CONFIDENTIAL
a)
the number of HMOCS members in service in 1997 and on how long they remained in service after 1997;
b)
Hong Kong Civil Service Salary increases between now and 1997; and
the exchange rate at the dates of payment.
c)
The cost could be as high at £44 million (at current exchange
rates) in the unlikely event that all 666 potentially eligible
HMOCS officers were to remain until normal retirement age and all
contract officers who had the option to transfer to permanent and pensionable terms chose to do so: and "bought back" all their previous service. Equally, if a high proportion of HMOCS
officers were to leave in 1997 or shortly thereafter, the cost could be relatively low. A figure midway between these extremes, say £20-30 million, is probably the most likely. (By contrast
the traditional compensation scheme, which members of HMOCS are
expecting, would cost between £60 million and £205 million.)
3. One way of limiting the financial commitment would be to
state that the compensation was based on 1991 Hong Kong salary levels and would be paid in sterling at the average exchange rate for 1991. The value thus derived could then be uprated annually
to take account of the movement of the Retail Price Index.
CONSULTING THE CHINESE
4.
This is an issue bearing on the implementation of the Joint
Declaration on which the Chinese could legitimately claim that they should be properly consulted. They may see the scheme as
an attempt by HMG to preserve influence in Hong Kong after 1997. We will therefore need to take great care to try to allay Chinese
suspicions and to persuade them that we are trying to ensure that Hong Kong remains stable and prosperous before and after 1997.
2
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