CONFIDENTIAL
We
10. It is by no means clear what sort of negotiations the
Treasury have in mind in their "pragmatic" approach.
believe it amounts to this: the Kenyans, having asked that
we should take over "full responsibility" for pre-independence'
pension liability, would be told that we could not agree to
take over "full responsibility", but that if they continued
paying these pensions we would reimburse the cost and deduct
this from other parts of our aid allocation for Kenya. The
Treasury seem to recognise that this offers the Kenyans
nothing at all and that, therefore, we may have to go further,
It is
£
presumably by increasing the total aid allocation.
not clear whether the Treasury would be ready to go so far
as H.M.G. taking over full responsibility for payment of
pensions. We believe that unless we are ready to do this
with Kenya and any other ex-dependent territory which so
requests, the initiative will always rest with the overseas
government and we will never be able to discuss àid
allocations without an acrimonious argument about pensions
and the threat of default.
If we do not take over full
responsibility the risk of a default will always persist.
E. Pensions in respect of Post-Independence Service
11. The Treasury argue that to avoid explicitly assuming
responsibility for pension obligations would put us in a
much stronger position to hold the line where we want to,
i.e. at expatriate pensions prior to independence. There is no obvious reason why the Treasury proposals (free-for-all negotiation) would better succeed in holding the line than
the O.D.M. proposals (laying down the ground rules). No
country has in fact seriously suggested that H.M.G. should
CONFIDENTIAL
/assume