CONFIDENTIAL
in order to meet the Governor's need for early action, we
should:
(a) abandon our efforts to secure a package deal covering
all aspects of the problem;
A
(b) accept that the Treasury will need more time to study
alternatives to our proposal for a sterling safeguard;
(c) concentrate on firming up quickly agreement to our
compensation proposal (which Ministers agreed in principle in 1988). Our aim should be for Lord Caithness to make an announcement of willingness in principle to offer a compensation scheme during his visit to Hong Kong on 16-21 February.
3.
If Ministers agree with this approach, the next step would be further urgent discussions with Treasury officials on the detail of the proposal. We would then submit a minute from the Secretary of State to the Chief Secretary, copied to the Prime Minister, underlining the political problem and seeking approval. It would be essential to obtain Treasury agreement to separate PES provision for the funds required (probably £20-30 million over the 8 years,
1997-2005).
Background and Argument
4.
Background on HMG's commitments to HMOCS officers, the scale of the problem in Hong Kong and possible ways of dealing with it are set out in the paper at Flag A. This is an FCO draft which is now largely agreed with the Treasury (and ODA) at official level as a neutral discussion of the options. Interdepartmental discussion of this issue has continued intermittently for a number of years.
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CONFIDENTIAL