CO_968_583_DEFENCE_OF_HONG_KONG_1957_1959 — Page 224

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suggested therefore that the Grantham proposal should be pressed and only when it is clear that it is unacceptable to the Committee should the Secretary of State revert to the line now sup, orted by Sir Robert" Black.

10. The arguments for the Grantham proposals are:-

11.

(a) They are a way out of an impasse. Service

Department title to the lands is very doubtful, and a deal would save prolonged hagling;

(b) If a decision on the artillery units goes

against the Colony there is bound to be bitterness against the Service Departments, and even among those who are not aware of the bargain which has been proposed as between these lands and the units, the desire to drive a hard bargain over the lands will be predominant. The closure of the naval dockyard will increase this feeling; and at the same time H.44.0. 's continued demand for a defence contribution of Jim, and its continued refusal to help with refugees will cause further bitterness;

(c)

We cannot force Finance Committee or the Legislature to pay their Defence contribution. Moans must be found of maintaining the

contribution which do not involve a head-on collision.

If these arguments are unsuccessful the attempt should be made to obtain the agreement of the Committee to the cost of the artillery units being met out of Bervice Votes, on the same basis as the rest of the garrison. (Any suggestion that the money should come from any Vote other then Service Votes, because the units are needed for "internal security", should be resisted. The danger to security in Hong Kong arises from the enemy outside the gates). If the cost is met from Service Votes, the Secretary of state should indicate that in the circumstances it seems reasonable to assume that Hong Kong would agree to the proposɛl at the beginning of paragraph y above. The Service Departments Claim that the Governor, at the Defence Committee meeting on the 23rd July, said that long ong would be prepared to continue its defence contribution of Min. even though the garrison were reduced to six major units. Whether this is co is not clear from the minutes. But what is quite clear is that at the same mecting the Covernor made plain that Tong Kong would not be prepared to increase the contribution to cover the cost of the two extra units.

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12. If the Defence Committee decides in favour of the proposals in paragraph 4 of 2. (58, 1 the Secretory of State may wish to warn the Committee that, in the Page £ircunstances, the continuation by the long of 283

kong

/Government