TNAG-1748-FCO40-2467-Visit-by-Sir-Geoffrey-Howe--Secretary-of-State-for-Foreign-a-1988 — Page 193

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CONFIDENTIAL

VISIT OF THE SECRETARY OF STATE TO HONG KONG: 29-31 MAY 1988 BRIEF NO 11: DEFENCE COSTS AGREEMENT (DCA)

[Revised]

Objectives

1.

In public, to maintain the line that we have a satisfactory basis for agreement on sharing defence costs in Hong Kong.

2. To convey to the Governor Ministers' disquiet that

negotiations are dragging on: and to urge a rapid conclusion within the parameters agreed by Ministers.

Points to make

[With the Governor]

Pleased we now have satisfactory basis for agreement on sharing defence costs. Difficult and sensitive issue.

MOD But concerned that negotiations are still dragging on. believe some of your negotiators' proposed additional points have significant financial and operational implications. agreement can quickly be reached on all outstanding issues within existing apportionment.

Hope that

Suggest interest of both sides

No question of Ministers' agreeing to any adjustment going beyond established parameters. now lies in speedy conclusion rather than in pursuing subordinate issues to inordinate lengths. You have agreement on key issues,

capable of being presented as significantly better deal for Hong Kong. Best settle for that.

Glad negotiators are preparing actively for further round. Hope it can be the last.

[With ExCo]

Hope you

Understand this has been difficult question for you. can accept we too had greatest difficulty in adjusting apportionment in Hong Kong's favour. Serious constraints on defence budget in

CONFIDENTIAL