CONFIDENTIAL
The Chief Secretary declined to accept the argument that the safeguard issue was only a matter of contingent liability. Both he and the Governor (or at least the HMOCS members) believed that events could deteriorate sufficiently to trigger the safeguard. Furthermore, the order of magnitude of the figures on the safeguard was a lot higher than on the compensation package.
The Chief Secretary said that, although public spending matters should normally be resolved bilaterally, he was not averse to discussion in OPD(K). Following the PES round, many at the table would be unsympathetic to the argument that more taxpayers' money should be provided for the pensions of Hong Kong civil servants. He suggested therefore that he and the Foreign Secretary reach an understanding in advance as to where OPD (K) might end up.
The Foreign Secretary declined to do this, saying that he supported the Governor on the question of the safeguard rate. But he would go over the ground with the Governor by telephone before OPD(K). There were limits to how far he expected to be able to shift the Governor, but he would make clear to him the pressures for a conclusion at OPD (K).
After the telephone call I spoke to the Chief Secretary's office about how work should now go forward. We agreed that officials should be asked to work up a brief joint paper which, together with the Cabinet Office paper, might form the papers for OPD (K). The precise terms of such a paper would need to await the outcome of the Foreign Secretary's intended telephone conversation with the Governor. As far as possible, the paper should reflect an agreed position (eg over compensation, if that was now agreed). Where there was no agreement, the paper should set out succinctly the differing views of the two sides.
27 Oct 1993
CC :
PS
PS/Mr Goodlad
PS/Baroness Chalker PS/PUS
Sir J Coles
Stephn Smith
(J S Smith)
Mr Muir
Mr Freeman, ODA
Miss Brooks, Legal Advisers Mr Trotter, ODA RMD
CONFIDENTIAL