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3.
b.
The military assessment is that internal security, and therefore stability in Hong Kong, could not be maintained with less than about 54 major units. There is no chance that Hong Kong would agree to
pay for the whole of such a force. Even the Treasury agree with this and regard their present formula as an opening bid. It would be unrealistic to allow other Ministers concerned to believe that the concept of a hundred per cent subvention by Hong Kong is a possible end result.
Provided there is a degree of negotiating flexibility,
the Governor is confident that we can induce Hong Kong to pay a larger proportion of the cost of a reduced garrison. His present view is that, by cutting out the rapid reinforcement capability, by reducing the garrison to around five major units, by disposing of some of the more expensive arms such as the artillery which are not relevant to internal security, and by keeping a large proportion of Gurkhas in the garrison (who cost about one-quarter per head as much as British soldiers), the overall cost to HMG could be halved, while the Hong Kong Government could, in absolute terms, pay around its present contribution of £8 million a year in return for a smaller presence on the ground. An alternative scenario would be to persuade Hong Kong to pay half the cost of whatever garrison is retained, which might involve some increase in their
£8 million contribution. But the Governor has launched a series of new social programmes, in which he has been strongly supported by HMG. For these he will have to raise fresh taxation, which will inevitably be unpopular. Any substantial increase in the £8 million contribution would further increase his difficulties in pushing through the social programmes.
4.
A general brief will be submitted for the next OPD meeting on the Review on 31 July. I make this: separate supplementary submission in view of the importance of the issue for Hong Kong.
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