50
CONFIDENTIAL
FM FCO
TO PRIORITY HONG KONG
TELNO 1815
OF 09103OZ OCTOBER 91
CONFIDENTIAL
Ils for all three fetter
to ps/6th..
19/10
TOP COPY Q DIST?
HKB 233/1
025536
MDLOAN 5916
PERSONAL FOR GOVERNOR FROM RICKETTS HKD
149
YOUR TELNO 3115: HMOCS MATTERS
1. THANK YOU. WE WILL ENSURE LORD CAITHNESS IS BRIEFED.
K
2. I AM NOT SURE HOW FULLY WE HAVE KEPT YOU UP-TO-DATE WITH OUR WORK ON THIS OVER RECENT WEEKS. IT MAY BE WORTH RECAPPING IN ADVANCE OF YOUR VISIT. ON 29 AUGUST WE SENT DETAILED PROPOSALS TO THE TREASURY ON THE THREE AREAS COVERED IN TUR. WHEN ANDREW BURNS RETURNED FROM THE PRIME MINISTER'S VISIT TO CHINA AND HONG KONG, HE FOLLOWED THIS UP, FLAGGING UP THE FACT THAT THESE ISSUES HAD BEEN RAISED WITH THE PRIME MINISTER BY THE EXECUTIVE COUNCIL. THE TREASURY REPLIED ON 24 SEPTEMBER ASKING A NUMBER OF FACTUAL QUESTIONS AND PUTTING DOWN A MARKER THAT THEY WERE NOT PERSUADED BY THE ARGUMENTS FOR A STERLING SAFEGUARD AND WISHED TO EXPLORE ALTERNATIVE APPROACHES TO THE QUESTION OF FINANCE. I AM ARRANGING FOR COPIES TO BE FAXED TO YOU (I BELIEVE THEY HAVE ALREADY BEEN SENT TO THE EXPERTS IN HKG). THE ODA ARE NOW PRODUCING A REPLY TO THE TREASURY.
3.
THE TREASURY WILL, I AM SURE, NOT BE PERSUADED AT OFFICIAL LEVEL THAT HMG SHOULD PAY FOR THESE MEASURES. WE WILL THEREFORE NEED TO HAVE A BILATERAL MINISTERIAL MEETING WITH THE TREASURY, PROBABLY FOLLOWED BY COLLECTIVE DISCUSSION IN OPD (K) UNDER THE PRIME MINISTER'S CHAIRMANSHIP. EVEN IF THIS PRODUCES THE RIGHT RESULTS, WE STILL HAVE TO GO THROUGH THE HOOP OF TALKING TO THE CHINESE ABOUT OUR PLANS.
4.
WHEN YOUR PENSIONS PEOPLE WERE HERE WITH THE JLG TEAM LAST MONTH, THEY BRIEFED US ON THE NEED TO MAKE ANNOUNCEMENTS SOON IN ORDER TO KEEP THE MORE MILITANT HMOCS MEMBERS QUIET. WE APPRECIATE THIS PROBLEM AND WE ARE WORKING AS QUICKLY AS WE CAN TO PUT THESE PROPOSALS THROUGH THE MACHINE. BUT IT HAS TO BE RECOGNISED THAT IN A WORST CASE SENARIO, STERLING SAFEGUARDS WOULD BE A VERY EXPENSIVE COMMITMENT AND IT IS BOUND TO BE AN UPHILL STRUGGLE TO BRING MINISTERS IN OTHER DEPARTMENTS TO THE
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PAGE CONFIDENTIAL
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