TNAG-2293-FCO40-3305-Official-visits-from-Hong-Kong-to-China-1991 — Page 5

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capitalisation scheme which would enable the HMOCS officers to be protected at no cost to the UK taxpayer.

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see Annex 1. We were

4. We had a full programme of meetings greeted everywhere with great courtesy, despite some of the unpalatable messages which the team had to deliver. Both sides spoke candidly about the problems they faced and the issues have - certainly been clarified for all concerned.

CAPITALISATION ISSUES

5. The team put a lot of work into the identification of the options and costs of a capitalisation proposal and we left an- outline of several possibilities with all the Hong Kong

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see Annex 2.

Government officials most involved with this issue There is по doubt that each of the options is financially feasible as far as the Hong Kong Government is concerned, and both the Governor and Chief Secretary confirmed this.

6.

Despite the ease of affordability, it became clear very carly in the visit that any capitalisation proposal, however limited the cost, would not be acceptable to the Hong Kong Government. Without exception, Hong Kong officials stressed the political impossibility of introducing a measure which involved the Hong Kong Government making special pension arrangements for members of HMOCS, and not local officers.

7. We advanced a number of possible arguments for special treatment for HMOCS officers:

their expatriate status;

their particular importance in terms of

public service stability;