TNAG-0543-FCO40-638-Strength-of-garrison-in-Hong-Kong-1975 — Page 13

SECRET UK EYES A

of an independent state, should accept a far larger share of

responsibility for its defence; and the UK's economic

difficulties and Defence Review requirements which make it

essential for us to ask for a larger contribution. This will

be the occasion formally to state our terms of a 75% contribution

from Hong Kong to the cost of a reduced garrison: i.e. for

1976/77 we want HK $351M for an estimated garrison cost of

HK $468M. This demand needs to be put in the best possible

light by emphasising that a number of elements have not been

included in the costing and that in consultation with Hong

Kong officials we have done our best to reduce the figures to a

minimum. A draft speech is at Brief B. Although the Minister's

statement may provoke some questions and counter-statements

it will be important not to let this opening session develop

into a negotiation, lest entrenched positions are taken up from

which it is difficult for either side to move.

20. The next phase will probably be one of clarification.

Although we have tried to clear up in advance as many outstanding

issues as possible, Hong Kong will almost certainly want to seek

further information on some aspects of the garrison, such as

our reinforcement capability and the pros and cons of the

frigate and patrol craft options for the naval element of the

garrison. It seems likely that in view of the extra cost of

the frigate option (about HK 85M a year) and the fact that, for

dockyard reasons, we want to carry out the refit in the UK,

Hong Kong will want to move fairly quickly to the patrol craft

option, although there could be difficulties here if replacement

costs have to be incurred before the end of the new agreement.

These points can probably be dealt with by officials. Our

object will be to answer factual questions, but not to give

anything away.

SECRET

UK EYES A