TNAG-2120-FCO40-3026-Hong-Kong-Garrison-future-of-the-Royal-Navy-presence-1990 — Page 134

CONFIDENTIAL

FM FCO

TO IMMEDIATE HONG KONG

TELNO 962

OF 111305Z MAY 90

CONFIDENTIAL

HKC OG 2

་

AY 1990

106264 MDHOAN 8592

Mi Stone

14

enter

4/5

2+

PERSONAL FOR GOVERNOR FROM PAUL, HKD

ROYAL NAVAL PRESENCE AFLOAT

1.

WE UNDERSTAND FROM THE MOD THAT, FOLLOWING HATFIELD'S RECENT VISIT TO HONG KONG, THERE IS A VERY GOOD PROSPECT OF AN AGREEMENT ABOUT THE FINANCING OF THE ROYAL NAVAL PRESENCE AFLOAT. WE HAVE BEEN TOLD THAT THE AGREEMENT INVOLVES HKG PAYING 100 PER CENT OF THE CREWING COSTS OF THE VESSELS, IN EXCHANGE FOR AN AMENDMENT TO THE DCA WHICH WILL ALLOW HONG KONG TO RECOVER 75 PER CENT OF ANY CAPITAL ITEMS (IE STOCKS) BOUGHT UNDER THE PREVIOUS DCA, WHICH ARE SUBSEQUENTLY SOLD, OR RETURNED TO HMG.

2.

IF THIS IS TRUE, AND IF YOURSELF FEEL ABLE TO ENDORSE AN AGREEMENT ON THIS BASIS, THIS IS GOOD NEWS INDEED. BUT PAST EXPERIENCE HAS TAUGHT US TO BE A LITTLE CAUTIOUS AND IT WOULD THEREFORE BE HELPFUL TO HAVE YOUR CONFIRMATION THAT THE UNDERSTANDING SET OUT IN PARAGRAPH 1 ABOVE IS ACCURATE.

SINCE I DO NOT WANT TO APPEAR TO BE SECOND GUESSING THE ASSESSMENT GIVEN TO US BY THOSE WHO HAVE BEEN INVOLVED IN THE DISCUSSION AT WORKING LEVEL, I WOULD BE GRATEFUL IF YOU COULD TREAT THIS TELEGRAM AS STRICTLY PERSONAL.

3.

HURD

YYYY

ΜΑΙΝ

3

NO DISTRIBUTION

HD/HKD

NNNN

DISTRIBUTION

3

MR MCLAREN MR BURNS

PAGE

1

CONFIDENTIAL