TNAG-0808-FCO40-1013-Use-of-Crown-lands-relinquished-by-Ministry-of-Defence-in-Ho-1978 — Page 210

CONFIDENTIAL #B

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ANNEX A

L

DEFENCE COSTS AGREEMENT 1976

G.F. $23

1

MEMORANDUM OF UNDERSTANDING

WHEREAS the United Kingdom Government has confirmed its continued commitment to the integrity and security of Hong Kong: AND WHEREAS the United Kingdom Government and the Hong Kong Government have agreed on the size, composition and cost of the garrison for Hong Kong and the contribution to that cost to be made by the Hong Kong Government :

AND WHEREAS the United Kingdom Government has confirmed that re- inforcement of the garrison will be effected should circumstances so require; NOW THEREFORE the United Kingdom Government and the Hong Kong Government have agreed as follows -

1.

The size, composition and cost of the garrison for which this Agreement provides are set out in Annex A.

2.

The Hong Kong Government will contribute to the cost of the garrison in the following manner -

from 1st April 1976 to 31st March 1977 from 1st April 1977 to 31st March 1978 from 1st April 1978

50%

622%

75%

The increases in the Hong Kong Government contribution from 50% to 62% and from 62% to 75% are conditional on the United Kingdom Government releasing land at Kai Tak and Victoria Barracks respectively in accordance with paragraph 10(a) and Part I of Annex C. In the event' of delay in meeting the release dates, the situation will be reviewed by the two Governments and, if the reasons for the delay are the responsibility of the United Kingdom Government, quarterly instalments of the Hong Kong Govern- ment contribution will be payable at the previous level until the release of the land is completed.

:

3.

This Agreement will run from 1st April 1976 for a period of 7 years in the first instance and will be renewed on the same terms for further periods of 5 years thereafter, unless either Government gives notice a year before the end of any period that it wishes to vary the terms.

4.

:

The cost of the garrison is based on price levels at Séptember 1975, The Hong Kong Government contribution, as provided for in paragraph 2, will, after setting off the United Kingdom Government share of expenditure on works services in the manner described in paragraph 6, be paid by quarterly instalments on the last day of each quarter of the financial year, with adjustments for changes in the price levels ruling in Hong Kong and the United Kingdom being made as follows. Before each quarterly payment

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