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Mr Male Sir D Watson
PS/Lord Goronwy-Roberts
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HONG KONG: DEFENCE COSTS AGREEMENT
1.
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H.V.
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In his minute to the Prime Minister of 18 November, the Secretary of State gave his approval to the agreement on the size of the Hong Kong garrison and the cost sharing formula reached between the Minister of State for Defence and the Hong Kong Government. At the same time, he suggested that there should be no stated duration for the agreement but that it should include a provision to the effect that after 7 years either side should have the option of seeking amendment to it on giving one year's notice of a wish to do so. The Secretary of State sought the views of his OPD colleagues on this suggestion.
2.
In his minute of 25 November to the Prime Minister, the Defence Secretary reported that all members of the OPD had now given their approval to the agreement subject to comparatively minor points of clarification. At the same time he suggested an improvement on our formula for the duration of the agreement. This is that it should run for a period of 7 years in the first instance and
should be renewed on the same terms for further periods of 5 years thereafter unless either Government gives notice a year before the end of each such period that it wishes to vary the terms. This is better from our point of view since it would further limit the
occasions for friction with Hong Kong over a matter in which our basic interests are now well safeguarded. In his letter of
28 November to Mr Mayne, Mr Wright indicates that the Prime Minister
og is content subject to comments by other members of OFD.
3.
I recommend that the Secretary of State should accept the Defence Secretary's proposal. You will observe that if he does, there is no need for him to minute further.
SECRET
14.
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