TNAG-2238-FCO40-3217-Future-of-Hong-Kong-Royal-Navy-presence-1991 — Page 167

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P 041445Z FEB 91

FM MODUK

TO GOVERNOR HONG KONG

INFO HQBF HONG KONG

FCO LONDON

BT

HKBOG 3/1

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TOP COPY

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EXCLUSIVE FOR GOVERNOR FROM DEPUTY HEAD OF SEC(O) (C).

HQBF EXCLUSIVE FOR CIVIL ADVISER. FCO FOR HONG KONG DEPT. HONG KONG PATROL CRAFT.

1. WHAT FOLLOWS HIS TEXT OF LETTER TO YOU FROM SIR MICHAEL QUINLAN. TEXT BEGINS:

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MY 21 DECEMBER ACKNOWLEDGEMENT OF YOUR LETTER OF 13 DECEMBER, WHICH FOLLOWED OUR HELPFUL DISCUSSION THE PREVIOUS WEEK, PROMISED THAT I WOULD WRITE AGAIN AS SOON AS I COULD ABOUT THE PATROL CRAFT.

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THIS IS A DIFFICULT ISSUE, AND I HAVE THEREFORE THOUGHT IT RIGHT TO GO OVER IT AGAIN WITH THE CHIEFS OF STAFFS AND MINISTERS BEFORE REPLYING TO YOU. THE FIRM CONCLUSION WHICH EMERGES IS THAT WE CANNOT SEE OUR WAY TO CHANGE OUR BASIC POSITION. THE MILITARY CASE FOR RETAINING THE PATROL CRAFT IN HONG KONG AFTER 1992 COULD NOT BY ITSELF JUSTIFY THE ALLOCATION OF DEFENCE FUNDING. THE WORSENING OF THE POSITION ON THE DEFENCE BUDGET SINCE WE FIRST REACHED THIS JUDGMENT IN APRIL 1990 -

AND I HAVE TO SAY THAT, THE GULF QUITE ASIDE, I CANNOT RECALL A TIME WHEN OUR FORWARD BUDGET FACED PROBLEMS OF SUCH SEVERITY AS NOW - SERVES ONLY TO REINFORCE THE POINT. PRESSURE ON NAVAL MANPOWER - AGAIN SHARPLY INCREASED SINCE LAST APRIL 1990 WOULD ALSO MAKE IT DIFFICULT, IN PURELY PRACTICAL TERMS, FOR US TO RETAIN THE PATROL CRAFT AFTER 1992.

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NEVERTHELESS, WE APPRECIATE THE POLITICAL CONSIDERATIONS IN FAVOUR OF KEEPING AN AFLOAT NAVAL PRESENCE IN HONG KONG, AND WE REMAIN READY TO DISCUSS HOW THIS MIGHT BE DONE IN A WAY WHICH KEEPS PRESSURES ON DEFENCE RESOURCES TO A MINIMUM. AT THE LEAST, THEREFORE WE WOULD EXPECT TO SEE A VERY SUBSTANTIAL CONTRIBUTION FROM THE HONG KONG GOVERNMENT TOWARDS THE ADDITIONAL COSTS THAT WOULD FALL TO MOD FROM RETAINING THE PATROL CRAFT AFTER 1992. THE SIZE OF SUCH A CONTRIBUTION WOULD BE A MATTER FOR NEGOTIATION: BUT 1 HAVE TO SAY NOW THAT WE CAN NO LONGER REGARD AS ADEQUATE THE DISTANT FINANCIAL SAVING THAT WOULD ACCRUE FROM ADOPTING THE PROPOSAL FLOATED BY TERENCE BRACK IN DECEMBER, WHICH ENVISAGED THE HONG KONG GOVERNMENTS WAIVING ITS SHARE OF THE DISPOSAL VALUE OF THE CRAFT IN 1997. THAT OFER MUST THEREFORE BE WITHDRAWN. A FORTIORI, CHANGES WHICH SIMPLY MODIFIED THE PROFILE OF COSTS, THOUGH USEFUL IN THEMSELVES, WOULD NOT COME NEAR MEETING OUR NEED. HOWEVER, AND WITHOUT PREJUDICE TO SUBSEQUENT DISCUSSIONS BETWEEN OUR STAFFS, YOU MIGHT LIKE TO CONSIDER A SOLUTION WHEREBY THE HONG KONG GOVERNMENT WOULD TAKE OVER THE MANNING AND OPERATION OF THE PATROL CRAFT FROM 1992. WE WOULD BE PREPARED TO PROVIDE,

ON REPAYMENT, LOAN SERVICE PERSONNEL TO HELP WITH THE TRANSITION TO FULL HONG KONG MANNING. THIS WOULD SOLVE OUR FINANCE AND MANPOWER PROBLEMS: WOULD ENABLE THE VESSELS TO STAY IN HONG KONG: AND NEED NOT INVOLVE ANY ADJUSTMENT TO THE DEFENCE COSTS AGREEMENT, WHICH TAKE TO BE YOUR PRINCIPLE CONCERN.

SUGGEST THAT YOUR STAFF AND MINE GET TOGETHER URGENTLY

IN LONDON TO DISCUSS THIS AND OTHER OPTIONS. TIME IS GETTING SHORT - IT IS LITTLE MORE THAN A YEAR TO THE POINT WHERE THE PATROL CRAFT ARE CURRENTLY DUE TO BE WITHDRAWN- AND I BELIVE WE MUST AIM TO REACH AGREEMENT IN PRINCIPLE ON THE WAY AHEAD BY THE END OF THE MONTH IF THAT PROVES IMPOSSIBLE, I FEAR SEE LITTLE OPTION BUT TO RECOMMEND TO MINISTERS HERE THAT WE PROCEED WITH WITHDRAWAL AS PLANNED.

SIVE

I RECOGNISE

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