TNAG-0480-FCO40-545-Strength-of-garrison-in-Hong-Kong-1974 — Page 62

SECRET

A P Hockaday Esq CMG

Deputy Under-Secretary of State (Policy and Programmes)

Ministry of Defence

Main Building

Whitehall

Foreign and Commonwealth Office

London S.W.1

11 December 1974

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17. Tymns

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LONDON SW1

Dear Hochady

DEFENCE REVIEW: HONG KONG

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12/12

The Governor of Hong Kong will be coming to see you on 18 December at 3.45 pm. We are asking Andrew Stuart, the Head of our Hong Kong and Indian Ocean Department, and perhaps somebody from the defence side to attend the meeting. You may, however,

find it useful to have a note in advance of whet we think will be in the Governor's mind and how the agenda of the meeting might look.

12/12

2. Your financial people are hoping before the Governor's visit to complete an exercise to bring the costs of the proposed reduced force up to date at 1974 prices. We have told the Governor that we will try to send these details to him before his visit. However, he will not be accompanied by his own experts and I doubt if it would be profitable to get involved t your meeting in detailed questions of costs. It seems likely, from preliminary talks that we have had with Bryers, that the costs of the currently proposed forces may already be above 240 million a year, rising towards £50 million by 1976 when the new Defence Agreement will enter into force. I expect that the Governor will accept these figures as firm for the purposes of his talks with you, but will want to go on to discuss how the gap can be filled between this estimate and his own judgment of the maximum that Hong Kong can pay, which at the moment stends t about £20 million.

3. Part of the answer may lie in a flexible approach to the proportion of total cost which must be borne by Hong Kong. Ministers decided that Hong Kong should be asked to pay at least 75%. But the Prime Minister went on to direct that officiels should also cover the possibility that Hong Kong might not, in the event, pay more than half. But before we even began to consider this, all concerned would need to be sure both that Hong Kong had made the maximum offer, and that the necessary forces were being provided at the minimum cost.

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SECRET