TNAG-0205-FCO40-241-Pensions-policy-1970 — Page 67

DIATE

Mr. O'Brien (FPAD)

Reference...........KK 18/35

113

R

Mr. McCarthy

Mr. Blakeway Mr. Dalton Mr. Steggle Mr. Miller Miss Swann Mr. Munro

Mr. McQuiggan Miss Sinclair Mr. Fairclough Mr. Odel2

Copy to:

Mr. Combs

Arabian Dept.

Caribbean Dept.

Central & South African Dept.

East African Dept.

North Africa Dept.

South Asian Dept.

South West Pacific Dept.

West African Dept.

South East Asian.Dept. West Indian Dept. Claims Dept.

Pension Policy

I explained to Mr. Shakespeare that it would be impossible to comment by 7 November on the ODM working papers on this subject attached to your minute of 5 November. We can agree with ODM without difficulty that Hong Kong poses a special problem. But we shall require more time, probably much more, in which to examine this complex question before we can comment " with any confidence that we have fully explored the issues in relation to Hong Kong. However, the diffi- culty is that any announcement which may be imminent, to the effect that HMG accepts responsibility for the pre-independence portion of pensions still payable by other dependent territories approaching independence in the ordinary way, may immediately embarrass us in our dealings with Hong Kong, unless this policy deci- sion is very carefully presented with an eye to the repercussive effects on the unique situation in Hong Kong. In fact we are inclined to think that it may be impossible to make such an announcement without exposing ourselves to a dilemma.

These comments will not therefore be exhaustive; and are most likely to make only a negative contribu- tion to the problem.

We accept that the Hong Kong position is unique in that we are dealing with a territory with no pros- pect that the political situation will evolve normally. On the other hand we can presuppose that one day the Colonial Government will be succeeded, possibly with- out warning, by a Government which will not assume the obligation to pay any pensions earned by service under the Colonial Government, whether by expatriate or local officers. HMG may therefore expect one day to inherit that obligation itself and to be in no position to contest the fact. Things may turn out to be different but we cannot safely assume that they will.

So far this is an argument apparently leading to the tentative conclusion of ODM that a Hong Kong pension fund should be established. But there is another unusual ingredient in the Hong Kong situation. There cannot be any public reference to the prospect outlined in the last paragraph, at least by the Hong Kong Government or by HMG. If there were, it would have an immediate adverse affect on the state of con- fidence in the Colony, on which its prosperity, and perhaps its existence, depends. Not only can it not be said: it cannot be implied. It might well be

CONFIDENTIAL

/ implied

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