Mr Male
SECRET
(183)
ndraud
DEFENCE REVIEW: HONG KONG
1.
The attached passage, drafted by the Cabinet Office, will be considered by the PUSs' Steering Committee for the Ministerial Statement on 3 December. The wording has been agreed by the Governor and should give us no trouble.
2.
I understand from the Treasury, however, that they may try to replace this by a reference to a reduction of forces with a higher proportion of the cost being borne by Hong Kong. There may be political reasons why Ministers will want to say more than is proposed. But I hope that, at official level, we can stick to the present draft.
3.
Although the passage favoured by the Treasury does not contain figures, it would precipitate the confrontation with the Hong Kong Government which all concerned have agreed should be postponed until May, when the Hong Kong budget, with its necessary increases of taxes for social expenditure, is out of the way. The Treasury now say they would favour earlier negotiations on the ground that they think the Hong Kong Executive Council would be more compliant before the budget. It is difficult to weigh this hunch against the Governor's advice. But, more important, Sir Murray MacLehose will be coming to London on 20 December for discussions with Lord Goronwy-Roberts. We should take the decision on the timing of consultations after talking to him. The statement now favoured by the Treasury would very largely pre-empt that decision.
4.
I therefore recommend that the PUS should urge the retention of the Cabinet Office draft.
15 November 1974
сс
Dest
A C Stuart
Hong Kong & Indian Ocean Dept.
Sir D Watson
Mr Wilford
Mp Thomson
Mr Jackson
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