TNAG-2240-FCO40-3219-Future-of-Hong-Kong-Royal-Navy-presence-1991 — Page 88

CONFIDENTIAL

FM FCO

TO DESKBY 27010OZ HONG KONG

TELNO

1396

OF 26170OZ JULY 91

PERSONAL FOR GOVERNOR

FM PAUL HKD

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CONFIDENTIAL

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OUR TELNO 1374: FUTURE RN PRESENCE IN HONG KONG

1.

AS YOU KNOW, THE PRIME MINISTER SUPPORTS THE RETENTION OF THREE RN PATROL CRAFT IN HONG KONG AFTER 1992, THOUGH IT HAS NOT YET BEEN AGREED HOW THE ADDITIONAL COSTS TO THE DEFENCE BUDGET

SHOULD BE MET.

2. THE DEFENCE SECRETARY IS PREPARED NOW TO PLAN ON RETAINING THE THREE VESSELS IN HONG KONG UNTIL 1997 AND THE STEPS NECESSARY TO WITHDRAW THEM NEXT YEAR HAVE BEEN SUSPENDED. THIS IS HOWEVER ON THE CLEAR UNDERSTANDING THAT COMPENSATION FOR THE

DEFENCE BUDGET WILL BE FORTHCOMING FROM SOMEWHERE. THE ONLY REALISTIC SOURCES ARE THE TREASURY OR THE HONG KONG GOVERNMENT.

IT WOULD BE UNWISE TO ASSUME THAT THE FORMER WILL NECESSARILY

COOPERATE: AND THE MOD REALLY ARE IN A DESPERATELY TIGHT POSITION.

3. WE HOPE THAT YOU WILL THEREFORE TAKE ADVANTAGE OF THE BREATHING SPACE GRANTED BY THE DEFENCE SECRETARY'S DECISION, ΤΟ TAKE A FURTHER AND CONSIDERED LOOK AT HOW THE SUM INVOLVED

POUNDS STERLING 15 MILLION AT TODAY'S PRICES - COULD BE FOUND FROM HONG KONG GOVERNMENT FUNDS WITHOUT CAUSING MAJOR POLITICAL DIFFICULTY WITH LEGCO. THE MOD HAVE MADE IT PLAIN THAT THEY ARE ENTIRELY FLEXIBLE ABOUT WHEN SUCH A SUM COULD BE PAID BETWEEN NOW AND 1997 AND THE MEANS BY WHICH IT MIGHT BE PAID: THERE IS FOR EXAMPLE NO OVERRIDING REASON FOR IT TO BE PAID THROUGH THE MECHANISM OF THE DEFENCE COSTS AGREEMENT.

4. I APPRECIATE THE DIFFICULTIES INVOLVED, BUT WE NOW HAVE THE OPPORTUNITY AND THE TIME TO APPLY WHATEVER LATERAL THINKING IS REQUIRED TO COME UP WITH A SOLUTION WHICH DOES NOT IMPOSE UNACCEPTABLY ON THE VERY HARD PRESSED DEFENCE BUDGET.

5.

AS WE HAVE TO SUBMIT TO MINISTERS ON HOW TO TAKE THIS

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