TNAG-2515-FCO40-3669-Future-of-Hong-Kong-International-Rights-and-Obligations-Sub-1992 — Page 43

CONFIDENTIAL

XCC(92)35

Formal application to host the Meetings

13

It has been suggested by the Chinese side earlier that, since the Meetings would be held in September/October 1997, after the transfer of sovereignty, the formal application to the Bank/Fund would be made by China, with the UK filing a memorandum confirming support for the application. This was considered acceptable by the UKG and HKG. However, the Bank management has recently received legal advice to the effect that it would be more appropriate for the UK, as the Member with sovereignty over Hong Kong, to make a formal application, with China confirming support and then take over, as the succeeding sovereign power, in 1997. We are happy with this arrangement, as either approach would display practical cooperation. The Chinese side's initial response is that they are prepared to be guided by the Bank's legal advice. We will need to ascertain from the Chinese their formal position on this.

Funding arrangements for the 1997 Meetings

14

It is expected that most, if not all, of the cost of the Meetings would be borne by Hong Kong. There are advantages in not seeking any financial contributions from China, so as to underline our high degree of autonomy in financial and commercial matters, and to reduce the risks of a Chinese demand for a greater say in the planning process on the ground that they are meeting the costs involved. However, it is important that the Chinese should be asked to note and acknowledge the financial commitments, arising from the holding of the Meetings in Hong Kong, (which have yet to be quantified) and that the bulk of the expenditure for the event would be incurred after 30 June 1997 and would be met by the Hong Kong SAR Government. We would also need to point out to them that HKG will need to obtain Finance Committee's agreement before any formal application can be submitted to the Bank/Fund.

The Way Forward

15

Subject to Members' views on the above, it is proposed that discussions with the Chinese should commence as soon as possible. On reflection, it is not thought practical to set out a bottom line for each aspect; the package will need to be assessed as a whole, and there will inevitably be areas where uncertainties still exist. The outcome of the discussions will be reported to Members.

Executive Council