CONFIDENTIAL
10.
(d) unless a sterling safeguard is introduced soon,
currently serving HMOCS members will not have the
confidence to continue up to 1997. [Comment: a strong point, already raised.]
(e) linked to (d), in order to make our proposals for a compensation/incentive scheme even remotely viable, some guarantee that the additional payments will actually be worth something is required. This could be a sterling rate for such payments. [Comment: a possible strong point, if it emerges when we announce the scheme that
this is a concern.]
(f) Hong Kong pensioners are currently suffering because the Hong Kong dollar has weakened considerably against
pound the US dollar. A sterling safeguard should be introduced
now to protect current pensioners. [Comment: very little evidence that there is any genuine hardship.]
are:
The arguments against introducing a sterling safeguard
—
(i) it has not been the principle for HMG to provide such a safeguard even if HMG has "done the right thing" in case of default. [Comment: no Brownie points for stressing the principle when the fact shows otherwise.]
(ii) it could show a lack of confidence on the part of HMG to Hong Kong's future. This could be very damaging to Hong Kong. [Comment: very valid but might be overcome if carefully handled.]
(iii) depending on how it was introduced, it could lead to strong demands on HKG to do the same for local civil servants - with dire consequences. [Comment: very valid
RODACP/5
CONFIDENTIAL