TNAG-0544-FCO40-639-Strength-of-garrison-in-Hong-Kong-1975 — Page 67

CONFIDENTIAL

and economic confidence within the Colony necessitates some UK

contribution to the costs and the composition of the forces

required for security.

But by far the greatest benefit from

Kong Kong's continued prosperity and security accrues

to the citizens of Hong Kong.

believes that Hong Kong should,

Her Majesty's Government

therefore, now assume the major

responsibility for and make the major contribution towards the

costs of its defence and that the UK's share should be the

minimum compatible with its political objectives. We put this

at 25% and Hong Kong's contribution at 75%.

We are satisfied that this step is right" on merit.

And I must make it plain that the UK's economic situation is such

that a rapid and substantial step is needed. The simple fact

is that the British economy is facing a crisis more serious than

at any time since 1945. This means that all our domestic

public expenditure programmes, for example education, housing.

and health, continue to be under the greatest pressure. Overseas

expenditure, such as the Hong Kong garrison, presents special

problems because of our acute balance of payments deficit.

This is the background against which we conducted our

Defence Review and are continuing to scrutinise our Defence

expenditure. The review proceeded from a careful appraisal

of the strategic priorities and their implications

political, economic, industrial

military,

and led to conclusions for

the future allocation of defence resources.

In strategic

terms the conclusion could only be that the North Atlantic

/Treaty

page 3.