TNAG-0541-FCO40-636-Strength-of-garrison-in-Hong-Kong-1975 — Page 137

CONFIDEN

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PRIORITY

CYPHER CAT/A

GPS 500

FM HONG KONG 169815Z

CONFIDENTIAL

REGISTRY No. 50

TO PRIORITY F C O TELEGRAM NUMBER 593 OF 16 JUNE.

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MIPT.

PROPOSED REDRAFT OF TEXT OF DEFENCE COSTS AGREEMENT IS AS

FOLLOWS -

AN AGREEMENT BETWEEN HER MAJESTY'S GOVERNMENT IN THE UNITED

KINGDOM AND THE HONG KONG GOVERNMENT:

1. THE SIZE, COMPOSITION AND COST OF THE GARRISON FOR WHICH THIS AGREEMENT PROVIDES ARE SET OUT IN ANNEX A.

2. THE HONG KONG GOVERNMENT WILL CONTRIBUTE TO THE COST OF THE GARRISON IN THE FOLLOWING MANNER.

DETAILS OF THE ANNUAL AMOUNTS AND THE DURATION OF THE AGREEMENT TO BE INSERTED UNDER SEPARATE HEADINGS OF CASH CONTRIBUTION, CAPITAL WORKS, AND MAINTENANCE AND MINOR WORKS, SHOWING IN EACH CASE THE CURRENCY OF PAYMENT.

3. THE AMOUNTS SET OUT IN PARAGRAPH 2 ARE AT A SEPTEMBER 1974 PRICE LEVEL AND ADJUSTMENTS WILL BE MADE TO REFLECT CHANGES IN THE RELEVANT PRICE LEVELS RULING IN HONG KONG AND THE UNITED KINGDOM AS APPROPRIATE. THE INDICES TO BE USED FOR THE PURPOSES OF ADJUSTMENT ARE SET OUT IN ANNEX B, THE CALCULATION FOR EACH FINANCIAL YEAR WILL BE BASED ON THE MOVEMENT IN THE RELEVANT INDICES FROM THE END OF SEPTEMBER OF THE PREVIOUS YEAR TO THE END OF SEPTEMBER OF THE CURRENT YEAR. THE CALCULATION WILL BE APPLIED TO THE THREE ELEMENTS IN HONG KONG'S CONTRIBUTION SET OUT IN

PARAGRAPH 2 AS FOLLOWS:-

(A) IN RESPECT OF THE CASH CONTRIBUTION, THE FIGURE SO ADJUSTED

WILL BE THE HONG KONG GOVERNMENT'S ESTIMATED CONTRIBUTION

FOR THE FOLLOWING FINANCIAL YEAR.

CONFIDENTIAL

/(B)