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BACKGROUND
A. General
The present position is that virtually all pensions
of both expatriate and local personnel, whether earned prior
to or after independence, are the responsibility of the
overseas government. The O.D.M. proposes that H.M.G.. should,
in most cases, become fully responsible for that portion of
the cost of expatriate pensions which relates to
pre-independence service. The extra cost of this proposal
would be some £11.5 m. per annum. This will be accommodated
within the aid programme, which is expected to rise from
£227 m. to £245 m. in financial year 1971/72.
2.
This O.D.M. proposal would remove a long-standing
irritant in our relations with independent Commonwealth
countries and a threat to the conduct of sensible and
constructive aid policies.
There is growing pressure on the
U.K. to accept responsibility for the payment of expatriate
The most serious form this has taken is in
Because we had
pensions.
Tanzania, which repudiated her obligations.
already warned the Tanzanians that such a repudiation would
oblige us to cut off aid, we did so. The resulting situation
in Tanzania has proved to be detrimental to our interests.
The Kenya Government has informed us that it has "decided"
cease the payment of pensions to expatriates of that part
of their pension relating to pre-independence service, and
has asked for discussions in the context of the next roună
of aid talks. It is very probable that Uganda and Zambia
will feel obliged by domestic pressures to follow suit in
/the
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the near future. Other countries, possibly less dependent on our aid, or believing that we will submit to pressure,
are likely sooner or later to follow the example of either
Tanzania or Kenya. Although our present position has a
perfectly logical basis and has been accepted by overseas
countries in independence agreements, it is an issue which
rouses strong emotions in many "new" countries which find
themselves forced to foster an emergent and often extreme
nationalism.
3. The paper on Southern Yemen indigenous pensioners is
related to this exercise for reasons of administrative
convenience but raises quite separate issues. It is
"sui generis", concerns indigenous not expatriate pensioners,
and ought not to prejudice discussion of this paper.
B. Dependent Territories
4. In official discussions we have so far taken the view
that it would be very difficult to justify proposals which
appear to treat dependent territories less favourably than
independent countries. Since dependent territories are
considered to be the first charge on our aid programme, it
would be very desirable, and make good sense, to include
all dependent territories in the proposed takeover. As a
fallback position we have sought to obtain a limited
inclusion of dependent territories on the following lines:
(a) Special arrangements on the lines to be offered
to independent countries would be offered to those
dependent territories having executive Public Service
Commissions as and when they reached that stage of
constitutional development.
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(6) For the other dependent territories we would
undertake to take account of their expenditure on
expatriate pensions in assessing their needs for
development aid.
Both the Treasury and O.D. M. have opposed us on this issue.
Hong Kong presents a major difficulty. FCO telegram No. 52
Flag B
5.
to the Governor, Hong Kong, and his reply, Hong Kong telegram
Flag C. No. 78 are attached. The Governor concludes that any change
in our present policy would raise embarrassing problems,
particularly in relation to the Hong Kong Public Service (both local and expatriate elements) and has expressed the view, as
an initial reaction, that Hong Kong should be omitted from the
takeover, whatever its scope. On the other hand, the specific
exclusion of Hong Kong from any scheme which included the
other dependent territories (for reasons which could hardly be revealed) would be criticised publicly as yet another
indication that H. M.G. is indifferent and unsympathetic in its
dealings with the Colony.
6. In view of Hong Kong's reaction and the opposition of
other Whitehall departments to our proposals, it is recommended
that we should now cease to press for the inclusion of
dependent territories but insist that, as regards the dependent
territories, the following arrangements should apply in
relation to expatriate pensions:
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(a) As they approach independence offers will be made to
them designed to assimilate them to the position applicable at that stage to H.M.G's' responsibilities in relation to
expatriate pensions in independent countries;
(b) For dependent territories other than those covered by
(a),
account would be taken of their expenditure on
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