23.
SECRET UK EYES A
(b) Extending the length of the agreement from 5 years
to 7 years if Hong Kong wants this, provided that
they are prepared to meet our financial terms.
Conversely we can threaten an interim agreement of
only one year if we cannot attain our objective.
(c) Exploring the possibility of a graduated Hong Kong
contribution which, to avoid too steep an increase
from the existing level, would start at less than
75% in the first year but rist to 75%, or preferably
higher, in the later years.
We have discretion, if it would produce agreement, to
settle for HK $264M (£25M) in the first year, rising to 75%
in the second or third year. If this concession is not enough
to bridge the gap after the possibilities indicated above have
been explored we shall have to refer to London. If the difference
between the two sides is small we might be able to get extended
authority by telegram; and we have warned the Cabinet Office
that we may want to put the issue to Ministers collectively in
the margin of Cabinet on Thursday morning (which will be the
only suitable opportunity). Accordingly, we shall have to take
a view on this by Wednesday evening. But if the gap is
substantial it is unlikely that Ministers will be prepared to
agree without a DOPC meeting to consider a report by the Minister
of State.
24. By Wednesday evening there would seem to be three
possibilities:
(a) Agreement could be in sight within the terms of our
mandate.
(b) There could be a small gap, in which case we should
telegraph London seeking additional discretion with
a view to resuming negotiations on Friday.
SECRET
on Ja
UK EYES A
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