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required to meet it was given the most rigorous study both in Hong Kong and in
London. The conclusion is that some further reduction can be made while still
military
prosent firmu Stauces maintaining a garrison which is the minim adequate. These reductions would
involve the removal of an infantry battalion, the remaining artillery battery,
and one or other components of the Naval element. Such a garrison, comprising
4 infantry battalions (one of them, for military and political reasons, a UK
battalion), engineers, a frigate, and a helicopter squadron will cost about
33 million[ dollars/September 74 prices or about 40 million
dollars at September 1975 prices. HMG are satisfied that this level
of forces is sufficient in Hong Kong in present circumstances. It could be
reinforced in an emergency from the UK and by the battalion now stationed in
[
Brunei.
But
7.
We therefore approach the cost sharing discussions on the basis/reduced
of a
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as
I have described. I should make it clear that these reductions entail cutting
the force level closer to the bone than is normally desirable and that the resulting
garrison, though military adequate is less than an ideal. But all possible
economies had to be sought both from the viewpoint of HMG and in our effort to
ease the difficulty for Hong Kong in meeting our associated financial requirements, which I will now explain: to which I now tum,
You may
8. I have already said enough, I hope, to impress on you the gravity of the
economic situation at the time we took decisions on the Defence Review.
know that it was necessary very shortly after the Review was complete to make
further economies in defence as part of the cuts in public expenditure announced
by HMG in
the spring budget of 1975. I am aware that Hong Kong
has also suffered as a result of the worldwide trading recession and that this
and a combination of other factors, including planned social programmes and a
tax structure especially geared to the encouragement of entreprenennial undertakings, may be thought to place real hunk on your ability to substantially
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