TNAG-2675-FCO40-3872-Hong-Kong-garrison-withdrawal-plan-1993 — Page 12

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17:35 FROM HQ-TAMAR-HONG-KONG

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SECRETHESE GROUNDS.

OPTION OF REDUCTION TO A SINGLE "SATTAMON THESE GROUNDS.

·PACE OF WITHDRAWAL

4. THE PAPER IDENTIFIES A NUMBER OF DISADVANTAGES TO SPEEDING UP WITHDRAWAL OF THE GARRISON, INCLUDING THE CHINESE ANGLE. THESE NEED TO BE WEIGHED AGAINST THE IMPORTANCE AND URGENCY OF REDUCING DEFENCE COSTS IN REAL TERMS EACH YEAR. AS YOU KNOW, WITHOUT SUCH CUTS, I SEE VERY GREAT DIFFICULTIES IN MAINTAINING LEGCO SUPPORT FOR THE DEFENCE COSTS AGREEMENT, FOR THE FOLLOWING REASON:

A) OTHER THAN AT SEA, THE GENERAL PERCEPTION IS THAT THE GARRISON DOES NOT NOW PLAY A LARGE ROLE IN HONG KONG. WE USED THE ARGUMENT WITH LEGCO, WHEN THE POLICE AND AUXILIARY AIRFORCE WERE BEING EXPANDED TO TAKE OVER ON THE BORDER, THAT THE GARRISON WOULD BE ABLE TO SHRINK. LEGCO MEMBERS NOW EXPECT IT TO DO so.

B) AS HONG KONG PREPARES FOR ITS NEW SOVEREIGN, SPENDING ON FORCES WHICH MANY NATURALLY EQUATE WITH DEFENCE AGAINST CHINA IS NOT GOING TO WIN A SYMPATHETIC HEARING.

C) AFTER 1997, CHINA HAS UNDERTAKEN IN THE JOINT DECLARATION TO PAY FOR ALL MILITARY FORCES WHICH IT SENDS TO HONG KONG. HONG KONG WILL MAKE NO CONTRIBUTION. CONTRAST WITH THE PRE-1997 SITUATION ARE INEVITABLY MADE.

D) UNLIKE AT WESTMINSTER, WE HAVE NO GOVERNMENT PARTY AND NO DEFENCE LOBBY. WE HAVE THREE OFFICIAL VOTES AND WE WILL LOSE THEM IN 1995. IF WE HAD GONE TO LEGCO FOR ADDITIONAL APPROPRIATIONS IN 1992-93 TO MEET THE GARRISON OVERSPEND IN THAT YEAR, THE RISK WAS TO SIMPLY THAT THE REQUEST WOULD HAVE BEEN REJECTED. RATHER IT WAS THAT THE ENTIRE DEFENCE COSTS AGREEMENT WOULD HAVE BEEN CALLED INTO QUESTION.

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5. MY CONCLUSION IS THAT THE DEFENCE COSTS BUDGET FOR 1993-94 SHOULD AIM NOT ONLY TO COVER ANY JUSTIFIED OVERSPENDING IN 1992- 93 BUT WITH THAT INCLUDED SHOULD ALSO IF AT ALL POSSIBLE DEMONSTRATE A DECLINE IN REAL TERMS. THIS MAY BE TOO AMBITIOUS A TARGET FOR 1993-94. BUT I AM SURE THAT IN EACH SUBSEQUENT YEAR THERE MUST BE A REAL DECLINE. I KNOW THAT THIS WILL BE DIFFICULT TO ACHIEVE. OUR PROJECTION OF THE SHORTFALL FOR 1993-94, AFTER TAKING INTO ACCOUNT THE OVERHANG FROM 1992-93 AND HQBF'S LATEST ESTIMATES FOR THE CURRENT YEAR, IS HKD360 MILLION OF GBP30 MILLION (HONG KONG'S SHARE). AS YOU KNOW, THE STRONG VIEW HERE IS THAT LEGCO WILL BE UNWILLING TO AGREE TO ANY/ANY SUPPLEMENTARY PROVISION.

6. IN OUR JUDGEMENT, THE PROPOSALS IN THE PAPER WILL NOT SOLVE ALL THESE PROBLEMS. WHILE THE PAPER HELPFULLY ACKNOWLEDGES THAT ONE OF THE THREE BATTALIONS NOW IN PLACE IS SURPLUS TO REQUIREMENTS, IT DOES NOT ENVISAGE WITHDRAWAL OF THIS BATTALION UNTIL THE LATTER HALF OF 1994. WE WOULD NEED TO EXPLORE THE FINANCIAL IMPLICATIONS. BUT IF REDUCTIONS IN FRONT-LINE UNITS CANNOT BE ACHIEVED UNTIL LATE 1994, ALL SAVINGS IN 1993-94 AND MOST IN 1994-95 WOULD HAVE TO COME FROM SUPPORT COSTS. I AM GRATEFUL TO YOU FOR ASKING MOD STAFF TO EXPLORE ECONOMIES HERE. BUT THE CLEAR ASSESSMENT HERE IS THAT SQUEEZING SUPPORT COSTS ALONE WILL NOT YIELD THE MAJOR SAVINGS WE NEED. THERE IS ALSO A

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