CONFIDENTIAL

CONFIDENTIAL

Copied to P. fyfect 5/0 AM.

360

065574

MDHIAN 6641

HKA 233/

:

FM UKREP JLG HONG KONG

TO IMMEDIATE FCO

TELNO 262

OF 04053OZ JUNE 92

INFO IMMEDIATE PEKING, HONG KONG

TOP COPY Q DIST?

HONG KONG: PERSONAL FOR GOVERNOR PEKING: PERSONAL FOR AMBASSADOR

359

YOUR TELNO 455 TO PEKING: HMOCS

3

1. I THINK IT ALMOST CERTAIN THAT THE CHINESE REACTION WOULD BE NEGATIVE IF WE PROPOSED SUCH A SCHEME FINANCED BY HKG. FOR ONE THING THEY WOULD QUICKLY PICK UP ANY DISSATISFACTION AMONG LOCAL. CIVIL SERVANTS, AND WOULD BE UNABLE TO RESIST THE TEMPTATION TO ACT AS THEIR CHAMPION.

2.

ALTHOUGH JD 73 DOES NOT USE THE TERM ''PREVIOUS SYSTEM'', IT REFERS TO ''BEFORE'': THIS INTRODUCES THE REFRENCE POINT IN THE SAME WAY AS ''THE PREVIOUS SYSTEM''. THE CHINESE ARGUE THAT WHAT THEY UNDERTOOK TO MAINTAIN WAS THE SYSTEMS PREVAILING IN 1984, AND THAT THEY ARE NOT BOUND BY SUBSEQUENT CHANGES IN THEM UNLESS FIRST AGREED WITH THEM. ALTHOUGH WE (RIGHTLY) DO NOT ACCEPT THIS, I HAVE LITTLE DOUBT THAT IT WOULD FORM THE BASIS OF ANY CHINESE POSITION ON THE SUBJECT. THEY WOULD FEEL NO DISCOMFORT IN MAINTAINING THE

LINE THAT IN SUCH CIRCUMSTANCES THE TERMS OF JD 73 DID NOT APPLY TO

THE ASPECTS OF THE SYSTEM AFFECTED BY UNILATERAL CHANGES.

3. WHETHER OR NOT A CHANGE TO THE SYSTEM IS ACTUALLY INVOLVED SEEMS TO US TO BE ARGUABLE: IF WE WERE TO ALTER WHAT WAS INTENDED TO BE A DISCRETIONARY PROVISION (AND PROBABLY ONE WHICH WAS EXPECTED TO BE THE EXCEPTION RATHER THAN THE RULE), SO THAT IN EFFECT IT BECAME AUTOMATIC OR NORMALLY APPLICABLE, IT SEEMS TO US THAT A REASONABLE CASE COULD BE PUT THAT THIS DID IN EFFECT CONSTITUTE A CHANGE TO THE SYSTEM.

4.

I DO NOT THINK IT WOULD HELP US MUCH, OR BE OF ANY PRACTICAL CONSOLATION TO HMOCS OFFICERS, IF WE WERE THEN TO PROTEST ABOUT THE GRAVE IMPLICATIONS OF THE CHINESE BREACHING A TREATY OBLIGATION. THE CHINESE WOULD NOT SEE IT THAT WAY, AND FACED WITH THE PROSPECT OF NON PAYMENT OF PENSIONS, HMOCS OFFICERS WOULD NATURALLY EXPECT HMG TO ASSUME THE RESPONSIBILITY FOR PAYING THEM. THAT IS THE RISK

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CONFIDENTIAL

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