TNAG-0478-FCO40-543-Strength-of-garrison-in-Hong-Kong-1974 — Page 7

Mr Thomson

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DEFENCE REVIEW: HONG KONG

1.

This minute records my understanding of the position following the Sub-Committee meeting on 2 October and the subsequent meeting which Mr Jackson and I had with Defence Planning Staff.

Timing

2.

The Sub-Committee, including the Treasury, accepted that there is no absolute need to have formal consultations with Hong Kong Executive Council until May 1975. This postponement has been requested by the Governor, who needs to get the 1975-76 Hong Kong Budget out of the way, including higher taxation to pay for the social programme which is strongly supported by UK Ministers.

3.

The Treasury agreed that neither an early Parliamentary statement nor the subsequent White Paper need give any figures for Hong Kong. Subsequently, however, you have pointed out that any statement which implied, ahead of consultations, that a decision had been taken on Hong Kong, would be almost as damaging as publishing the details of that decision. I am certain you are right; but if the statement could be in something like the following terms, I believe it could meet the needs of both the British and the Hong Kong Governments.

"The current defence agreement with Hong Kong runs until March 1976. Before that date there will have to be consultations with the Hong Kong Government about a successor agreement. Our commitment to defend Hong Kong will remain. The purpose of the consultations will be to agree on how the cost of the necessary forces should be divided. Under the present agreement Hong Kong contribute about £81 m. a year. But in our current financial circumstances we shall aim to agree that Hong Kong should bear a higher proportion of the cost than they do now." In answer to supplementary questions about the right size or proportion of the contribution, we would say that this is what the consultations will be about.

4.

I suggest that you should seek the agreement of the Sub- Committee at its meeting on 11 October that a statement on these lines in the White Paper would be sufficient for UK purposes.

From our meeting with Commodore Perowne I believe the MOD would go along with it. We could then put it to the Governor, making the point that the alternative is formal consultations before the White Paper is issued.

5.

The next stage would be to convince Ministers, who may hanker after decisions. In our brief for the Secretary of State we would need to make two points:

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