TNAG-1638-FCO40-2282-Future-of-Hong-Kong-withdrawal-of-the-British-garrison-1987 — Page 76

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SECRET UK EYES A

10. The Garrison. HMG, the HKG and the PRCG have direct interests in whether, and in what strength, a British Military Garrison remains in Hong Kong until 1997. Numerous factors. impinge on the judgement including financial considerations and the importance of handing over Hong Kong with a stable internal situation in 1997. However, it is the preservation of public confidence in the security and stability of Hong Kong up to and post 1997 which remains vitally important.

11. The PRC Dimension.

Informally, the PRCG have emphasised

that they expect the UK to maintain an effective military presence, which will not be withdrawn precipitately or in a manner which would adversely affect preservation of the Territory's stability either prior to 1997 or thereafter.

12. Defence Cost Agreement (DCA) Renegotiation.

The present

DCA, under which the HKG pays 75% of the total cost of the garrison, expires in March 1988; it is to be renegotiated between April and October 1987. [The indications are that the HKC

will seek a reduction in their contribution. Amongst other factors, this is because of their plans to expand the RHKP and their wish to avoid paying twice for the same security needs, as they see it. In addition, they foresee greater financial stringency in Hong Kong in the late 80s and early 90s. Finally, their own budget scrutiny procedures are now both more public and more severe than they were when the present DCA was negotiated. Our own budgetary position is, of course, under heavy pressure and this pressure is not likely to lessen in future years. We would therefore strongly resist any increase in the present cost to HMG of retaining forces in Hong Kong and would look to reduce this in line with the rundown of our forces. Whilst acknowledging the difficulties that ape therefore likely to arise in the DCA renegotiations, the Withdrawal Plan must primarily be based on the Territory's security needs and on the needs of the military

role. The CA financial arrangements should flow from these needs and should not themselves predicate the size of the garrison although it must be acknowledged that financial considerations

will bear on final decisions. ーコ

COS S/172 (1)

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UK EYES A

SECRET LOCSEN