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(c) that we should continue to pursue sterling safeguards
and SPOS separately; and
(d) that the Secretary of State should minute the Chief
Secretary to inform him of this and to pick up some of
letter. the points in his minute.
I submit a draft letter from Lord Caithness and a draft
minute from the Secretary of State.
Background and Argument
3. The Secretary of State's minutes and the leverage of
Lord Caithness' visit to Hong Kong have at last secured
movement in the Treasury position. In summary:
(a) The Secretary of State's minute of 11 February sought
Treasury agreement to Lord Caithness' announcing in Hong Kong that we have formulated a
compensation/incentive proposal and would begin consultations with HMOCS officers about it before
Easter; that we continued to explore options on sterling safeguards and expected to be able to take decisions within 3 months; and that we had decided to
amend the SPOS rules.
с
(b)
D (c)
The Chief Secretary's letter of 24 February offered agreement to the compensation/incentive scheme and SPOS changes, provided that we accepted now that HMG should not fund a sterling safeguards scheme.
The Secretary of State's letter of 26 February rejected this and proposed as a "compromise" that Lord Caithness should announce only the compensation/incentive proposal; that we should leave SPOS to be settled at
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