TNAG-0544-FCO40-639-Strength-of-garrison-in-Hong-Kong-1975 — Page 106

PS

SECRET

HKIOD

PA

35.3

HONG KONG: DEFENCE COSTS AGREEMENT

11.

It appears that there is some possibility that at the OPD meeting this morning the Defence Secretary will report on the results of the negotiations last week between the Minister of State for Defence and the Governor of Hong Kong.

2.

In the time available, it is not possible to give a complete analysis of the agreement reached. This was essentially that Hong Kong should pay 50% of the costs in the first year of the new agreement beginning in April 1976; and that this should be increased to 621% in the second year of the agreement and 75% thereafter. There was also agreement that the garrison should consist, as the Chiefs of Staff recommended, of 4 major units together with a small naval and RAF presence.

3.

From the Foreign and Commonwealth Office's point of view,

the agreement is a good one in that:

4.

(a) it is evidence of our continuing commitment to Hong

Kong which is very important vis-à-vis China;

(b)

there will continue to be a British battalion and a

small adding British financial contribution, both of which are important for our relations with the Colony; and

(c) the release of land in central Hong Kong will make the agreement more palatable to Hong Kong opinion.

I consequently recommend that the Secretary of State should endorse the agreement that has been reached. (The cost sharing aspect of the agreement is being kept secret for the present in order that the Hong Kong Government should have time to prepare Hong Kong opinion for the greater financial contribution they will have to pay.)

4 November 1975

cc

PS/Lord Goronwy-Roberts

Sir D Watson

Mr Cortazzi

Mr Male

SECRET

PL O'Keeffe

Hong Kong & Indian Ocean Dept.