SECRET
Timing of Consultations
5. The Governor's other advice is that we should not begin formal consultations with Hong Kong until his 1975/76 budget is out of the way in May 1975. He does not want to complicate the discussion of new taxes to pay for Hong Kong's social programme. The existing Defence Agreement does not expire until March 1976 and there is no intention on either side to replace it before it
runs out.
6.
Ministry of Defence and Treasury officials have suggested that it might be better for Executive Council to consider together proposals for increased taxes for the social programme and for the defence contribution. They also pointed out that it would be necessary to make some reference to Hong Kong before May in Ministerial statements and in the eventual Defence White Paper. They queried whether this would be possible without previous
formal consultations with Executive Council.
7.
The Governor has advised that he would still prefer formal consultations to be delayed. He would be able to brief Executive Council informally before any public announcement. Provided that the statement did not reveal the actual contribution envisaged, it would not be regarded as pre-empting consultation with Executive Council.
8.
Ministers should be able to accept postponement of consultations until May 1975. It should be enough for the Defence White Paper to take the line (agreed by the Governor) that our overall commitment to defend Hong Kong with the necessary forces would remain; that there would be consultations with the Hong Kong Government about a successor to the present Defence Agreement before it expires in 1976; and that the purpose of the con- sultations would be to agree on how the cost of the necessary forces should be divided.
9.
The unresolved problem is whether and how Hong Kong could be persuaded to pay 75% of the reduced cost. The Governor advises
/that they
No comments yet.
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