SECRET
General Compensation Scheme on the lines indicated above.
I have concluded that it would not, for the following
· reasons:
a) the obligation is one for HMG, not the Hong Kong Government. The officers in question belong to a special overseas service and formally speaking they enjoy HMG's protection:
b) it is now clear that if the Hong Kong Government sought to introduce such a scheme for expatriates only it would place itself in a politically untenable position. Such a scheme would be highly divisive within the Hong Kong Civil Service because it would leave without any form of compensation the large number of local members of the Hong Kong Civil Service who (unlike their expatriate colleagues) will almost all have no option but to remain in Hong Kong. For these reasons it would also arouse very strong opposition in the community as a whole if the Hong Kong Government were asked to bear the cost.
As you will know from their behaviour over the defence costs agreement and other matters, the Legislative Council are increasingly prone to criticize HMG for failing to live up to our commitments. It is the Governor's firm view that the Legislative Council would not vote funds for a locally financed scheme for expatriates only;
c) a Hong Kong funded scheme would also almost certainly be unacceptable to the Chinese Government, who would find the discrimination in favour of expatriates equally
STORET