TNAG-2100-FCO40-2989-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 140

CONFIDENTIAL

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13. It is significant that the Police would be most and

badly effected if the HMOCS members left: well over half of the superintendents and above are expatriates and their

departure would leave a yawning gap. But the local inspectorate and above are equally vociferous in claiming they need protection. Offering protection to HMOCS members could split the Force with serious consequences. The Force is already showing signs of strain.

14. My view is that there is not justification now for introducing a sterling safeguard. There is concern that

HMOCS members will quit in large numbers in the run up to

1997 but there is no evidence for this yet. There is

widespread concern amongst all Hong Kong civil servants that

their pensions will not be worth much post 1997, but to

acknowledge that such a concern is legitimate for HMOCS

members could be very destabilising. It would appear that

for the good of Hong Kong generally it would be best not to

take any action to introduce a sterling safeguard for HMOCS

members pensions unless or until the HK$ did indeed collapse. Such circumstances would indicate a general

collapse in Hong Kong and HMG's action to safeguard HMOCS

pensions would be unlikely significally to worsen the

situation. If the HK$ were to become worthless, it was

estimated in 1985 that the cost of HMG at 1983/84 salary

levels and exchange rates would be £10.5 million per annum, continuing until about 2040.

RODACP/7

CONFIDENTIAL