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Sir D Watson
HONG KONG DEFENCE COSTS NEGOTIATIONS: MR RODGERS'S OPENING STATEMENT
1.
At Mr Rodgers's meeting yesterday evening, it was agreed that Departments should submit any comments on the revised draft 13 attached to Mr Ward's minute of 21 October by close of play today.
Flag A 1:
HB telegram no. 1033.
I have been through the draft in the light of Hong Kong telegram no. 1033. All the points which the Governor proposed have been included and the more important ones in the same order which he
(315) suggested. Points (e) and (f) have been put at the end, which seems
right.
3.
I am not, however, toe happy about some aspects of the draft statement. In particular, para. 4 seems to labour the point about our own economic circumstances, whereas the Governor advised that this should be dealt with "briefly and obliquely". I think the Treasury, who provided this paragraph at an earlier stage, will want to retain it in full and since we acquiesced in its inclusion earlier en, it will probably be difficult to shorten it now.
4.
Similarly, I think the passage on the Defence Review and NATO in paras. 5-6 is also a bit laborious, though I agree that it is useful to make the point that even with regard to NATO, which is our first defence priority, we have had to make cuts.
This
5.
One weakness of the draft seems to me that it is nowhere made entirely clear that Hong Kong is being asked to make a 75% contribution from the first year of the proposed new agreement. point could be brought out in para. 7. On this same paragraph, I imagine that the MOD themselves will make amendments in order to avoid saying, as the draft does at present, that the reduced garrison now proposed represents an absolute minimum. Mr Rodgers was concerned not to say this, at least at the outset, just in case it is necessary to trim further in order to arrive at an agreement.
6.
Apart from these general comments, I have made a number of suggested amendments in pencil to the draft. I have put these together in the form of a separate note which, if you agree, I could pass to the MOD this evening.
7.
We discussed the question whether the Governor should be informed that the cost of the reduced garrison is now estimated at £43.5 m. at September 1975 prices. I had a word about this with Mr Andrew after Mr Rodgers's meeting. He did not think that it was necessary to point this out to the Governor in advance of
Mr Rodgers's arrival. His main argument for not doing so was that we now seem to be in a position where we are asking Hong Kong for a fixed sum of money rather than a percentage figure. For example,
£30 m. which is our opening bid is not, in fact, 75% of £43.5m. In addition, Mr Andrew pointed out that what Hong Kong are interested in is the price in terms of Hong Kong dollars. They were advised at
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Private notes are available after approval.