TNAG-2418-FCO40-3520-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1992 — Page 15

CONFIDENTIAL

C

would need to consider whether the step-by-step approach

still makes sense. By mid-March we may be able to judge whether the commercial loan option could be a feasible alternative to sterling safeguards, so we could then put the

whole package to OD (K). That would in practice probably

have to be after the election.

11. If Lord Caithness is unable to make any substantive announcement in Hong Kong, we shall try to negotiate a new form of words with the Treasury about our continuing

consideration of the issues. They recently agreed that we should say that we recognise HMOCS officers will need to

know well before the end of June what arrangements HMG are

to make for them in 1997. However, it now emerges that the Treasury game is to use this deadline to squeeze us into accepting that there will be no HMG-funded sterling

safeguards.

Mas

PF Ricketts

Hong Kong Department

NC1ABU/4

The Minister of State will

uminto there papers teface

withere he leaves tanight-faittan

paprastofase

Kanp

2'aquel with these argumenti

and the backin

proposed. Adew

25/2

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