TNAG-2677-FCO40-3874-Hong-Kong-garrison-withdrawal-plan-1993 — Page 94

SECRET

OF

CHANCELLOR

THE EXCHEQUER

On

1

I am aware of

the

difficulties in the defence costs

talks with the Hong Kong Government, but I fail to see how we make them any easier by negotiating on one basis only to introduce a new thought

that is our decision early next year.

-

if

the substance of the case, you identify three penalties from pursuing my alternative. We have addressed in the Survey your concern about the availability of infantry; I do not believe that the administrative difficulties in advancing the Gurkha run-down should stand in the way of savings of £30m; and since the solution to the problems of the Defence Costs Agreement is likely to be some form of deferral of payments, I am disinclined to put much weight on the fact that my alternative has marginally higher upfront costs than yours (the fact is that under both schemes we are unlikely to be paid immediately).

I have

In summary, I see no reason to defer a decision, and every reason to

press ahead with the cheaper alternative which identified.

I am copying this letter to other members of OPD(K)

Sir Robin Butler.

2 L

and to

2

KENNETH CLARKE