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c) if not, what would be HMG's commitment to provide guarantees on HKG borrowing?
d)
given the greater need for HMG to provide guarantees, should we not be more involved in Hong Kong's financial management (ESD's constant refrain!)
e) are there objections to Hong Kong issuing their own coinage, with or without Queen's head?
5. Section C on Pensions and Compensations for Public Officers ought to be taken out into a separate paper and expanded. I have obtained some useful papers on Aden from Research Department, which make it clear that HMG did, in effect, take on the responsibility for paying the pensions of local staff when the S Yemen Government defaulted. Questions that arise include:-
a)
what are the financial implications of
pension and compensation payments to HMOCS Officers, other expatriates and local officers?
b) would HMG be prepared to provide an
ultimate guarantee for pension payments to ensure the loyalty of the civil service in Hong Kong?
c)
what would happen if the Hong Kong dollar collapsed? Would HMG fix an abitrary exchange rate (para 21)?
Annex J Defence and Internal Security
6. The section on the garrison seems alright as far as it goes. Paragraphs 7-10 spell out some of the areas that would need consideration. We are already in touch with MOD on other aspects.
7.
On the police, paragraph 11 needs updating. Some of the obvious difficulties are noted in paragraphs 15-17.
Annex K
8.
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Citizenship, Nationality and Immigration
Revised Annex attached. The problems and possibilities are spelt out pretty clearly in paragraphs 11-16, except for two important points which really come under the heading of contingency planning:-
a) what commitments on nationality are HMG prepared to make to B&TCs who are, eg Crown Servants?
b) what steps can be taken to counteract decreasing Chinese cooperation on legal and illegal immigration?
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/Annex