SECRET UK EYES A
tension, the Government might face charges of abandoning Hong
Kong.
Financial implications
8.
If we withdraw a UK battalion from Hong Kong, we will
immediately lose the 65% of its full costs that the Hong Kong
Government meet under the DCA. This amounts to about £llm per year. Pulling out the battalion will lead to some savings in
support, eg the closure of Stanley Fort, some educational facilities and possibly the British Military Hospital and a
reduction in logistic support, but to the extent that the UK
units and personnel affected are simply redeployed rather than disbanded a similar problem of lost receipts will apply. This would be offset by savings from those UK and Gurkha support units
which were disbanded and from locally entered labour released
earlier than planned, amounting to 35% of their full costs though the up front costs of redundancy would need to be taken into account. Without a good deal of detailed work it is not
possible to establish what the overall balance of these
additional financial changes would be but they may not offset the
loss of receipts from the DCA of bringing a battalion back to the UK. In addition, there may be unquantified costs associated with
finding accommodation for the battalion, eg from retaining
barracks which would otherwise be alienated.
9. From a Hong Kong Government point of view however, this
course of action would lead to major financial savings which they
would embrace with open arms. It is also worth pointing out that the Hong Kong Government may force us into major additional expenditure by simply refusing to pay their full share under the
DCA and in effect cash limiting the size of the garrison or
forcing the MOD to pick up the difference. They are already in
breach of the DCA by not paying the full amount due for the
1992/3 fourth quarter payment and the desire to avoid more political trouble in LEGCO than is absolutely necessary may well lead them to conclude that they this is the least painful option.
Given that the HKG have no reserve powers over LEGCO, and we have
no realistic means of forcing them to pay, they are probably
Page 4 of 5 pages SECRET UK EYES A
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