TNAG-2120-FCO40-3026-Hong-Kong-Garrison-future-of-the-Royal-Navy-presence-1990 — Page 58

NOTE ON PATROL CRAFT

SECRET

HKC 062/1

повора

#:90

ва

GAR

POSSIBLE ARGUMENT AND FORM OF WORDS TO TRY TO RESOLVE THIS

ISSUE

Essential to reach agreement without having to go to FC.

Would cause unholy row. Would expose HMG to unnecessary criticism in Hong Kong.

55

-

HKG appreciate MOD financial difficulties

-

Add

thus prepared to pay 100% up front an "advance". But not prepared to

concede that cost should not be borne 65/35 in principle. This "advance" to be recouped.

- HKG propose to offset 100% up front by increasing the

proceeds given to HKG from sale of stores under 1981 DCA

from 65% to 75%.

If proceeds from 1981, fairly judged, are not enough, need to look at 1988 DCA. [This point to be dropped if agreement

can be reached on 1981 DCA.]

HKG need a letter of comfort from MOD to the effect that

they will use their "best endeavours" to cover the extra

35% which HKG are paying up front from the increase in

stores proceeds from the 1981 DCA.

Only MOD can make a realistic assessment of the value of

stores: HKG never privy to exactly what was/is bought.

Appreciate this is difficult but should be possible.

-

HKG understand that if the proceeds from 1981 DCA (and

1988 as required) do not cover the 35% advance, MOD has no

alternative source of funds.

-

Possible form of words from MOD.

ROFAOD/1

SECRET