CONFIDENTIAL
C
would need to consider whether the step-by-step approach
still makes sense. By mid-March we may be able to judge whether the commercial loan option could be a feasible alternative to sterling safeguards, so we could then put the
whole package to OD (K). That would in practice probably
have to be after the election.
11. If Lord Caithness is unable to make any substantive announcement in Hong Kong, we shall try to negotiate a new form of words with the Treasury about our continuing
consideration of the issues. They recently agreed that we should say that we recognise HMOCS officers will need to
know well before the end of June what arrangements HMG are
to make for them in 1997. However, it now emerges that the Treasury game is to use this deadline to squeeze us into accepting that there will be no HMG-funded sterling
safeguards.
Mas
PF Ricketts
Hong Kong Department
NC1ABU/4
The Minister of State will
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25/2
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