CONFIDENTIAL
-Compensation:
We have to make a revised proposal: talks in Hong Kong revealed a huge gulf between our proposal and what HMOCS officers can be brought to accept. The advice from Hong Kong on what would be tolerable has proved unreliable. We tried to cut corners, but it is now clear that we must move to a more traditional scheme. Impossible to argue that the Joint Declaration so protects HMOCS officers who stay on that we can treat them differently from other DTS at independence and effectively wash our hands of them. We cannot seem to coerce loyal members of one of HM Services to work for a Communist regime. Hong Kong's economic prospects are still excellent, but it now seems inevitable that there will be substantial interference by Peking in the administration and police force.
-Our revised compensation proposal still comes broadly within the maximum figure we gave for our previous proposal: some £8m pa for 5-6 years.
- We should not delay decisions any longer. The issues will not become easier. HMOCS officers will not wait: many will vote with their feet unless we announce a decent scheme soon.
- Chris Patten will have a tough job. The last thing he needs is a demoralised cadre of expatriate civil servants, thinking less about their present jobs than how they can get new ones. Hong Kong's approach to 1997 bristles with intractable problems: this one is uniquely within our power to solve.
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