CONFIDENTIAL
necessary arrangements: it would require an Order-in-Council over-riding the Hong Kong legislature's powers over finance. This would cause a grave constitutional crisis and set a deplorable precedent for Hong Kong's financial autonomy after 1997 as laid down in the Joint Declaration. also go against the whole pattern of our constitutional history and our relations with overseas territories.
10.
It would
There is no dispute that, because of the general assurances originally given by Robert Carr and Reginald Prentice, we already have a large contingent liablility in respect of Hong Kong HMOCS pensions. I strongly believe
that we should now openly accept the limited contingent
liability of our sterling safeguard proposal. This would be good for the morale of key Hong Kong officials and police officers and help anchor them in position, thus strengthening the authority of the new Governor and his government over the next five years, improving the prospects for a smooth transition and making it less likely that the liability will ever become real. Taking action now will
also make it easier for us to hold the line that these are specific arrangements deriving from our historical obligations towards HMOCS officers: if we were to leave the matter unresolved until problems actually occurred it would be much harder for us to hold the line against claims by
non-HMOCS officers, who have shown equal commitment in Crown
service, to receive equal support from HMG.
11. Once we have agreed the principle of an HMG-backed sterling safeguard, our officials can look again at the practical details to ensure that the liability is fixed at the minimum level necessary to fulfil our obligations. I
should be happy to meet you to discuss the question if you
would find this helpful. If we cannot reach agreement we shall need to discuss collectively with colleagues.
ARRAFI/5
No comments yet.
Private notes are available after approval.