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MDLOAN 510
FRAME E.G. UP TO 2002, WOULD PROVIDE A BACKGROUND AGAINST WHICH FINANCE COMMITTEE MIGHT BE PREPARED TO VOTE THE FUNDS TO CAPITALISE HMOCS PENSIONS, THUS DISCHARGING THIS FUTURE LIABILITY AT LOW COST AND ENSURING THAT HONG KONG HMOCS OFFICERS RECEIVE A FAIR DEAL IN LINE WITH WHAT OTHER DEPENDENT TERRITORY GOVERNMENTS HAVE DONE IN THE PAST.
4. THE TREASURY HAVE THEREFORE GOT HOLD OF AN ARGUMENT WHICH MAY PROVE EFFECTIVE IN WHITEHALL. WE HAD AGREED THAT, BEFORE DECIDING WHETHER HMG SHOULD PROVIDE A STERLING SAFEGUARD, WE SHOULD EXPLORE IN AN OPEN-MINDED WAY (DESPITE OUR DECLARED SCEPTICISM) THE TECHNICAL FEASIBILITY OF DEVISING A PRIVATE SECTOR SCHEME WHICH WOULD MEET THE HMOCS REQUIREMENT. NOW THE TREASURY ARGUE THAT SOME GENERAL PRIVATE SECTOR SCHEME SHOULD BE TECHNICALLY FEASIBLE AND THAT, ALTHOUGH IT MAY NOT ITSELF MEET THE HMOCS REQUIREMENT, IT COULD PROVIDE COVER TO MAKE CAPITALISATION OF HMOCS PENSIONS POLITICALLY FEASIBLE. CONE OF OUR PREVIOUS LINES OF ARGUMENT - THAT BECAUSE OF THE AIRPORT MOU CONSTRAINTS, HONG KONG COULD NOT AFFORD CAPITALISATION, EVEN IF IT WERE POLITICALLY FEASIBLE - HAS OF COURSE FALLEN AWAY). IT WILL NOT BE EASY TO DEAL WITH THIS LINE OF ATTACK, PARTICULARLY IF THERE IS ANY IMPRESSION THAT HKG HAVE REJECTED THE POSSIBILITIES WITHOUT FULL IMAGINATIVE AND CONSTRUCTIVE EXAMINATION OF THEM. THE TREASURY CONTINUE TO MAKE PLAY OF THE FACT THAT THE WHITE PAPERS PLACE THE OBLIGATIONS FOR PROVIDING PENSIONS SAFEGUARDS ETC. ON THE GOVERNMENT OF THE TERRITORY CONCERNED AND THAT SOME OF THE TERRITORIES WHICH CAN AFFORD TO PROVIDE THEM STILL DO SO: THE UK TAXPAYER SHOULD BE INVOLVED, IF AT ALL, ONLY AS A LAST RESORT. WE NEED THE BEST AMMUNITION YOU CAN GIVE US IF WE ARE TO PERSUADE MINISTERS TO CONTINUE TO ARGUE:
(A) THAT IT IS POLITICALLY IMPOSSIBLE FOR HKG TO SATISFY HMOCS CONCERNS, AND
(B) THAT IT WILL REMAIN POLITICALLY IMPOSSIBLE UP TO AND BEYOND 1997, AND
(C) THAT HKG CAN DO LITTLE MORE TO PROVIDE INCENTIVES TO KEEP THE OFFICERS CONCERNED CAND NON-HMOCS OFFICERS IN THE SAME GRADES) So HMG MUST STEP IN NOW TO AVOID AN EXODUS.
5. COX (HKD) WILL BE IN HONG KONG FROM 1-4 APRIL ON OTHER BUSINESS AND COULD STAY ON TO DISCUSS HMOCS MATTERS FURTHER WITH CIVIL SERVICE BRANCH ON 6 APRIL IF THAT WOULD BE HELPFUL.
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