CONFIDENTIAL
Possible Solution
7. The ideal solution to this problem is to negotiate with the Chinese a legally binding instrument which would require
mdmght of 30 sime
A
the HKG to pass to the CPG on July 1997 all its rights and asgeks
to obligations and that the CPG should immediatay pass these to
the newly created SARG, and which would not involve the physical movement of assets.
8.
It would be virtually impossible for us to negotiate an
instrument of this sort as the Chinese would not be prepared
to commit themselves to inheriting all the obligations of the HKG, particularly with some years to go to the transition. It would also be a tactical mistake to try to do so as it would strengthen their hand in demanding that we seek their agreement to all HKG obligations spanning 1997.
9.
A better approach would be to negotiate an instrument which covers only assets. Such an instrument would probably
as well on the epa need HMG HKG and the SARG as parties. It is difficult to
predict how the Chinese would react to this proposal. It could have some attraction for them, particularly if they were
concerned that in the absence of an agreement HMG might syphon
off HKG assets before 1997. On the other hand they could:
MB NA tho SARG
because ht would not
yet exist.
-demand a full list of HKG's assets and their value
-argue that our proposar accepts their interpretation of the
MB if they argued this, both sides. constitutional position
would reach apreement.
before the -demand that HKG cannot dispose of any assets from the date thing
operation of the agreement
^
of the agreement, without their consent and try to use this
as a means of reopening the issue of the amount of reserves to
be left to the SARG
-argue that an instrument of this sort is not necessary as
into
assets.paper/MONEY/bp
CONFIDENTIAL