TNAG-0544-FCO40-639-Strength-of-garrison-in-Hong-Kong-1975 — Page 157

CONFIDENTIAL

You may point out that no one could then have foreseen the

impact of worldwide inflation and may offer to redress the

imbalance occuring since 1971. But in Her Majesty's Government's

view that could not be a sufficient step. We see it as

inappropriate that Hong Kong's defence contribution should continue to cover only a minor part of the cost. Hong Kong

is unique among our remaining dependent territories, in that

it is rapidly developing economically, has considerable

international economic significance in its own right, and

for all practical purposes enjoys economic and financial

autonomy.

Indeed, if Hong Kong were to be asked to bear

the full cost of the garrison, it would be in our view well

within the capacity of your economy to pay. Hong Kong's

economy enjoyed rapid growth throughout the 1960s and, even

after allowing for the 'setback of the last few years, is well.

placed to resume a rapid rate of growth as soon as the upturn

in world trade gets underway. Even if Hong Kong bore the full

cost of the garrison, this would represent only about 6% of your

total public expenditure programmes and a bare 1% of total GNP.

In comparison with many independent states at the same stage of

economic development, which bear the whole cost of their defence,

this would not be a severe burden. The time has come for

Hong Kong to bear a share of its defence costs more in keeping

with its wealth and economic maturity.

We recognise, as I have said, that special factors apply

to Hong Kong's situation, and that the maintenance of political

/and

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