TNAG-2238-FCO40-3217-Future-of-Hong-Kong-Royal-Navy-presence-1991 — Page 103

Mr Paul, HKD

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Hr5063/1

7031

From:

PS/Lord Caithness

Date:

12 February 1991

CC:

PS/PUS

Mr McLaren

Mr Burns

ROYAL NAVAL PRESENCE IN HONG KONG

As arranged, Lord Caithness spoke to Mr Hamilton this afternoon.

1.

There

2. Lord Caithness said that he was greatly concerned that the MOD and the Hong Kong Government had been unable to agree on financing of Royal Naval patrol boats in Hong Kong after 1992. Sir Michael Quinlan's letter to the Governor appeared to be uncompromising. Lord Caithness did not underestimate MOD's budgetary difficulties. But there were strategic issues at stake for HMG. Mr Hamilton would have seen the report in today's press of biligerent remarks by Deng Xiaoping. was a need to remain vigilant. The recent JIG assessment had flagged up the dangers. There had been 29 incursions by Chinese vessels last year. It was essential that the White Ensign remained visible in Hong Kong. There were good political and military reasons for retaining the patrol craft beyond 1997.

3.

Mr Hamilton agreed that there were valid political reasons for retaining the patrol craft but questioned the military need. The MOD were facing very serious budgetary problems. They were assailed on all sides by Whitehall departments that thought that had a large budget with plenty of fat. They did not.

But the Hong Kong Government was rich. He could not understand why agreement had not been reached. Lord Caithness said that the Hong Kong Government had made very serious efforts to reach agreement. But every time they put forward a proposal the goalposts shifted. They had just made a substantial contribution to our Gulf costs. Mr Hamilton pointed out that the Hong Kong contribution would go to the Treasury not to the MOD.

4.

Lord Caithness said that Hong Kong was not an independent country. It was a dependent territory for which HMG had certain responsibilities. The Hong Kong Government had repeatedly sought to find ways of easing MOD's budgetary difficulties. Under the Defence Costs Agreement the MOD's share of the additional costs of retaining the patrol craft until 1992 would be £15 million. He understood that the

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