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ability to disburse Hong Kong funds before 1997 on projects of interest to British businessmen), capitalisation would enable HKG to transfer to HMG in the UK (or perhaps to some offshore fund) before 1997 a sum of money which would otherwise have been available to the SAR Government in 1997.
The FCO therefore see no prospect of convincing the Chinese that it would be in their or the SAR Government's interest
thus to discharge before 1997 their future liabilities for expatriate civil servants. Instead the proposal would fuel their suspicions of British/Hong Kong asset-stripping. At the least they would engage us in lengthy dialogue: at the worst they could accuse us of trying to renege on the Joint Declaration and could withdraw co-operation in other areas, despite the damage this would do to the prospects of a smooth transition in 1997 and to the authority of the Hong Kong Government. If we sought to take unilateral action, the Chinese could frustrate it by announcing that this was a major change in the arrangements existing in 1984, and that the SAR Government after 1997 would be free to over-turn it and/or to reconsider related provisions of the Joint Declaration.
(d) Commercial Loan
15.
HKG have commissioned a consultancy report on a scheme to enable all Civil Servants to take out loans against a part of their pension entitlements. The attractiveness of such a scheme to HMOCS members would depend upon whether it could be extended to cover their full pension entitlements and how much HMG were prepared to subsidise the costs. From HMG's viewpoint this scheme would enable us to discharge at a quantifiable price before 1997 our obligation to safeguard the sterling value of HMOCS pensions, rather than have to face an uncertain but possibly much greater liability thereafter (this assumes that financial institutions will be willing to operate it without HMG giving a sovereign guarantee ie a continuing contingent liability). No assessment has yet been made of the level of
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