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the Chinese seeking to re-open the provisions of the Joint Declaration in which they guarantee continuity of public service, salaries, pensions etc after 1997.) This advice from David Wilson, Robin McLaren and Tony Galsworthy draws on years of negotiating with the Chinese and on close personal involvement in the discussions in which the Chinese
have raised Hong Kong civil service pensions. I back their judgement.
6. However, as indicated in my minute of 26 February I am
content that we should take no final decision about HMG
funding of the sterling safeguards until the private sector approach you mention (Option (d) in the paper) has been
fully explored.
7. As for what Lord Caithness could say in Hong Kong, we were grateful for the revised draft statement enclosed with
your letter. However the revised formulation of paragraph 5
would continue to cause us difficulties. Both the second
and fourth sentences are factually inaccurate or misleading.
The fourth sentence if used could place HKG under intolerable pressure to issue a denial, so as to avert an
explosion from local civil servants and from the Chinese.
Lord Caithness therefore concluded that the option at the end of paragraph 6 of your letter was the best one, ie that he should say nothing about pensions (sterling safeguards or
While in Hong Kong last SPOS) this week, but confine his announcement to a low-key
statement of our intention to open consultations on the compensation/incentive scheme (ie the last three sentences of para 4 of the draft enclosed with your minute): he has
done this in confidence, in order to allow us to brief the
Chinese before the decision becomes public. However we
shall soon come under great pressure to say where matters stand on the pension points: my officals will be in touch with yours to try to agree a form of words pending final
decisions.
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