AWMENT HOUSE HUNG KUNG.
fia
nu
The Rt Hon Christopher Patten
CONFIDENTIAL
GOVERNMENT
-ONG KONG
USE
21 January 1993
HMOCS Arrangements
I have just seen a copy of Michael Portillo's letter of 15 January to Douglas Hurd copied to you.
I must say that I am very disappointed that we appear to be no nearer an equitable solution than we were some months ago. I am all for being careful with money. But there are times in our history where important principles are at stake to which we must hold. We cannot treat our colonial civil servants in a shabby way, pretty well unprecedented in the history of our disengagement from Empire, simply because it is cheap for us to do so. Not only is this dishonourable. It will also backfire badly if the end product is an administration riven by distrust and resentment.
Turning to the points made in Michael Portillo's letter, I agree that a balance has to be struck between protecting the interests of the UK taxpayer and honourably meeting our obligations to Hong Kong members of HMOCS. This is precisely what Douglas Hurd's proposals of 18 November sought to do. A Sterling pension safeguard at a rate of HK$16:£1 is already some 35% below both the actual exchange rate and the historical average. In addition, the compensation scheme proposed by the FCO, whilst using traditional factors, has an artificially low cap of £120,000. In no other IMOCS territories were these arrangements so constrained.
I am sure that we would be well able to defend in Parliament an equitable HMOCS package, particularly when one considers the political realities. After 30 June 1997, Hong Kong will not only be outside the Commonwealth. It will be operating under the auspices of an alien Communist power.
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