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FM FCO
TO DESKBY 05003OZ HONG KONG
TELNO 403
MAR
OF 04183OZ FEB` 92
INFO IMMEDIATE UKREP JLG HONG KONG, PEKING
PERSONAL FOR GOVERNOR AND PS/LORD CAITHNESS AND RICKETTS (HKD)
(VISITING) FROM COX (HKD)
HMOCS: DRAFT STATEMENT
1.
WE ARE FAXING TO PS/LORD CAITHNESS A COPY OF THE CHIEF SECRETARY'S REPLY TO THE FOREIGN SECRETARY'S MINUTE OF 26 FEBRUARY. AS YOU WILL SEE, MR MELLOR IS NOT PREPARED FOR US TO SAY, IN THE DRAFT STATEMENT, THAT HMG ARE STILL CONSIDERING THE QUESTION OF STERLING SAFEGUARDS. HE SUGGESTS AN ALTERNATIVE FORMULA AND SAYS THAT IF HIS FORMULA DOES NOT COMMEND ITSELF TO US, IT MIGHT BE BETTER TO SAY NOTHING AT ALL ON THE SUBJECT OF PENSIONS (IE STERLING SAFEGUARDS OR SPOS). THIS, OF COURSE, LEAVES IT OPEN TO SAY SOMETHING ON THE COMPENSATION SCHEME ONLY: AN IMPORTANT ADVANCE ON MR MELLOR'S PREVIOUS POSITION.
2. THE SECOND AND FOURTH SENTENCES OF PARAGRAPH 5 OF THE TREASURY DRAFT STATEMENT ARE FACTUALLY INCORRECT AND WOULD BE DAMAGING. SEEN FROM HERE THEREFORE THERE SEEM TO BE TWO
OPTIONS:
A) DEPENDING ON THE PRESSURE LORD CAITHNESS HAS ENCOUNTERED TO SAY SOMETHING ON HMOCS ISSUES, IT MIGHT BE POSSIBLE TO GET AWAY WITH SAYING NOTHING AT ALL THIS WEEK AND TO TRY TO DISCUSS WITH THE TREASURY A REVISED FORM OF WORDS ON STERLING SAFEGUARDS. BUT THE PROSPECTS OF GETTING BETTER WORDING ARE SLIM: MINISTERS
WILL HAVE TO RESOLVE THE SUBSTANCE OF THE ISSUE.
B)
FOR LORD CAITHNESS TO MAKE A LOW PROFILE AND A VERY SHORT STATEMENT ALONG THE LINES OF THE LAST THREE SENTENCES IN PARAGRAPH 4 OF THE DRAFT STATEMENT (KEEPING THE PROSE OF PARAS
1-3 IN RESERVE FOR A FUTURE OCCASION). THIS SEEMS TO ME THE
BEST WAY TO PROCEED. IT WOULD ACHIEVE WHAT THE GOVERNOR SOUGHT CLEAR MOVEMENT ON THE COMPENSATION SCHEME WHILE WE CONTINUE TO TRY TO RESOLVE STERLING SAFEGUARDS. HOWEVER, IT WOULD BE PREFERABLE FOR THE MINISTER NOT TO BE PUT IN A POSITION
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