TNAG-0522-FCO40-617-Discussions-with-Sir-Murray-MacLehose--Governor-of-Hong-Kong-1975 — Page 117

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in the Prime Minister's minute of 20 February to the Defence Secretary. Sir Murray would obviously favour the largest garrison which is financially possible; but accepts that one of the cheaper options may be good enough provided there is some reinforcement capability in the event of a civil disturbance faster than the battalion that would at present be provided from the UK for this purpose. The Gurkha battalion in Brunei could be a help in this connection if, as seems likely, this is to stay in Brunei for two or three years yet; but this is not yet certain and we are not yet in a position to make any promises.

6. It was obviously impossible to discuss what exact proportion of the costs should be paid by each of the two Governments. This must be settled by negotiations once OPD has considered the question in the light of the decision of the Chiefs of Staff on the viability of the various options. The Governor's position remains that, on optimistic assumptions, Hong Kong might be able to find £17 million with costs shared on a 50/50 basis. Our position is, of course, as set out in the Prime Minister's minute. There is thus still a substantial gap between the two sides which will need to be closed in due course. I suggest that in your talk with Sir Murray you should mention the difficulty in general terms, emphasising the stringent criteria heing applied rot our own defence requirements world-wide and the present economic situation facing Britain. In my view, there must be some "give" on the Hong Kong side, at least in connection with the proportion of costs payable by them over the whole period of the next Agreement, if a satisfactory solution is to be reached.

7. The Governor made some interesting points on other aspects of the proposed new Defence Agreement eg period of duration, local costs and the possibility of the Services giving up some very valuable land in Hong Kong. These are useful suggestions which would make the Agreement presentationally more acceptable in Hong Kong and thus ease the task of negotiating the central issue of costs and burden-sharing. They are being taken up with the Ministry of Defence and I mention them only because he may refer to them himself in the course of your talk.

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