TNAG-2120-FCO40-3026-Hong-Kong-Garrison-future-of-the-Royal-Navy-presence-1990 — Page 91

CONFIDENTIAL

FROM: R M Marsden

Hong Kong Department

DATE: 19 July 1990

cc: Mr McLaren

Mr Burns o/r

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PS/Mr Maude 20 in

ROYAL NAVAL PRESENCE IN HONG KONG

34

19 JUL 1990

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O 2 AUG 1990

135

A 1. As requested in your minute of 17 July, I submit a

short letter which Mr Maude may wish to send to Mr Hamilton.

2. The MOD have confirmed that they have just put revised

proposals to the Hong Kong Government. (A letter from Mr Hatfield, the responsible Under Secretary, to the Deputy Secretary for Security issued today). The MOD are proposing

that the Hong Kong Government would advance an amount equivalent to the MOD's 35% share of crewing costs for the three Peacock-class patrol craft in return for receiving an increased share of the value of garrison stores disposed of

or backloaded to the UK. This is a variation of one of the options discussed by MOD and Hong Kong Government officials on an exploratory basis in May.

3.

The Hong Kong Government want the costs to be split exactly on the basis of the 65:35 apportionment agreed under the Defence Costs Agreement. But they are willing to show some flexibility about the detailed arrangements. What is not clear is whether the MOD's concession on garrison stores would wholly compensate the Hong Kong Government for their additional expenditure on crewing costs and whether a compromise on this basis would cause any difficulties with the LegCo Finance Committee. These are points which

ASHAEI/1

CONFIDENTIAL