garrison on defence grounds, we could well expect Hong Kong to meet a greater proportion of the cost by continuing to pay at least the present £8 million annual contribution. They might also perhaps be asked to pay more, for example to reflect inflation.except in the unlikely event of the agreed reduction in the size of the garrison resulting in total costs comparable to the present Hong Kong contribution, we could not expect then to meet the whole cost of the garrison themselves.

20 May 1974

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Sir D Watson Mr Cable

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