Hong Kong’s 13-month battle to cut its bill for the British garrison in last decade of colonial rule

British cabinet files reveal the Executive Council wanted a 50-50 split of costs but reluctantly agreed to pay 65 per cent

PUBLISHED : Friday, 30 December, 2016, 8:47am
UPDATED : Friday, 30 December, 2016, 8:46am

The Hong Kong government fought hard to cut its share of funding the British garrison in the city in the last decade of colonial rule – proof, one academic said, of the efforts to maximise its autonomy from Britain.

In June 1988, after 13 months of negotiation, the British and Hong Kong governments reached a new agreement to cover the cost of the 9,000-strong military force from 1988 to 1997.

The deal reduced Hong Kong’s share of the costs from 75 per cent to 65 per cent, with Britain making up the difference. That equated to a HK$7.5 billion saving for the city’s taxpayers.

According to British cabinet files recently declassified from the National Archives in London, Hong Kong’s governor at the time, David Wilson, made a strong case for cutting the city’s financial burden and at times rebutted arguments presented by British officials.

The Executive Council initially wanted a 50-50 split of costs, although the Hong Kong government’s bottom line was to pay 65 per cent of the bill.

In a minute to British prime minister Margaret Thatcher in December 1987, defence secretary George Younger wrote “it has always been arguable that, for the remainder of the period to 1997, the Hong Kong government should be expected to meet the full cost of the garrison, since it will be devoted to meeting their own security requirements”.

He added: “The Hong Kong government’s position is quite unreasonable, and we are fully justified in continuing to require them to bear at least 75 per cent of cost for the Hong Kong garrison.”

There are strong political arguments for avoiding bad blood with Hong Kong
Percy Cradock, Margaret Thatcher’s foreign affairs adviser

The UK’s Treasury also adopted a tough stance. But Percy Cradock, Thatcher’s foreign affairs adviser, and foreign secretary Geoffrey Howe sided with the Hong Kong government.

In a minute sent to Thatcher’s private secretary, Charles Powell, on January 29, 1988, Cradock, said the British government must show itself to be supportive of Hong Kong in the run-up to 1997.

“There are strong political arguments for avoiding bad blood with Hong Kong,” he wrote. “This is reinforced by the forthcoming publication of the White Paper on representative government on which we are likely to face criticism.

“We do not want two battles on our hands at the same time. The governor will also need our support in facing a new and more restive Legco.”

In February 1988 the Hong Kong government released the white paper, which ruled out the introduction of direct elections for the Legislative Council that year.

Cradock wrote that the British team should be given flexibility to settle at around the 65-35 mark to avoid a public confrontation.

In a minute sent to the Foreign and Commonwealth Office in March 1988, Wilson wrote that Hong Kong’s proposal to pay 65 per cent of costs was endorsed by the Executive Council, but “very reluctantly”.

“The essential political point remains that we shall have difficulty getting a new agreement approved by a politicised finance committee [of Legco]. We are already beyond the level of apportionment which would be politically saleable,” the governor wrote.

In 1985, 12 lawmakers were returned by nine functional constituencies such as legal and education. Twelve more were returned by an “electoral college” of district councillors.

“To get through the proposal which we have now put forward with a prospect of sniping rather than either bruising political attack or failure requires the support of unofficial members of Exco,” Wilson wrote.

He also argued that the government’s budget surplus was “irrelevant to the political problem we are trying to tackle”.

“I understand the Chancellor of the Exchequer also faces embarrassingly healthy prospects for his budget; I do not intend to use this as an argument,” Wilson wrote.

The stalemate was eventually resolved by Thatcher’s intervention.

Ray Yep Kin-man, a political scientist at City University, said the colonial government had differed from London on issues such as defence costs and quotas for Hong Kong’s textile products exported to Britain since the 1960s.

“Wilson’s efforts to defend Hong Kong’s interests were another indication of the colonial government’s attempt to maximise the colony’s autonomy vis-a-vis the sovereign state,” Yep said.

Additional reporting by Jennifer Ngo