CONFIDENTIAL
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MINISTER OF STATE FOR THE ARMED FORCES
D/MIN (AF)/AH/5/1/4
Dear Malvolin
40
RECEIVED IN RECISTRY
2 1 AUG 1990
ROYAL NAVAL PRESENCE IN HONG KONG
INDL
Francis Maude wrote to me on 20 July on the question of financial arrangements for the retention of the three Royal Navy Peacock class patrol craft in Hong Kong after 1992.
Although there is no overriding military reason to retain these vessels after 1992, the case on political grounds for preserving an afloat RN presence as a clear demonstration of HMG's commitment to Hong Kong is a strong one. We therefore agreed to keep the Peacocks there after 1992 on condition that a satisfactory financial arrangement is reached with the Hong Kong government which recognises that retention would be primarily for political rather than military reasons.
My officials are currently negotiating with the Hong Kong government on the detail of a possible financial arrangement which would suit both our purposes. Like you we recognise the importance of reaching agreement quickly and the need to avoid disagreement becoming a political issue in Hong Kong. Equally, however, given that it is defence money that is involved, it is beholden upon the MOD to agree a deal which minimises the additional pressure on the already severely stretched defence budget.
My officials will keep yours in touch with progress on the negotiations.
Утил да Accia
ARCHIE HAMILTON
Rt Hon Earl of Caithness
Minister of State
Foreign and Commonwealth Office
King Charles Street
London
SW1
CONFIDENTIAL
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