TNAG-2752-FCO40-3967-Organisation-for-Economic-Co-operation-and-Development-(OECD-1994 — Page 18

Kong's aid receipts at the moment are related to Vietnamese migrants and would be expected to continue while this problem remained. A few donors, including Japan, have difficulties providing some types of aid to countries not on the list as it is referred to in their aid legislation. However, this is surmountable and has not prevented them aiding FSU countries. There will probably be a three-year transition period for countries leaving the list during the course of which they would remain on it. If the next High Level Meeting in December this year agrees to the outcome of the review, the transition period would take Hong Kong up to 1997 when, presumably, eligibility for the list would be on a quite different footing (China is on the list and likely to remain there for the foreseeable future).

5. The UK position has been strongly in favour of the review of the list from the outset. The present list undermines the credibility of DAC and, when we are trying to spread scarce funds over a widening range of genuinely needy recipients, having them listed side by side with the Gulf States detracts from our efforts to present the aid programme as poverty focused. It would be difficult to argue special status for Hong Kong.

6. I should be grateful for your comments on any issues this might raise. The next formal discussion in DAC will take place on 24 June at the Senior Level Meeting and the mandate from the last High Level Meeting requires the issue resolved by the next High Level Meeting in December. However, the DAC secretariat have asked us informally whether we would be prepared to unilaterally remove Hong Kong from the list before then. The French have already done this for their dependencies.. I should be grateful for your comments on this also. It may be that Hong Kong leaving the list with other countries as a result of a general review would cause no problems, while unilateral removal in advance of such a review would cause difficulties. Naturally, the DAC secretariat would find such an action supportive of their proposals. While it would be consistent with the general line we have taken over the list, I do not think the kudos for UK would be great.

Ju Voc

V Heard

Aid Policy Department

vic\067