TNAG-0542-FCO40-637-Strength-of-garrison-in-Hong-Kong-1975 — Page 53

SECRE

EYES A

DRAF

phat

MMG's posilcón

on the benes

1. The purpose of my visit to Hong Kong is, as you know,/ to conclude a new

defence costs agreement to succeed the present arrangements which expire on

1 April 1976. The Government of Hong Kong has made a financial contribution

to the cost of the Hong Kong garrison for many years in a succession of agreements

Se

and you will rightly have concluded that, the practice being well established.

HMG would not have sent a Minister of State to discuss these matters with you

now were it not necessary to ask the Hong Kong Government to make a substantially

increased contribution; and that HMG viewed this matter so seriously as to warrant

our position being put at the highest position level.

2. Before explaining our position on the future cost sharing arrangements I

believe I must first explain the reasons for our Defence Review decisions of which

this position is an important part. This Government came into office at a time

when the British economic situation was more serious than ever before.

For many

years our annual average growth rate had lagged far behind that of our major

European Allies for example, it was only half that of France or the Federal

Republic of Germany. The roots of economic growth- and this needs no

explanation in Hong Kong are industrial investment and a strong trading position;

and efforts had to be made to release resources to these ends. This had to be

defence programme, then

ん

our first priority and the UK fore

Fran

planned to absorb a higher proportion

of GNP how those of

measures of economy. We came into office, therefore, with a common-interant to

achieve substantial savings on Defence while maintaining a modern and effective

defence system.

i or Germany, could not be excluded from the general

Commitment

3. When previously in office we had made clear our intention to concentrate

our defence recources on Europe, but the successor Government continued to place

emphasis on a world-wide military capability. On reassuming office, therefore,

we found ourselves confronted with a defence programme of world-wide military

and political commitments, forces stretched to meet the commitments, and a

SEORE UK

SECKÉ LIKERES EYES A