CODE 18-77
SECKEI
Reference
interpreted by some people in Hong Kong as a weakening of HMG's commitment to the territory, and this may have implications for confidence in the territory.
8.
Current state of play on FCO/MOD_exchanges. We and the Hong Kong Government are commenting on the 1991 review of the Garrison withdrawal plan and its proposals. We agree with its emphasis on keeping the garrison stronger
have also commented with SAD on the future
We envisage no problems with the retention smaller force than planned.
for longer. We of the Gurkhas. after 1997 of a
9. However, the issue of the withdrawal of the patrol craft is no nearer to a solution. The Hong Kong Government simply cannot countenance any financial arrangements outside of the 1988 DCA cost-sharing formula. The MOD want the Hong Kong Government to pay as much as possible of its 35% share ie an extra £3.5m per annum. This is not politically possible in Hong Kong. The Governor has advised that it would be irresponsible to seek the approval of the Finance Committee of LegCo (which he would have to do) for such arrangements: this would open up the whole DCA controversy and cause serious political difficulties for HMG in Hong Kong. Despite several rounds of discussions and consideration of a variety of financial arrangements put forward by both sides, no agreement has been reached. The MOD's final suggestion that the Hong Kong Government should buy out the MOD's capital interest in the craft and operate them themselves is not acceptable to the Hong Kong Government on financial and practical grounds.
10. The Secretary of State and the Defence Secretary have exchanged letters about this. The Defence Secretary's last letter stated that the craft would be withdrawn unless the MOD were relieved of the costs of the vessels. The Secretary of State has sent an interim reply pending the outcome of the Out of Area Commitments paper.
Gill Coglin
G Coglin
Hong Kong Department
8 July 1991
WINALG
SECRET
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