CONFIDENTIAL
(a) Traditional Scheme
The Chinese
11. This is not a practical possibility. Government, as sovereign after 1 July 1997 stand as proxies for the successor government. The FCO believe that they would instantly reject any proposal to go beyond the Joint Declaration in this way. They would see it as undermining the Joint Declaration provisions for continuity in the public service. They would not be prepared to offer an
exchange-rate guarantee to either local or expatriate
officers.
(b) Modified Traditional Scheme
12. This is what HMOCS members are seeking, but it would be
very expensive and would probably ensure that almost all
HMOCS officers would leave. As most HMOCS officers would be
likely to take advantage of the scheme, the cost could
approach its maximum - £150 million. It would also be hard
to reconcile with our commitments under the Joint Declaration to work for Hong Kong's prosperity and stability and for a smooth transition in 1997. Local officers, who
have shown the same loyalty to the Crown, would react angrily to a scheme which led to an expatriate exodus in 1997, leaving them alone to face the change of sovereignty. It could be difficult to explain to Parliament why we were prepared to commit up to £150 million on a group of civil servants who are already well paid by UK standards and given the assurances about security of pensions in the Joint
Declaration.
(c) Capitalisation
13. This scheme would cost HMG nothing, and would give HMOCS members the protection they seek. However
capitalisation of pensions is precisely what local Hong Kong civil servants are after. For the Hong Kong Government to
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