TNAG-2677-FCO40-3874-Hong-Kong-garrison-withdrawal-plan-1993 — Page 125

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the MOD if the British battalion were to return to Hong Kong

in April 1995 as then the MOD would be saved 35% of the HK

cost of the Gurkhas and 65% of the cost of the British

battalion (since HK pays 65% of the full cost of the

Garrison).

4. The Defence Secretary's minute estimates that the

Chancellor's option would save the MOD some £30 million.

However he argues that because of implications of the outcome

of the PES round and the current round of Defence Cost talks

with Hong Kong, no decision should be taken until early next

year.

5.

We understand from MOD officials that, although he is yet

to take a final decision, the Defence Secretary is inclined

not to accept the Treasury proposal, in part because of the

political implications of accelerating the run-down of the

Gurkhas, and in part because operationally the MOD see value

in retaining the British battalion in the UK for the extra

time. However at this stage of the PES round he does not wish

to be seen to be indifferent to potential savings of £30

million. He is therefore trying to push a decision beyond the

New Year.

6.

It suits us for the MOD view to prevail, but since the

Defence Secretary has already made the Hong Kong points well

in his minute, I do not see any advantage in volunteering an FCO view at this stage. But we should be prepared to chip in

if the Chancellor presses for early agreement to the Treasury

proposal.

Tramin

J C Morris

sub.garrison.MORRIS

JEB

The hey grit for Hong Key, which is well made in the Defence Saunotary's minute, is that the Treasury

the cats falling to the Hay Kay

proposal will warmer the

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Crannad, and have the Governor's political problems.

Cm 15,0