TNAG-0540-FCO40-635-Strength-of-garrison-in-Hong-Kong-1975 — Page 247

GRPS 228

IMMEDIATE

CYPHER/CAT A

FROM F C O 281900Z

SECREI

RECEN EP IN REGISTRY

(HIC)

90

- 6 MAR 1975

SECRET

TO IMMEDIATE HONG KONG TELNO 155 OF 28TH FEBRUARY, 1975.

YOUR TELNO 178: DEFENCE COSTS.

LAM

88

120

1. YOUR 2(1).

''ESTIMATES 1975/76 PRICES MEANS ACTUAL

SEPTEMBER 1974 PRICES. THE DEFINITIONS ARE THEREFORE THE SAME.

2. YOUR 2(11). THERE IS NO MISUNDERSTANDING BETWEEN US. THERE IS

AN UNFILLED GAP BETWEEN WHAT MINISTERS WANT (75 PER CENT) AND YOUR OFFER (POUNDS STERLING 17 M./ONE-HALF, IN 1976). MINISTERS HAVE AGREED THAT, AS ONE POSSIPLF MEANS OF CLOSING THIS GAP THE TEAM WILL EXPLORE THE POSSIBILITY OF A CHEAPER FORCE AS IN (A) AND (B) OF THE TERMS OF REFERENCE. IF ANY SUCH FORCE

•

WERE IN THE EVENT AGREED, THIS WOULD BRING US WITHIN DISTANCE OF YOUR POSITION, BUT NOT OF HMG'S FIRM OBJECTIVE OF 75 PER CENT. THE REMAINING GAP WILL HAVE TO BE CLOSED LATER IN NEGOTIATIONS. ONE

WAY OF ACHIEVING THIS, WHICH WOULD HAVE TO BE EXPLOPED AT THAT LATER STAGE, WOULD BE SOME FORM OF GRADUATION.

•

3. YOUR 2(111) THE OBJECT OF THE STUDY IS TO ESTABLISH WHETHER THERE IS ANY VIABLE MILITARY/SECURITY OPTION WITHIN THE LOWER FINANCIAL LIMITS SET OUT IN THE TERMS OF REFERENCE, WHICH YOU AND CBF CAN RECOMMEND. WE DO NOT EXCLUDE THAT THE REPORT COULD, IF UNAVOIDABLE, ALSO IDENTIFY OPTIONS ABOVE POUNDS STERLING 35 M. THE WORKING PARTY MAY WISH TO IDENTIFY THE FINANCIAL IMPLICATIONS FOR

HONG KONG OF VARIOUS POSSIBLE GARRISONS AND YOU MAY WISH TO COMMENT ON THEM. BUT WE DO NOT SEE THE FUNCTIONS OF THE WORKING PARTY AS

ONE OF MAKING PROPOSALS E.G. ON GRADUATION. THIS WOULD BE A MATTER

FOR SEPARATE AND SUBSEQUENT CONSIDERATION.

;'ཀྑུ

". JACKSON NOW PROPOSES TO ARRIVE ON 7 MARCH TO HELP IN THE

FINAL PREPARATION OF THE REPORT.

CALLAGHAN

FILES HICIOD (4)

DEFENCE D MR THOMSON M&MALE SI« DWATSON

SECRET

COPIES TO:

MR. J.D. BRYARS AUS (GS) MOD CDR PEROWNE POFDP (E) MOD

MR. HANSFORD TREASURY