TNAG-0543-FCO40-638-Strength-of-garrison-in-Hong-Kong-1975 — Page 102

SECRET

UK EYES A

ment if necessary. The cost of this garrison was estimated

at £33.5M at 1974 prices; but as a result of inflation

the cost. in 1976/77, the first year of the new agreement

is now estimated at about £39M. This is the figure on

which negotiations are likely to be based.450M HK dollars

UK Objectives

4.

.Our objective must be to secure a new defence

agreement, preferably for a further 5 years, from 1st April

1976 which will enable us to station in Hong Kong the

garrison which we consider necessary for external defence

and internal security, but which will permit us to recoup

from the colony a substantially higher proportion of the

cost than in the past. The agreement must be in a form

which provides for inflation during its operati on.

5.

Although

At OPD in July Ministers accepted the reduced 43

units garrison, confirmed their view that Hong Kong must

be pressed for an immediate contribution of 75% of the cost,

and decided that in view of the aifficult position of the

Governor the Minister of State for Defence should be sent

out to conduct the negotiations for a new agreement.

the possibility of a graduated Hong Kong contribution,

starting at 50% and rising to 75% by the end of the agreement,

was discussed the Minister of State was not given authority

to negotiate on this basis but was instructed to refer back

if he could not obtain 75%. Subsequent exchanges with

the Treasury............7 Thus we must aim to secure a

new agreement in which Hong Kong wilИin 1976/77 pay £30M

towards the cost of a 4 units garrison, contributions in

subsequent years depending on the rate of inflation.

SECRET UK EYES A