TNAG-2417-FCO40-3519-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1992 — Page 187

CONFIDENTIAL

worked out satisfactory to the Treasury, HKG and HMOCS officers, it would be a very attractive proposition.

Decision not to offer a Scheme

15. This would require a Ministerial decision that Hong Kong HMOCS officers, uniquely amongst ex-colonial servants, should be left at the mercy of fluctuating exchange rates

for their pensions. It would risk a major exodus of HMOCS from Hong Kong before 1997, with the consequences noted above for our ability to administer Hong Kong effectively.

HMOCS officers would no doubt also bring pressure to bear on

HMG through Parliament and the media. Such a campaign would highlight their lack of confidence in the guarantees contained in the Joint Declaration: this would be damaging in Hong Kong and internationally and would further antagonise Peking. An exodus would face HKG with the decision of what more they could do to encourage key HMOCS

officers, eg in the Police Force, to stay: for example by raising salaries or improving other conditions of service. However, HMG could not be certain of escaping all costs, if they were to adopt this approach. If the Hong Kong dollar were to collapse, or if the SARG were to stop paying pensions, HMG would still be obliged to intervene (by the terms of the Carr- Robertson assurance, see Annex A, that

HMG would not stand aside in the case of default or if a pensioner found himself in financial difficulties as a result of non-payment of pension).

16. This option would fail to deal with the problem. It would expose HMG to a political campaign by HMOCS officers and their supporters for a change of policy, and would risk a serious deterioration in the quality of administration in Hong Kong. It would put the onus on HKG to take steps to minimise the damage as far as serving officers are concerned. HMG would in any case have to deal with the problem of existing pensioners.

NFJABA/8

CONFIDENTIAL