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expatriate officers only and costing £650,000 annually. I would

not regard this as absolutely impossible in terms of orders of

magnitude and while, in terms of what is essentially an aid operation,

I think it would be rough for the British taxpayer to have to foot

this bill, I fully recognise the political arguments.

3.

I would be very reluctant indeed to see dependent territories

as a class excluded from the pensions scheme. But if the suggestion

in paragraph 8 (a) of Mr. Carter's minute of 5 December is practicable,

I wonder whether the principle in the U.N. Charter to which yʊu refor

in your minute could seriously be prayed in aid by Hong Kong in this

particular situation. As I have said above, the pensions scheme

is essentially an aid operation and, in negotiating the taking-over

of responsibility for pensions, we would be making it clear that

this new factor would be taken into account in assessing the total

allocation of aid for the territory concerned. In other words,we

could claim that we were in principle changing the application of

our aid but that we were not changing the basic pattern of

distribution of aid as between dependent and independent territories.

*

Copios to:

Mr. Wilford Mr. Morgan Mr. Carter Mr. Fairclough Mr. O'Brien

(W. I. Combs )

12 December, 1969

CONFIDENTIAL