TNAG-0537-FCO40-632-Strength-of-garrison-in-Hong-Kong-1975 — Page 19

512.

SECRET

UK EYES 'A'

Sir D Watson

PS/Lord Goropwy-Roberts

DEFENCE REVIEW: HONG KONG

1.

ww

Sir D. Watson

Mr. Stagit

012

R&R

BD 6/2

In Dis/widdy when the time

comes to submit the paper in

hould refer to this

Sinal form we

endorsement Des 5/2

Attached is the draft of a DOPC paper which has been agreed by the team of officials who recently visited Hong Kong. It is intended for parallel submission in the Ministry of Defence, Treasury and FCO;

and would then be submitted to Ministers as an MOD paper, through the normal Defence Review machinery.

2. The paper is more complicated than I would have wished, but the main points are simple. There is still a gap between what Hong Kong say is the maximum they can pay (£17 m. a year) and Ministers' preferred option of a 75% Hong Kong contribution to a £40 m. garrison (which is the size of forces which all are agreed would be ideal).

3.

Without abandoning our preferred option, on which Ministers are likely to continue to insist, the paper seeks authority to explore ways of lessening the gap. The most substantial proposals are to reduce the cost, and size, of the forces still further, to about £35 m. a year, and/or to allow Hong Kong to graduate their contribution, starting around their present offer and working up to 75% over a period

of years.

4.

In my view an eventual compromise may well be found through graduation. A £35 m. force might be insufficient for Hong Kong's defence needs and would not anyway close the whole gap between Hong Kong's offer and a 75% contribution. The strongest Hong Kong argument against paying more than £17 m. is that this already entails doubling their present contribution for a smaller force at a time of economic stringency. These arguments would be less effective against graduation, particularly if the period was long enough (say seven or eight years). There is also political advantage in a fairly long term agreement which would demonstrate our belief in the future of Hong Kong.

SECRET UK EYES 'A'

15.