CONFIDENTIAL
7. I submit that it is completely unrealistic to think that the Hong Kong Government would be able or willing to make over this capitalised amount. The Chinese would probably
also view this as a breach of the Joint Declaration.
reasons are:
The
(a) At present HKG, like HMG, funds its pension
liabilities from recurrent revenue. It has no fund for
this purpose. In 1986 the amount required to fund pensions up to 1997 was estimated to be HK$120 billion. HKG has stated publicly that it is simply impossible for
it fully to fund this pension liability. It would
therefore be politically impossible for the Hong Kong
Government to agree to fund the liability only for HMOCS
members.
(b) If such a fund were to be handed over to HMG it
would require the approval of Finance Committee. There
is no way the Finance Committee would agree to such a
transfer.
(c) Any action by HMG on this would inevitably
undermine our assurances on the credibility of the Joint
Declaration.
(d)
Confidence in the future of Hong Kong would
evaporate. The Chinese would probably claim that such
action breached the Joint Declaration (JD4 on HMG's
responsibility for preserving prosperity and social
stability) and was therefore unacceptable. The Chinese
would also no doubt object to the use of HKG reserves
for this purpose.
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