TNAG-2270-FCO40-3269-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1991 — Page 86

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CONFIDENTIAL

FM PEKING

TO IMMEDIATE FCO

TELNO 2119

OF 190455Z DECEMBER 91

INFO IMMEDIATE HONG KONG

CONFIDENTIAL

INR Kirke H. HED

Mr Cox M

Mr Stone

miss, withiansen

ра

ви

19/12

адрес

W(233

124670

MDHIAN 6843

agree that Carltonen)

INFO ROUTINE UKREP JLG HONG KONG

HONG KONG TELNO 3872:

PENSIONS

HMOCS:

COMPENSATION/INCENTIVE SCHEME AND

1. I AGREE WITH THE ASSESSMENT IN PARA 6 OF TUR OF THE LIKELY CHINESE ATTITUDE TOWARDS ANY SCHEME WHICH INVOLVED THE HONG KONG GOVERNMENT PAYING SUBSTANTIAL SUMS TO HMG TO FUND THE PAYMENT OF PENSIONS TO RETIRED EXPATRIATE CIVIL SERVANTS.

2.

I HAVE NOT SEEN (AND DO NOT NEED TO SEE) THE DETAILED RECORDS OF THE DISCUSSIONS WITH THE WHITEHALL TEAM AND DO NOT KNOW WHAT FIGURE WAS USED FOR THE CAPITALISED VALUE OF THE HMOCS PENSION LIABILITY. I ASSUME THAT A VERY LARGE SUM IS INVOLVED. BUT I HAVE NO DOUBT THAT THE CHINESE WOULD TAKE STRONG EXCEPTION TO ANY/ANY SCHEME OF THE KIND IN QUESTION, EVEN IF THE FIGURE WAS RELATIVELY MODEST.

3.

THE CHINESE WOULD SEE THE QUESTION IN TERMS OF PRINCIPLE. JOINT DECLARATION CONTAINS A CLEAR PROVISION ABOUT THE CONTINUED PAYMENT OF PENSIONS TO RETIRED CIVIL SERVANTS IRRESPECTIVE OF THEIR NATIONALITY'. THE PROVISION IS REPEATED ALMOST VERBATIM IN

THE

THE BASIC LAW. THE DIRECTOR OF THE STATE COUNCIL HONG KONG AND MACAO OFFICE, LU PING, POINTED TO THE ASSURANCES CONTAINED IN THESE PROVISIONS WHEN HE MET REPRESENTATIVES OF FIVE CIVIL SERVICE UNIONS IN HONG KONG ON 12 MARCH THIS YEAR. ANY SUGGESTION THAT A TRANSFER OF FUNDS FROM THE HONG KONG GOVERNMENT TO HMG WOULD NONETHELESS BE NECESSARY TO ENSURE CONTINUED PAYMENT OF PENSIONS TO EXPATRIATES WOULD BE INTERPRETED AS AN INDICATION THAT THE BRITISH AND HONG KONG GOVERNMENTS (AS WELL AS THE EXPATRIATE CIVIL SERVANTS CONCERNED) HAD NO FAITH IN THE JD/BL PROVISIONS, OR IN THE INTENTION OF THE CHINESE GOVERNMENT TO HONOUR THEM AFTER 1997.

irrespectin natimality or

of their

4 THERE IS ALSO THE ASSET-STRIPPING ASPECT. THE LONG DRAWN OUT NEGOTIATIONS OVER THE NEW HONG KONG AIRPORT AMPLY DEMONSTRATED THE DEPTH OF CHINESE SUSPICION THAT THE BRITISH ARE OUT TO SYPHON OFF AS MUCH AS THEY CAN OF THE HONG KONG GOVERNMENT'S RESERVES BEFORE

(73) place of residence

1

PAGE CONFIDENTIAL