CONFIDENTIAL
Finance
5. It was noted that a pensions take-over was virtually conditional on new aid money being made available. If it proved necessary to use existing money for part, at least, of the operation, it was agreed that funds should be found from the Aid Programme as a whole, rather than by precise credit and debit calculations country by country. It was pointed out however that. in practice regard was bound to be paid, when aid allocations were determined, to the saving on individual countries' budgets resulting from our take-over.
Countries which might be excluded
6.
Possible exclusions of particular countries were then discussed on the basis of paras. 4-6 of the ODM paper. The FCO representatives said that, in their view, once the new principle had been established it would seem extremely difficult to justify the exclusion of any country, and the new arrangements should in principle be open to all. At the same time there might be local considerations in regard to particular countries, as a result of which we might either withhold the offer of a pensions take-over, or use it as a bargaining point to extract concessions in other fields from the countries concerned.
7.
The following points were made on particular countries.
(i) India. There could be no question of repaying the Indians the £50m. which they paid in 1955 for the annuity under which we at present pay the most of India's overseas pensions.
(ii)
(iii)
Burma. Mr. Combs said that it might be impolitic to offer to take over Burma's overseas pensions so long as questions relating to expropriation etc. remained unresolved.
While it was agreed that Hong Kong was a special case, Mr. Stewart said the FCO would deprecate any public singling out of Hong Kong for special treatment, on the grounds that this might affect confidence adversely. Mr. Cahill said that the ODM had felt for some time that Hong Kong should set about funding its future pension liabilities, expatriate and local. Mr. Martin suggested that we might decline to include Hong Kong in our take-over on the grounds that there was no prospect of its becoming independent.
(iv) Mr. Fairclough saw advantage in including Bermuda and the Bahamas in the take-over. The political situation was evolving in each of them and an offer on pensions might ease our relations with Bermuda, who were proving difficult over compensation. If Hong Kong were included in the scheme, it would be impossible not to include Bermuda and the Bahamas also.
CONFIDENTIAL
/(v)