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an interest in our maintaining the Garrison at a reasonable
level. The present status quo suited them but if we cut
the Garrison sharply the Chinese might feel that they had to make a response or lose credibility.
4.
Minister of State said that although he entirely accepted the force of this argument it was by no means easy to put it over in the House of Commons. Once we left Singapore and Gan, Hong Kong would stick out like a sore thumb and MPs would be looking very critically at the cost to us of our presence there. It was felt that Hong Kong was relatively affluent and should be able to pay very considerably more towards the cost of the
Garrison.
5. The Governor said that if Hong Kong was rich it was because it had for too long neglected necessary spending on housing, roads, education and so on. This was now being put right, major expenditure programmes were in hand and with the current economic recession it was just not possible for Hong Kong to meet a very greatly increased Defence bill. He had always stressed that his assessment that Hong Kong might be able to find £17M per annum (at 1974 Survey prices) was
optimistic. If the Garrison were reduced so that this £17M represented 50% of the cost then he felt that this would fully meet Mr Mason's public position that we were seeking a substantial increase in Hong Kong's proportionate contribution.
6. Continuing the Governor said that during his previous visit to London it had been suggested to him that it might be possible to negotiate an agreement providing for a steadily increasing share of the cost of the Garrison to be met by Hong Kong, perhaps moving to 75% over 7 years. This might be possible for Hong Kong since their budgetary situation should improve after 1977/8 if the world recession did not deepen. One important condition would be that there should be some assurance
/that
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