TNAG-2239-FCO40-3218-Future-of-Hong-Kong-Royal-Navy-presence-1991 — Page 171

HKD

SECRET

PS/ Larc Caithness PS/PUS Bird Coles

Mr Burns

FCS/91/118

DEFENCE SECRETARY

1415

HKB 063/1

62

21/5

14/5/ Mostarc

My's Cogin

1.

Hong Kong Royal Naval Presence Afloat

We had a brief word in the margins of Cabinet on 11 April about how to resolve the question of the funding of the Royal Naval Presence in Hong Kong after 1992. I

asked the Governor to consider ways to reduce the costs, or whether it would be possible for Hong Kong to contribute more than the agreed share (65%) to enable the vessels to remain in Hong Kong.

2.

The Governor recognises your Department's budgetary difficulties. He has looked again at ways of finding

more money to meet your requirements. He has concluded

that there is no practicable way to do so without

reverting to the Finance Committee. He sees no prospect

of the Finance Committee agreeing to further funding and indeed sees this as a recipe for precipitating a major row, with damaging consequences for HMG's position in

Hong Kong.

3. He has therefore concluded that the only way to

reduce the costs to HMG is to reduce the number of

vessels from three to two. This would be less than ideal

from an operational point of view. But it would save HMG an estimated HK$8.75 million per year: or over £3 million in the period 1992/1997. I understand this compares with

a total estimated costs to HMG for the three craft of

£15 million in the same period.

/4.

SECRET