CONFIDENTIAL
(c) Any action by HMG on this would inevitably undermine our assurances on the credibility of the Joint
Declaration.
8.
(d) Confidence in the future of Hong Kong would
evaporate. The Chinese would probably claim that such
action breached the Joint Declaration (JD4 on HMG's responsibility for preserving prosperity and social stability) and was therefore unacceptable. The Chinese would also no doubt object to the use of HKG reserves for this purpose.
Set against these arguments is the fact that, if things
were to go badly wrong in Hong Kong and the SARG to refuse
to meet payments of pensions for HMOCS members, HMG would in all probability be forced to pick up the tab. The liability for this was calculated in 1985 to be approximately £10.5 million per annum, at 1983/84 salary levels and exchange
rates. A fluctuating liability would continue until about
2040.
9. Given our commitment to review the position, I recommend that we ask the Governor for his personal views on this issue. But I would recommend against asking the Governor formally to consult the Executive Council: I think this
would provoke a strong reaction.
M V Stone
RODACQ/4
CONFIDENTIAL
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