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B
letter) to the compensation question; that we shall be
briefing the Chinese before making a public
announcement; and that we shall clear lines with the
Treasury; and
(c) showing interest in Treasury officials' detailed
suggestions for the compensation scheme and agreeing to keep in close touch.
I submit a draft. It is long, but we want to get the details right.
Background and Argument
3. The Secretary of State's minutes and the leverage of
Lord Caithness's visit to Hong Kong have at last secured
movement in the Treasury position. In summary:
The Secretary of State's minute of 11 February sought
Treasury agreement to Lord Caithness' announcing in
Hong Kong that we have formulated a compensation/ incentive proposal and would begin consultations with
HMOCS officers about it before Easter; that we
continued to explore options on sterling safeguards and expected to be able to take decisions within three
months; and that we had decided to amend the SPOS
rules.
C
D
The Chief Secretary's letter of 24 February offered
agreement to the compensation scheme and SPOS changes,
provided that we accepted now that HMG should not fund
a sterling safeguards scheme.
The Secretary of State's letter of 26 February rejected
this and proposed as a compromise that Lord Caithness
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