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UK EYES A
HONG KONG DEFENCE COSTS AGREEMENT
3.50/€
Defensive Notes for OPD 4 November 1975
Could we not have achieved 75% from the outset?
It became clear at the opening meeting with the Unofficial members of the Executive Council and Finance Committee that there was no realistic prospect of obtaining 75% from the outset - as indeed the Governor had consistently advised. The Minister of State had to fight hard to secure anything over 50%, which had become an article of faith with the Hong Kong side, as much for political as for financial reasons. Even 50% (over £21M a year) represents a very large increase over the £82M per year payable under the present agreement; and at one time it looked very doubtful whether we would be able to improve on this. It was only possible to get to 75% by stages and then only with the aid of a sweetener in the form of the release of real estate. In the climate of opinion existing in Hong Kong it was a considerable achievement to get to 75% by the third year; and it is an indication of the Minister of State's success that the Governor considers that he must spend at least a month softening up public opinion in Hong Kong before the news is made public.
Should we have "given away" so much valuable real estate?
Some concession was necessary if we were to secure a satisfactory ageement - or indeed any agreement at all. In densely populated Hong Kong and Kowloon land is in extremely short supply and this gave us a valuable negotiating card. As far as Victoria Barracks is concerned there is no military objection to a move and it may be possible to reprovide improved facilities more conveniently and more economically by concentration at HMS TAMAR. The release of RAF Kai Tak has been considered in the past and some planning work done for a move. Although there is some risk involved in terms of internal security and external reinforce- ment, the Minister of State assessed this as slight. The moves have been accepted by CBF and the Chiefs of Staff.
Hong Kong tried to make the payment of increased contributions in April 1977 and April 1978 conditional on the release of Kai Tak and Victoria Barracks by those dates. This would have imposed an impossibly tight timetable; but in negotiating the Heads of Agreement we were able to secure a year's grace and to make it clear that the timing of the release of land would depend on reprovision by Hong Kong. Nevertheless, deadlines are tight and any failure to meet them is bound to lead to recrimination which could put the agreement at risk; it is therefore important that every effort is made to release the land as soon as possible. This will require co-operation from the Treasury and PSA in, the planning processes, as well as from all concerned within the MOD.
There may be political objection here to the release of valuable real estate which, it may be suggested, will fall into the hands of speculators. It has to be remembered, however, that the land already belongs to the Hong Kong Government and that they will bear the whole cost of reproviding military facilities.
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UK EYES A
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