TNAG-0546-FCO40-641-Strength-of-garrison-in-Hong-Kong-1975 — Page 193

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4. IN THESE CIRCUMSTANCES I FEEL THAT THE CORRECT COURSE FOR BOTH OF US TO FOLLOW IS TO KEEP THE AGREED TEXT ON ICE WHILE WAITING FOR THE UNCERTAIN QUESTION ABOUT IMPORT RESTRICTIONS TO CLARIFY ITSELF

THERE AFTER AN ANNOUNCEMENT COULD BE ARRANGED AT A TIME TO BE

MUTUALLY AGREED.

5. IN CONCLUSION I WOULD LIKE TO SAY HOW MUCH I REGRET THIS LAST MINUTE DIFFICULTY WHICH HAS ARISEN, AND WHICH RELATES ONLY TO TIMING, NOT TO THE SUBSTANCE OF THE AGREEMENT AND WHOSE CAUSE YOU WILL

AGREE IS NOT OF HONG KONG'S MAKING,

6. I HAVE SENT A COPY OF THIS LETTER TO LORD GORONWY-ROBERTS.

ENDS

(B) JOINT PRESS STATEMENT AGREED BY MINISTER OF STATE AND GOVERNOR ON 8 DECEMBER BUT NOW HELD UP UNTIL ANNOUNCEMENT IS TO BE MADE:- BEGINS

1. THE NEW AGREEMENT REAFFIRMS HMG'S COMMITMENT TO THE SECURITY AND INTEGRITY OF HONG KONG AND STIPULATES THE SIZE OF THE AGREED GARRISON, WHICH WILL BE SMALLER THAN IN THE PAST BUT WHICH CAN BE REINFORCED IN AN EMERGENCY, THE GARRISON WILL IN FUTURE INCLUDE 4 INFANTRY BATTALIONS (3 OF THEM GURKHA), A GURKHA ENGINEERING SQUADRON, 5 NAVAL PATROL CRAFT AND AN RAF HELICOPTER SQUADRON. AT CURRENT PRICES THE COST WILL BE £42 1/2M A YEAR WHICH IS SOME £20M LESS THAN THE PRESENT GARRISON. THE HONG KONG GOVERNMENT WILL MEET 50 PER CENT OF THE COST OF THE GARRISON IN THE FIRST YEAR OF THE NEW AGREEMENT (1976/77), 62 1/2 PER CENT IN THE SECOND YEAR AND 75 PER CENT IN THE THIRD AND SUCCEEDING YEARS COMPARED WITH AN ANNUAL CONTRIBUTION OF ABOUT £8M UNDER THE PRESENT AGREEMENT THE NEW AGREEMENT WILL RUN FOR 7 YEARS INITIALLY AND WILL THEN BE RENEWED FOR FURTHER PERIODS OF 5 YEARS ON THE SAME TERMS UNLESS EITHER GOVERNMENT GIVES DUE NOTICE OF A WISH TO VARY THEM.

2. AN IMPORTANT FEATURE OF THE NEW AGREEMENT, WHICH WAS NOT INCLUDED IN EARLIER AGREEMENTS, IS THAT HONG KONG'S PAYMENTS TO THE UNITED KINGDOM WILL BE ADJUSTED FOR CHANGES IN PRICE LEVELS. THE GREATER PART OF THE COST IS INCURRED IN HONG KONG AND IS THEREBY SUBJECT TO PRICE MOVEMENTS IN HONG KONG RATHER THAN IN THE UNITED KINGDOM. THE AGREEMENT MAKES PROVISION FOR REVIEWS OF THE COSTS OF THE SUPPORT ELEMENTS OF THE GARRISON, WITH ANY SAVINGS BEING SHARED IN THE SAME PROPORTION AS THE CONTRIBUTIONS.

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