TNAG-0477-FCO40-542-Strength-of-garrison-in-Hong-Kong-1974 — Page 102

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science put pressure on Gibraltar to come to an accommodation with them, there is little scope for savings. Our present commitments oost £13 million a year, half of which goes on subsidising the dockyard.

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Caribbean and South Atlantic The cost of the small Falkland Islands detachment is minimal: if we were to make progress in our current exchanges with Argentina the need for the detachment could come to an end. If we are to retain forces in Belize the garrison of 600 men could not sensibly be reduced and, in the absence of a diplomatic settlement, its removal would very probably lead to the invasion af Belize by Guatemala and Mexico. The loss to our material' interests would not be significant, but the abandonment of a dependent territory to predatory neighbours would be a serious act of policy.

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Support Aspects If any of these overseas commitments are retained there would be communications, routine trooping and freighting tasks and a degree of sea maintenance, but these costs have been taken into account in estimating the total.

Critical Level and non-NATO Commitments Summary of Costs

40. We have examined the military contribution to NATO which the Chiefs of Staff judge to be the minimum compatible with the continued viability of the present NATO strategy, and the non-NATO commitments which may have to be retained. The cost of forces at the Critical Level is assessed at £3,800 million in 1978/79 and £3,750 million in 1983/84 (a saving compared with LTC 74 of £480 million and £750 million respectively). The savings involved would be less by some £200 million in 1978/79 and £150 million in 1983/84. than required by the First Level (4 per cent of GNP by 1983/84). The Critical Level of forces could however be sustained within a defence allocation of 4 per cent of GNP by the mid-1980s. If it were decided that provision should be made for the retention of the non-NATO and Mediterranean commitments indicated above in addition to the Critical Level of forces for NATO the total cost of the defence programme would be higher by some £70-£80 million (ie a total of about £3,875 million in 1978/79 and about, £3,825 million in 1983/84) and the difference in savings by comparison with those required at the First Level would be similarly increased. We now turn to the implications of the Four Levels of defence expenditure specified in our terms of reference but first we consider the resources available for defence.

Resources for Defence

41. Our GNP is now below France's and significantly below Germany's. Throughout the late 1950s and the 1960s France and Germany achieved a growth rate of at least 5 per cent a year, while ours was under 3 per cent. Preliminary studies of the effects of the oil crisis suggest that this divergence in growth rates will continue.........Over time such a difference in the annual increment to output makes a

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