aef1.mr/kw/7.4.2.
HM Treasury
CONEOENTIAL
DIE
ET MON
Parliament Street London SWIP 3AG Telephone 071-270
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Qw10/2
N J Cox
Hong Kong Department
Foreign and Comonwealth Office
Whitehall
LONDON
SW1A 2AH
HKA 233/1
RECEIVED IN REGISTRY
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43
in the paper recovered
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7 February 1992
Dear Nigel
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67 1985 2-prong apprach
HONG KONG HMOCS
22
Thank you for your letter of 24 January inviting comments on your redrafted paper on the above subject, together with annexes.
I
'Elements of
think the paper is an improvement on earlier versions, though I do have a few comments, especially on the new section under a Package' on 'compensation'. I think this section and annex C would benefit from giving the costs of any compensation scheme in indicative terms only as the details have yet to be agreed; it remains our view that any scheme should be selective and targeted, should involve finite payments, over a limited period,
awards limiting
average 1991 salary and
sterling: HK $ exchange rate levels.
to
A suggested redraft of your paper to take account of these points is attached.
We still need to be clear about our aim in announcing any compensation/incentive scheme. The supposition has been that a scheme of some sort would be needed to induce HMOCS members to stay on through 1997. We have all agreed that there is no question of giving HMOCS Officers a "traditional" general compensation scheme. They are not losing their careers, such a scheme would signal doubt in the Joint Declaration, and would be politically unacceptable to the Hong Kong Government and the
Chinese.
These considerations brought Ministers to agree in principle in 1988 to a modified compensation scheme. Although you maintain that HMOCS members continue to expect a traditional scheme
it is our impression that they know this will not be available.
You say in paragraph 9 that a modified compensation scheme along the lines of annex C was designed to form part of a package. However, my recollection of Ministerial exchanges in 1988 was that compensation was considered on its own. Similarly, you say in the first paragraph of your paper that HMG have commitments, set out in two White Papers of 1954 and 1960, to ensure that HMOCS members
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