CONFIDENTIAL
decision, we would encourage the HMOCS Associations to step up their pressure on HMG to reach a firm decision in their
favour, and would ensure that the uncertainties, and the
risk of large numbers of HMOCS deciding to leave, would remain. This is therefore an unattractive option from HMG and Hong Kong's point of view.
CONCLUSIONS
17. This is a complex problem, with many different factors
affecting the final decision. But the key issues are (i) how serious is the risk of a deterioration of the quality
of administration in Hong Kong if this problem is allowed
to drag on without a solution? and (ii) what would be the
political damage of trying to force Hong Kong to pay for a scheme against their will? On the first point, it will
never be possible to produce a precise estimate of the
extent or timing of a crack in HMOCS morale in Hong Kong.
But if it occurred on a substantial scale, the effect on our
ability to discharge our obligation to administer Hong Kong
up to 1 July 1997 would be very serious. The implications
for maintenance of law and order are particularly worrying,
and we have to bear in mind that we shall continue to have a
British garrison in an increasingly in Hong Kong until 1997. On the second point, the Governor sees no prospect of persuading LegCo to vote funds for safeguarding the pensions
of HMOCS officers above, and a Ministerial direction to the
Governor would in our judgement lead to a constitutional
crisis, and in particular to a breakdown in confidence between the Legislative Council and HMG. The FCO
(Diplomatic Wing and ODA) believe that an HMG-funded partial
compensation/safeguards package of the kind set out inn
Annex B and C is the most practical and cost-effective way of tackling the problem. However, if HMG were not prepared
to bear the costs of this, the commercial loan option might,
subject to further work, be better than nothing. Otherwise the choice is to take a firm decision not to proceed with a
scheme, or to delay a decision until much nearer 1997. Both
NFJABA/8