TNAG-0546-FCO40-641-Strength-of-garrison-in-Hong-Kong-1975 — Page 206

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some UK contribution to the costs and the composition of the forces required for security. But by far the greatest benefit from Hong Kong's continued prosperity and security accrues to the citizens of Hong Kong. Her Majesty's Government believes that Hong Kong should, 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. Anc 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.

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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 - military, political, economic, industrial and led to conclusions for the future allocation of defence resources. In strategic terms the conclusion could only be that the North Atlantic Treaty organisation - the area of prime importance to British and European Security - must be the first and overriding charge on our defence resources although even here significant economies were necessary; and that our commitments outside the NATO Alliance must be reduced. We announced our intention to reduce defence expenditure as a proportion of our GNP by about 18, to 44% over the next 10 years.

I must emphasise that in military terms these were painful steps to take; and that our NATO allies, while sympathetic to our economic difficulties, expressed considerable concern at the scale of reductions we proposed. You will, therefore, understand

how rigorously we had to review our

military commitments outside the NATO Alliance.

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In the case of Hong Kong we have undertaken careful and prolonged study of the minimum garrison required. In 1974 the garrison comprised 5 infantry battalions, an artillery regiment, an armoured reconnaissance squadron, engineers, a frigate and patrol craft, and a helicopter squadron. At September 1975 prices, it would have cost about £65m, or $685M HK dollars. Careful study showed that a reduction from this level of forces would be militarily acceptable, and as a first step a number of withdrawals were agreed and announced in March this year. The important elements were the removal of the artillery regiment (less a battery) and the armoured reconnaissance squadron; and a reduction in the Naval presence. The remaining gar.ison would have cost about Z50m, or $550m HK dollars. In further discussions with the Governor and his security advisers, the whole problem of the security threat and the forces, both civil and military, required to meet it was given the most thorough

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