SECRET
SECRET
CELLOR O
OF
UK EYES A
UK EYES A
MOD' REPRODUCTION SERIES A
Defence Secretary's Circulation
THE EXCHEQUER
20 10 75
OPD +
CDS
PUS
CGS
Treasury Chambers, Parliament Street, SWIP 3ADUS (P)
01-930 1234
AUS (GS) AUS (D Staff) Head of DS1 Head of DS6
Head of DS11
October 1975
Dunn Best,
HONG KONG DEFENCE CONTRIBUTION
Thank you for your letter of 12th October about these negotiations.
I am glad to see you propose to press the Hong Kong Government hard for 75%. Our economic situation requires (and justifies) seeking the largest possible contribution from Hong Kong. From your own point of view it is obviously in the interests of the Defence Budget to secure the largest possible contribution from this source in the context of the decisions that will be needed on public expenditure this year. Moreover, OPD recognised that Hong Kong could well afford the full 75% contribution.
On the other hand, 'I recognise the force in your argument that to conduct the negotiations productively some room for manoeuvre before reference back may be helpful. I cannot, however, agree that the flexibility should be as extensive as you suggest. Option C.seems to me to go well beyond what we should be prepared to contemplate. I do not think we should be unduly concerned by the Governor's view that $17 million is the most Hong Kong can pay next year. This could well be no more than an opening gambit, and was first mentioned in the context of the £33.5 million costing (i.e. at 1975-76 Estimates prices). Nor can I agree that we should be prepared to contemplate Option B at this stage. Even in February, before the further deterioration in our economic situation, this was considered acceptable only as a possible final fall-back position if nothing better was obtainable, and I should want to have a full assess- ment of the Hong Kong Government's attitude in negotiation before considering it again..
SECRET
The Rt. Hon. William Rodgers, M.P.
In JUK EYES A
the
No comments yet.
Private notes are available after approval.