CONFIDENTIAL

In the

influence in Hong Kong after 1997. We will therefore need to take great care to try to allay Chinese suspicions and to persuade them that we are trying to ensure that Hong Kong remains stable and prosperous before and after 1997. final analysis however, the Chinese could not block the scheme: the obligations of HMG to HMOCS officers are a matter for us and we would in the end have to decide ourselves how those obligations should be met.

CONSULTATION WITH THE LOCAL STAFF ASSOCIATIONS

5. There would also have to be consultation with the staff

associations in Hong Kong. Such consultation is a requirement laid down in the 1960 White Paper.

6. We must be prepared for widespread criticism by the local staff associations, the Overseas Service Pensioners'

Association and from Members of Parliament here. All concerned will no doubt claim that the proposed scheme fails to fulfil our responsibilities to HMOCS members in Hong Kong; that compensation and the right to retire early with immediate payment of pension have been granted in the case

of all other British dependent territories; and that the

consideration that is given to inducement to serve the SAR

Government is out of all proportion to the consideration

given to compensation for loss of career under the Crown.

7.

In response, we could say that the proposed scheme had

been designed to suit the particular circumstances of Hong

Kong in a way which, to quote the 1960 White Paper,

"reflects the interests of both the officers and the

Government concerned". The Joint Declaration provides that expatriate officers may remain in service with terms and

conditions no less favourable than before and the scheme

adds a further incentive. Those who choose to give up their career in 1997 would receive a deferred pension at normal

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CONFIDENTIAL

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