17
Reference.....
CONFIDENTIAL
Mr Jackson, Defence Dept.
HONG KONG DEFENCE AGREEMENT
1.
RECEIVED **** REGISTRY No. 51
- 8 JUL 1974
HKK 10/9.
I have been asked to attend a meeting at the Ministry of Defence at 2.30 p.m. on 10 July to discuss a successor agreement to the present Hong Kong Defence Agreement. As you know, this agreement provides for the Hong Kong contribution towards the maintenance of the British garrison there, and expires in 1976. A joint Ministry of Defence/DOE team recently negotiated an interim increase to take some account of inflation.
2.
I should be grateful if, before the meeting, we could discuss what line I should take. My inclination is to say that it is difficult to reach any concrete conclusions pending the outcome of the Defence Review. Hong Kong will not want to pay more for a smaller garrison. As you know, the Governor during his recent visit suggested that a credible garrison .could be main- tained at lower cost by having a greater proportion of Gurkhas, on the grounds that it costs only about a quarter as much to maintain a Gurkha as to keep a British soldier in Hong Kong. Hong Kong will plead that their economic situation is much less good than it used to be, and that employment is less full than it was. Average real wages have gone down by about 11% in less than a year. If they have to pay more for the garrison they will have to cut back on their social services and housing programme, which they are under pressure, not least from this country, to maintain. The Quarter Master General, on the other hand, whose Department appears to be taking the lead in setting up this meeting, will presumably want to keep up his works programme in Hong Kong and to have some advance assurance of the financial framework within which he has to work.
3.
I wonder whether anyone from Defence Department
has been invited, or will wish to come?
R.1. horm
RB Crowson
Hong Kong & Indian Ocean
Dept.
8 July 1974
· די
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