TNAG-0540-FCO40-635-Strength-of-garrison-in-Hong-Kong-1975 — Page 19

CONFI

ENTIAL

that the level of contribution in the final year of such an agreement would continue for the future and that Hong Kong should not be further squeezed. A 75/25 split could be rationalised, for presentational purposes, as reflecting the

internal and external roles of the Garrison.

7. Minister of State said that as the Defence Review was concerned with reducing expenditure over a period he saw no difficulty in principle in negotiating a sliding scale agreement provided it covered a reasonably short period, perhaps 5 years

rather than 7. No Government could commit its successor but he

hoped that a 75/25 split could continue in the longer term.

8. The Governor said that it would be helpful to him presen- tationally if he could say publicly that the force level reductions and the increased contribution by Hong Kong were at the request of HMG and reflected financial stringency in the UK. Minister of State said he saw no difficulty in this.

9. Finally, the Governor said that a great deal of work needed to be done on the details of a new agreement to cover such matters as where the money will be spent, provision for inflation and so on. He hoped that MOD would be ready to produce a draft outline agreement covering these points fairly quickly. It was agreed that he should continue discussion on this separately with DUS(P).

10 April 1975

D.2.7 Y

(D E Young)

PS/Minister of State

CONFIDENTIAL

CONFIDENTIAL