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from the refugee problem, local opinion will not so readily do 80. For all practical purposes, therefore, any decision about the contribution zust be taken against the heckround of the other problem. We are avaiting the decision of N.M. Government about the posting in Hong Kong of two artillery regimenta over and above the long term garrison.
garrison. If their posting approved, the Governor thinks that he will be able success- fully to put to his unofficials the argument that H.. Government is making special defence arrangements for Hong Kong at great expense, that they have therefore had it in mind to ask liong Kong for an increased defence contribution but that, in recognition of the problem caused by the refugees and by way of indirect aid to Hong Kong in squatter resettlement, they had agreed not to press a claim to an increased defence contribution. He thought that that explanation might
Be satisfy his unofficials and informed public opinion that 4.M. Government was giving some practial support to Hong Kong, and enable him to maintain the Defence contribution at its prosent level. Both the Governor and ourselves realise, of course, that that proposal will not help to meet the cost of the two additional regiments, but in the circumstances it is provably the best solution and consistent with the principle that the defence contribution is not related sp cifically to the size of the U.K. forces maintained in a Colony. The Chiefs of Staff recently expressed the view that the loss of Long Kong would have a serious effect on H.M.G.'s influence in the Far East, and this supporte the argument that in bringing its forces up to a level which reduces the likelihood of loss ve are serving an Imperiál as well as a local interest. 7. The above represents the problems as we see them at present. They are full of difficulties both on the Treasury and Foreign office side, but we hope the discussions we have
If you suggested can take them on a stop nearer sɔlution. will allow me a prsonal footnote, I ought to say that with regret I shall have to drop out of these discussions, as I am" off to Malaya next week, and am then going on leave prior to being transferred to the Commo.wvalth Relations office.
I am sending copies of the letter and enclosure to Phelps in the Treasury and to Dalton, Errock and Ritchie in the foreign office.
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(J. B. Jahaston)
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