TNAG-0541-FCO40-636-Strength-of-garrison-in-Hong-Kong-1975 — Page 99

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Treasury Chambers

Parliament Street

London SW1P 3AG

198

Telephone 01-930 1234 ext 162

R J ANDREW ESQ

AUS (GS)

MINISTRY OF DEFENCE

MAIN BUILDING WHITEHALL

LONDON S W 1

2 July 1975

194

༧

Mar

HONG KONG:

FINANCIAL NEGOTIATIONS

RECEIVED IN REGISTRY No. 31

- 3 JUL 1975

NICIO),

Your minute of 27 June asked for any comments on the latest draft of a paper for OPD on this subject. We have two small comments on the paper, which are described in the following paragraphs.

While we do not dispute the judgment that we may have to concede graduation over a period of seven years to get an agreement, and indeed the Prime Minister's minute of 20 February allows this possibility, we think we should make it clear to Ministers that we would only want to go as far as this as a last resort and on condition that it produced an agreement. We therefore suggest the following amendments to the last two sentences of paragraph 5:-

"If this proved not to be possible we should be ready to move to a graduated scheme aiming at a Hong Kong contribution of 50% in the first year rising to 75% within a five year period. The precise rate of graduation would be for negotiation and officials should be empowered to reach the most advantageous settlement they could. It is possible even so that the Hong Kong Government may not be prepared to go as high as 75% within a five year period; accordingly, I hope that we could empower officials, as a last resort and on condition that it would achieve a settlement, to offer a seven year period of graduation and to be prepared to accept any variation of the 50-75% pattern, which would produce a result no less favourable to us".

Incidentally, we think that if the Hong Kong Government does ask for a seven year period, we might respond by asking for the rate of graduation in the earlier years to be somewhat steeper than under a five year scheme. But there is no need to go into this sort of detail in the OPD paper.

Second, we note that the revised paper no longer refers to the possibility that the Hong Kong Government might wish to retain the presence of the 4 patrol boats and the artillery battery. While this could be an element of substance in the negotiations, we agree that a reference to it in the OPD paper is not needed. But we will need to consider carefully how this issue should be handled. Even if the Hong Kong Government express a willingness to pay 100% of the patrol boats costs, this would only be acceptable if their contribution to the main garrison costs meets our requirements. Assuming this aspect of the problem is resolved, however, there may be a case for selling

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