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CONFIDENTIAL
FM FCO
CONFIDENTIAL
Misoma Ry 23/10
Marin
Mr Story
TO PRIORITY HONG KONG
TELNO 1949
OF 221515Z OCTOBER 90
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Mr Bwar
Paul, HK)
064
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166051
MDLOAN 0730
16
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PERSONAL FOR WIGGHAM, SCS, FROM PAUL, HKD
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YOUR TELNO 2892: STERLING SAFEGUARDS AND COMPENSATION ARRANGEMENTS
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1. THANK YOU FOR YOUR VIEWS ON THE RELATIVE PRIORITIES TO BE GIVEN TO STERLING SAFEGUARDS AND COMPENSATION ARRANGEMENTS. I WAS ALSO GRATEFUL FOR KEITH SHIPLEY'S FAX SETTING OUT A PROPOSAL FOR HMG TO TAKE OVER THE PAYMENT OF PENSIONS TO HONG KONG HMOCS OFFICERS AT A FIXED STERLING EXCHANGE RATE.
2. I APPRECIATE YOUR WISH UNDER PRESENT CIRCUMSTANCES TO GIVE GREATER PRIORITY TO STERLING SAFEGUARDS. RECENT EXCHANGE RATE MOVEMENTS HAVE SERVED TO FOCUS ATTENTION ON THIS ISSUE, BOTH HERE AND IN HONG KONG. AS A RESULT, IT IS DOUBTFUL WHETHER AN ANNOUNCEMENT OF COMPENSATION ARRANGEMENTS ALONE, WITH A PARALLEL ANNOUNCEMENT ON STERLING SAFEGUARDS, WOULD HAVE MUCH, IF ANY, POTENTIAL IMPACT. THE PREVAILING VIEW HERE, BOTH IN THE FCO AND IN THE OTHER DEPARTMENTS INVOLVED, IS THAT THE TWO ISSUES SHOULD BE CONSIDERED AS A TOTAL PACKAGE.
3.
THE CONSEQUENCES OF LINKING THE TWO ISSUES COULD WELL MEAN FURTHER SIGNIFICANT DELAY BEFORE WE ARE IN A POSITION TO ANNOUNCE ANYTHING AT ALL. SUCH A DELAY WOULD ENTAIL SERIOUS DIFFICULTIES FOR US, AS WELL AS FOR YOU. IN CORRESPONDENCE WITH OSPA AND MPS, MINISTERS HAVE IN GOOD FAITH CREATED A REASONABLE EXPECTION THAT THERE WILL BE AN ANNOUNCEMENT ON COMPENSATION IN THE FAIRLY NEAR FUTURE. THERE WOULD NEED TO BE A CONVINCING EXPLANATION OF ANY CHANGE OF PLAN.
4.
MOREOVER THE DIFFICULTIES OF GETTING WHITEHALL AGREEMENT TO A SCHEME ON STERLING SAFEGUARDS CANNOT BE OVERSTATED. I HAVE NEVER BEEN SANGUINE ABOUT THIS, AND NOTHING I HAVE READ OR HEARD ON THIS SUBJECT IN RECENT MONTHS HAS GIVEN ME ANY REASON TO CHANGE THAT VIEW. IT CANNOT BE TOTALLY EXCLUDED, THEREFORE, THAT AT THE END OF THE DAY, IN THE ABSENCE OF ANY AGREEMENT ON STERLING SAFEGUARDS, WE MIGHT HAVE TO CONCLUDE THAT WE SHOULD AFTER ALL TRY TO MAKE AN EARLY ANNOUNCEMENT ON COMPENSATION
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CONFIDENTIAL
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