cst.ps/dr/5dm18.2
CONFIDENTIAL
Mc Kuketts HURD
PS
-5/hard Cathe Si J Codes in Burns
Treasury Chambers Parliament Street SWIP 3AG
071-270 3000
Fax 071-270 5456
The Rt Hon Douglas Hurd CBE MP
Secretary of State for Foreign Affairs Foreign & Commonwealth Office
King Charles Street
London
SW1A 2AH
พ
W February 1992
C
HONG KONG: HMOCS
Thank you for your minute of 11 February.
am
this
2. I suggest that we take this forward he following ways
prepared in principle to agree a compensation/incentive dir and amendments to SPOS regulations provided that we agree now tha would represent all that HMG should do, at a cost to taxpayer, to address the sterling safeguards “issue. The should be placed firmly on the HKG to fund any further measure protect the value of pensions which they consider: desirable
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3. Our officials have, as you know, demonstrated. to. the HKGS practicable, costed scheme for capitalising: the value of HIOC: pensions. The HKG accepted that this proposal was in principl the cleanest way of meeting HMOCS'8 concerns. (It Lavalsc unquestionably the best deal for the UK taxpayer.) The HKG dit not deny that they could afford this, at a total cost of £170-370x or phased annual payments of £37-80m over the next 5 years.
They acknowledged that, far from representing 'asset-stripping', our proposal would relieve HKG/SARG of a significant liability, potentially on attractive terms.
4.
The HKG's obstacles to implementing this proposal are political. But Chinese reaction to it has not been tested. It remains available to the HKG to pursue at any time if they wish tc meet the HMOCS's concerns. On this and on numerous other measures which we have taken recently to help the HKG, I cannot avoid the impression that the flexibility and positive thinking has been much more evident on our part than theirs.
CONFIDENTIAL
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