TNAG-0543-FCO40-638-Strength-of-garrison-in-Hong-Kong-1975 — Page 40

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a sufficient step. We see it as inappropriate that Hong Kong's

rapuerant fire a Swoll Part- defence contribution should continue to be only a minor part of the

Hal cost. Hong Kong is unique among our remaining dependent territories,

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in that it is a fully developed community with an autonomous économy

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comparable to-that of many independent states who bear the whole

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cost of their defence. We recognise, as I have said, that special

factors apply to Hong Kong!s-situation, and that the state of relations

with-Chinumand- the maintenance of political and economic cónfidence

within the colony both necessitate-a UK participation to the costs and

composition of the forces required for security.. But the time has

now come for our contribution to be the minimum compatible with

these political objectives and for Hong Kong to assume the major

burden of the cost of ita defence. HM has decided that in-bermo

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this means that the UK/contribution should not exceed 25% 57. Wel Corts.

4. We are satisfied that this stop is right on its merits for

the reasons I have explained. And-I-mist-make it plain that the Bw it happin

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UKLa economic situation is such that a rapid and substantial step lear me nood to walk, a dopl and voly fuborlantão move to cother is needed. The simple fact is that the British economy is facing a

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crisis more serious than at any time since 1945.

1945. Last year our

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balance of payments on current account was showing a deficit at an

puts, annual rate of £3,750m or nearly 5% of GNP, inflation was running at At tea

a high level and unemployment was beginning to rise. We are attacking 1 Bild

inflation through a severe limit on wage increases which will mean haylawir ff I did

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a fall in real living standards for very many people during the next

twelve months. Our balance of payments has improved, it is true, but

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our deficit so far this year is running at an annual rate of £1,500m

(and that is before the most recent increase in oil prices). By

itself the elimination of our remaining current account deficit will

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