TNAG-2427-FCO40-3529-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1992 — Page 42

CONFIDENTIAL

530

052157

MDHOAN 1243

CONFIDENTIAL

FM FCO

TO IMMEDIATE HONG KONG

TELNO 1419

OF 221753Z SEPTEMBER 92

HKA 233/1

INFO ROUTINE PEKING, UKREP JLG HONG KONG

TOP COPY Q DIST?

529

YOUR TELNO 2374: HMOCS: HONG KONG HMOCS ASSOCIATION

1.

WE AND THE TREASURY ARE CLOSE TO COMPLETING THE PAPER WITH COSTED OPTIONS COMMISSIONED AS A BASIS FOR FURTHER MINISTERIAL DISCUSSION. WE HAVE BEEN HELD UP SLIGHTLY, FIRST BY THE NEED FOR THE GOVERNMENT ACTUARY TO PREPARE UP-TO-DATE FIGURES- WHICH THEY ARE NOW FINALISING, HAVING RECENTLY RECEIVED THE FULL DATA FROM YOU- AND SECOND BY THE NEED FOR THE PRIVATE SECTOR POSSIBILITIES TO BE FULLY EXPLORED. HAVING NOW SEEN THE EXCHANGE OF LETTERS BETWEEN WIGGHAM (SCS) AND MR GRAY CHONG KONG BANK), WE DO NOT BELIEVE THAT THIS WILL BE SUFFICIENT TO PUT THIS OPTION TO REST. WE ARE WRITING TO WIGGHAM WITH DETAILS OF WHAT WE NEED TO ACHIEVE THIS. ONCE WE HAVE THIS AMMUNITION, WE WILL FINALISE THE PAPER QUICKLY AND SUBMIT TO THE SECRETARY OF STATE.

2. YOU ASK ABOUT THE TIMING OF DECISIONS AND OF THE NEXT ROUND OF CONSULTATIONS. THE LATTER AT DEPENDS ON THE TIMING OF MINISTERIAL DECISIONS. AGAINST THE BACKGROUND OF LAST WEEK'S EVENTS ON THE ECONOMIC AND FINANCIAL FRONT, THE PROSPECT OF EARLY DECISIONS INVOLVING HMG UNDERWRITING SIGNIFICANT CONTINGENT LIABILITIES FOR A STERLING SAFEGUARD MUST HAVE DIMINISHED. WE SHALL PRESS AHEAD, BUT WE CANNOT HOLD OUT HIGH HOPES OF SECURING MINISTERIAL DECISIONS SOON AS A BASIS FOR FURTHER CONSULTATIONS WITH THE ASSOCIATION.

3. WE SUGGEST YOU SHOULD TELL THE ASSOCIATION THAT HMG INTENDS TO HOLD THE NEXT ROUND OF CONSULTATIONS AS SOON AS PRACTICABLE. BUT THAT AT THIS STAGE WE CAN ONLY REITERATE WHAT MR GOODLAD SAID THAT WE HOPE THE NEXT ROUND WILL BE IN THE AUTUMN.

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