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4.
Redacted under FOI exemption section 27(1).
The case for retaining the vessels is largely political:
the repercussions of not doing so could impact strongly on
our relations with China (and Hong Kong) over the next six
years.
the Chinese
will be very suspicious if we now tell them the vessels will
be withdrawn. They would see this as a blatant tactic to
get rid of the naval base at Tamar and not replace it.
They might then well state publicly that whatever we do now, they will
take over all the defence lands that existed in 1984. The
removal of the vessels would send the worst possible signals
to both Hong Kong and China.
5.
We are thus on the verge of a potentially serious crisis
in our relations with Hong Kong, with wider political and
strategic implications. The MOD estimate their 35% share of three vessļe's running costs up to 1997 to be £15 m: if, as Hong Kong have reluctantly proposed, we cut one vessel, the savings would only be some £2 m over the period. I think the Governor is right to warn that it would be very
dangerous to approach Finance Committee on this matter. They would react very strongly indeed, with repercussions on
HMG generally in the territory.
6. Hong Kong will revert very soon with their decisions on
various financing options which the MOD have put to them. If the response is negative, we can expect the MOD to act very quickly. The Defence Secretary is likely to write to the Foreign Secretary proposing withdrawal of the boats. should try to prevent this.
We
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