TNAG-2238-FCO40-3217-Future-of-Hong-Kong-Royal-Navy-presence-1991 — Page 132

14

CONFIDENTIAL

Requtry

D/Sec (0) (C) 6/7

10 December 1990

PS/PUS

copy to: AUS(C)

Ава

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AUS (GF)

DROW

ما

flrind the to

Fic (HRD)

Mo Stone

Head of Sec ((0) (C)

Head of GF1

Head of RP (Navy)

20/12.

HONG KONG PATROL CRAFT:\CALL ON PUS BY GOVERNOR OF HONG KONG

1. Sir David Wilson, the Governor of Hong Kong, called on PUS at 0930 on 7 December to discuss the future of the three Hong Kong patrol craft. He was accompanied by his Private Secretary. I also attended.

2. The Governor explained that the Hong Kong government saw a need to retain the patrol craft after 1992 in order to counter encroachments by Chinese vessels of which there had been an increasing number. He was concerned that there should not be any difficulties between HMG and the Hong Kong government over the financing of the patrol craft after 1992 because of the dangers of re-opening the politically delicate subject of the Defence Costs Agreement. But the recent talks between MOD and HKG officials had exposed a major difficulty in that MOD had indicated that the Hong Kong government should pick up a larger share of the costs than would be the case if the existing arrangements were to be extended after 1992. The Hong Kong government could not accept any deviation from the 65%/35% split of costs under the 1988 DCA, but were prepared to be helpful over the incidence of cxpenditure in order to help the MOD's cash flow problems in the earlier years which they had understood to be the nature of the MOD's problem. He was anxious to avoid a political row i'mñúng Kong, particularly given the imminence of the first direct elections in the Territory.

3. PUS responded by saying that the costs of running on the patrol craft were not negligible. The military case for running them on had a very low priority. Ministers had therefore agreed that they should be retained only on the basis of securing a satisfactory deal which would provide overall financial benefit to the MOD. This had been our position from the beginning: we had never said that cash flow only was the problem.

4. The Governor stressed again the importance of being able to deter Chinese encroachments.

Redacted Under FOI Exemption Sec 27(1)