TNAG-2238-FCO40-3217-Future-of-Hong-Kong-Royal-Navy-presence-1991 — Page 146

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PS/Lord Caithness

SECRET

15

3.063

FLS 1091

Sir Patrick Wright

From:

Date:

11 February 1991

CC:

Mr MacLaren

12/1

Mr Burns

Mr Paul, HKD

ROYAL NAVAL PRESENCE IN HONG KONG

14

1. The Minister of State will have seen a copy of Mr Burns' minute to me of 8 February with which he enclosed a speaking note for me to use with Sir Michael Quinlan at the MOD.

2. I called on Sir Michael at noon today (without others present) and covered all the points in Mr Burns' note. the course of the discussion, Sir Michael made the following points:

3.

a) he understood the political and strategic

considerations which I had put forward, but emphasised that MOD Ministers and the military staffs took a very hard line on the subject; indeed, much harder than he was inclined to take himself;

b) he acknowledged that Sir David Wilson had put forward a possible compromise over the timing of payments, but had described in his own letter back why this would not do. In the course of further discussion, Sir Michael agreed to have a further look at this;

c) he acknowledged that the Hong Kong contribution of

£15m for burdensharing represented twice the direct cost to the MOD for naval patrol craft over 5 years, but pointed out that the burdensharing contribution went straight to the Treasury. It would have no effect on the defence budget for this year;

d) the MOD remained sceptical about the extent to which

the Governor could not find some way round the financial problems without going back to LEGCO.

At no point did Sir Michael suggest that the FCO should bear the extra cost. I concentrated on the argument that a row with Hong Kong on this subject threatened to open up at least four Pandora's Boxes: the first being the future of the Defence Costs Agreement; the second being a further argument in the Financial Committee of LEGCO; the third being the future of the Defence Lands in Hong Kong; and the fourth being our whole relationship with the Chinese. Apart from

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