TNAG-2120-FCO40-3026-Hong-Kong-Garrison-future-of-the-Royal-Navy-presence-1990 — Page 100

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O 2 AUG 1990

PS/Mr Maude

CONFIDENTIAL

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FROM:

35

16 JUL 1990

A R Paul

Hong Kong Department

DATE:

13 July 1990

CC:

Mr McLaren

ROYAL NAVAL PRESENCE IN HONG KONG

Mr Burns

1. Mr Maude might like to know where things stand on the

negotiations between the Ministry of Defence and the Hong

Kong Government about the financing of the running costs of

the naval patrol boats (Peacock Class) during the period up

to 1997.

2. The negotiations are not going well. In a nutshell, Hong Kong want the costs to be split exactly on the basis of

the 65:35 apportionment agreed under the defence costs agreed. MOD believe that the financing should be on terms

which are slightly more favourable to them.

mont

3.

I expect that a suitable compromise will be worked out.

But it is very important that this happens quickly and

quietly. It could be damaging if the fact of a disagreement became known publicly. It could then become a political

issue in Hong Kong.

4.

As the Governor raised this issue personally with

Mr Maude some time ago, I think it would be worth Mr Maude

touching on it very briefly while in Hong Kong at the end of next month. A brief will be provided.

ARPACC

A R Paul

PATABB/1

CONFIDENTIAL