CONFIDENTIAL
Capital transfer from HKG to HMG
HMG
This is a red herring which we must now put to rest. The Foreign Secretary has explained in successive minutes on 11 February, 26 February, 11 March and 1 May the political impossibility of forcing Hong Kong to do this. Briefly, the Legislative Council would not agree to vote the funds. would therefore have to direct the Governor, through an Order-in-Council, to do so. This would create a political crisis in our relations with Hong Kong and the Chinese would see it as a clear case of asset stripping. It could lead them to repudiate their undertakings on pensions in the Joint Declaration. We could find ourselves saddled with paying all Hong Kong pensions for sevice pro-1997.
CONFIDENTIAL
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