cst.ps/dr/21dm28.2
CONFIDENTIAL
ECDETARY
TARY TO
THE
EASURI
A
Mr Ricketts, HMD Sradnie pl
Ps PS/Lord Caithor PS/US Så J Coles
Treasury Chambers Parliament Street SWIP 3AG
071-270 3000
Fax 071-270 5456
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The Rt Hon Douglas Hurd CBE MP
Secretary of State for Foreign Affairs
> Foreign & Commonwealth Office
King Charles Street
London
SW1A 2AH
4 March 1992
4
रूद
HONG KONG: HMOCS
Thank you for your minute of 26 February.
the
2. I am disappointed and somewhat surprised by your reaction to my proposal, especially when the Governor had given such a clear indication that a positive response to the HMOCS on compensation/incentive question was the
the priority for urgent settlement. As regards the sterling safeguard question, I do not accept that HMG is under an obligation to provide such provision at UK taxpayers' expense. The provision by the UK of sterling safeguards in other cases was essentially an aid measure and does not represent a precedent for the very different circumstances of Hong Kong.
3. I am not seeking to row back for an instant from what was agreed between John Major and Geoffrey Howe in 1988 on the question of compensation. I do suggest, however, that your proposals on SPOS would represent a sufficient and generous measure in respect of HMOCS pensions, which I could accept on this
basis.
4.
Our proposal for the capitalisation of HMOCS pensions would of course meet fully the HMOCS's concerns. You say that the Chinese would have difficulty with hypothecating HKG resources for pensions protection. But it was they who first proposed a measure of capitalisation in response to civil servants' concerns. possibility of a private sector approach also deserves full consideration by HKG. This option might or might not entail a
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