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Confidential
FCO proposal as a compromise between the demands of the HMOCS
Association and the interests of the UK taxpayer. He made
clear, and has since confirmed to Mr Ricketts who is in Hong
Kong, that the FCO proposal (with some minor modifications) is
likely to be the minimum acceptable to the HMOCS Association
and that it represents his bottom line. He told Mr Ricketts
that he would publicly oppose any offer to HMOCS falling short of the FCO proposal.
4.
At the Secretary of State's bilateral with the Prime
Minister on May, the Prime Minister said he would support a
package which involved splitting the difference in cost between the FCO and Treasury proposals. However, as this would not provide a package acceptable to the Governor, the
Secretary of State decided not to propose it to Mr Portillo. One loose end is that PS/Mr Portillo is expecting the
Secretary of State to broach this issue with the Chief
Secretary. The draft seeks to finesse this point by trailing Mr Goodlad's visit to Hong Kong.
5. I have spoken to Mr Dinham, Government House about possible next steps. One option would be for a final decision on HMOCS to be taken at a meeting of OPD (K). (The Governor has it in mind to suggest a meeting with Ministers in June to
discuss electoral matters, so HMOCS might dovetail into that). But Mr Dinham thinks the Governor is likely to prefer a
meeting with the Prime Minister, Secretary of State and Chief
Secretary, on the grounds that an OPD (K) meeting would be more
likely to favour the Treasury view. Mr Goodlad will have an
opportunity to discuss these ideas during his visit. In the
meantime, we should endeavour to keep the Prime Minister
engaged.
Then
J C Morris
sub.hmocs24.ADMIN
JEB
Confidential