TNAG-0477-FCO40-542-Strength-of-garrison-in-Hong-Kong-1974 — Page 16

Jefrem Spot.

2/4. M. Hatters by The 5. Arthi /M2

Thomson

SECRET

NCELLOR OF

CHANC

THE EXCHEO

'COPY NO.

CH/EX REF:

Treasury Chambers, Parliament Street, SWIP 3AG

Mr Wilford Sin 6. J. Killick / SEED.

Defence Defor Nond

for advice soon

01-930 1234

I don't think we read

8 August 1974

prelov so,

Freing this form

wish to mull over in the next few weeks.

OF 17 COPIES

14 46

When for the best Kilve We begin?

I hope you will forgive me for raising a point you\may

The minutes of our OPD Meeting on 1st August do not seem to me fully to reflect what I felt was the sense of your summing up. I had the impression that the Committee did conclude it would be necessary to make public before the end of September our decision in principle to wind up our military commitments outside NATO, although I appreciate that further examination of some aspects is required. In my view this is likely to prove essential in order to convince the Party and the rest of the Cabinet of our deter- mination to cut defence expenditure, and to render the currently expected increase in the Defence Budget next year more acceptable. I do not think it will be possible to conceal this increase from colleagues in the spending departments once we take the FESC work in Cabinet in September. The issue may also bulk large in discussions between the Cabinet and the National Executive Committe about the Manifesto - particularly since at present at least half the commitments envisaged in the last Manifesto cannot be accommo- dated within our public expenditure limits over the next four years, which will be under considerable strain.

For these reasons I doubt whether we can afford to delay consulting those concerned outside NATO about the rundown East of Suez and in the Mediterranean. Moreover, I think the Foreign Secretary might find it useful to keep the planned rundown of our forces in Cyprus as one of his objectives in the ongoing negotiations with Greece and Turkey.

I am sending copies of this letter to Jim Callaghan, Roy Mason and to Sir John Hunt.

(Denis Healey)

The Rt. Hon. Harold Wilson, OBE., FRS., MP.