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British influence. If Ministers were, hypothetically, to
decide to force Hong Kong to bear some of the cost, there
would be a big row with the Chinese. Since the issue is
likely to become more public in Hong Kong soon, there could be advantage in the Secretary of State saying something
about our intentions to Qian. This is another argument for early decisions.
Options
13.
We have three broad options (none without drawbacks):
(i) we could make a major political push for our package
approach. The Secretary of State would probably need to appeal direct to the Prime Minister to override Treasury objections, on the grounds that the situation in Hong Kong demanded decisive action. But the Treasury have the argument that all other options need to be carefully considered before the British taxpayer takes on a significant contingent liability for Hong Kong pensioners. And it is frankly difficult to say with certainty that the situation in Hong Kong will
become unsustainable without the early announcement of
a comprehensive package;
(ii) we could adopt the Governor's proposal of separating
out the compensation proposal from sterling safeguards and seeking early announcement of agreement in
principle to introduce a compensation scheme. The
Governor believes that if we did this, even though the
scheme is much less generous than in previous
territories, it would take the heat out of the issue,
and buy some time. The disadvantages are that the Treasury might fight hard even on the details for compensation package; that we would lose all momentum
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