16 March 1992
CONFIDENTIAL
233/1
HKA 233
FILE
Foreign & Commonwealth
Office
129
182
Mrs S Brown The Treasury LONDON
Dear Sandra,
HONG KONG HMOCS: STERLING SAFEGUARDS
London SW1A 2AH
1. As you know, our Ministers did not think they could include your revised formulation about pensions (sterling safeguards and SPOS) in Lord Caithness' announcement in Hong Kong. They therefore agreed that we should say nothing about pensions on this occasion but should confine the announcement to a low key statement of our intention to open consultations on the compensation incentive scheme. However, the Foreign Secretary pointed out in his minute of 11 March to the Chief Secretary that we should need a holding line on pensions, for use once the consultations with HMOCS officers on compensation get under way, pending final decisions. The Foreign Secretary suggested that officials should sort this out.
2.
I think you will agree that a holding line is necessary. We have been saying for many years that HMOCS arrangements are under consideration. Having announced a compensation scheme, we will come under intense pressure to say whether that is the only arrangement we intend to make or whether other arrangements are still under study.
3.
Ministers here have not agreed your proposal that they should rule out at this stage HMG's acceptance of a sterling safeguard contingent liability. So it would be wrong to imply that they have. Nor can we imply that this is entirely a matter for the Hong Kong Government: any such statement would provoke intense suspicion and questioning from local Hong Kong civil servants and the Chinese, and in order to control the situation, HKG might be obliged to make a denial. Such a public split between the United Kingdom Government and the Hong Kong Government would be very damaging.
4. We are agreed that we need a statement that does not give rise to unrealistic expectations among HMOCS officers in Hong Kong, and one which does not give anyone in HKG the impression that we have lost interest in a private sector approach. At the same time, I think we all have an interest in avoiding a statement so negative in tone that it provokes an immediate hostile reaction from the HMOCS officers, undoing the helpful effect of the annoucement of the compensation/incentive scheme.
5.
I enclose a draft to which we have given careful thought and which I hope strikes a reasonable balance between the different interests and objectives involved. I should be
BUNABR
JRB
CONFIDENTIAL
No comments yet.
Private notes are available after approval.