TNAG-0544-FCO40-639-Strength-of-garrison-in-Hong-Kong-1975 — Page 203

SECRET

UK EYES A

334

нов

Foreign and Commonwealth Office

London SW1A 2AH

27 October 1975

314

(826)

Hong Kong Defence Contribution

Mr. Mason sent to Mr. Callaghan a copy of his minute to the Prime Minister of 17 October about the Hong Kong Government's contribution towards the cost of the British garrison. Mr. Callaghan has since seen Mr. Wright's letter conveying the Prime Minister's agreement to Mr. Mason's proposals.

The Governor has consistently advised that the most we could hope to persuade Hong Kong to accept at one step would be a doubling (to £17 m.) of the present contribution. The Governor reports that the unofficial members of his Council do not seriously contest that Hong Kong's defence contribution in the past has been unrealistically low nor that there must now be a substantial increase. But it is the rate at which the increase should take place which preoccupies Hong Kong. An attempt to make a complete correction overnight of the present unsatisfactory situation, particularly when Hong Kong considers itself as suffering in its own way from the general trade recession, is likely to be stubbornly resisted. The risks involved in a breakdown in the negotiations, particularly in terms of a loss of confidence in Britain's commitment to Hong Kong, are difficult to gauge but potentially serious.

While Mr. Callaghan fully accepts that we should press hard for a 75% contribution from Hong Kong in 1976/77, he believes we must recognise that the gap to be bridged in negotiation is very wide. If we are to secure this level of contribution, what we know of the Hong Kong position suggests that some limited short-term flexibility is needed. He therefore agrees to the discretionary fall-back position agreed between the Minister of State for Defence and the Chancellor of the Exchequer.

I am sending copies of this letter to the Private Secretaries of other members of OPD and to Brearley (Cabinet Office)

J. F. Mayne Esq.,

Private Secretary,

(R. N. Dales)

Ministry of Defence SECRET

-

UK EYES A

27/10