TNAG-2815-FCO40-4061-Future-of-Hong-Kong-International-Rights-and-Obligations-(IR-1993 — Page 78

Background

3.

IMF/World Bank Annual Meetings are held outside Washington

once every three years. 1997 is Asia's turn; and Hong Kong has for some time registered its wish to host the meetings. Bank and Fund staff have visited Hong Kong, and are extremely satisfied

with the facilities on offer. If Hong Kong's bid is accepted, some expenditure will need to be incurred before the July 1997

handover to China. The main item will be staff costs for the

planning team; but there will also be advance hire charges for

the Convention Centre and office accommodation. Hong Kong

estimates that the costs it will incur up to July 1997 will be

some HK$35mn, around £3.5mn at the current rate of exchange.

Throughout the

4. One complication has been that Hong Kong is not a member of the Bank or Fund in its own right. Accordingly, we have been negotiating with the Chinese for over a year about the precise role the Hong Kong authorities would play; but some politically

sensitive details remain to be settled.

negotiations, we have been seeking to ensure that assurances on the provision of facilities and so on in the period up to 1 July

1997 would be signed by the Hong Kong authorities, not HMG. Bank and Fund staff, together with the Chinese, have resisted this. The outcome is a complex package of texts, including a memorandum of understanding (MOU) which would be signed by the Bank and Fund, and UK and Chinese Governors (the UK with responsibility

up to July 1997, the Chinese thereafter). The Treasury

Solicitor's clear advice is that, taken together, the package

constitutes an assurance by HMG that it stands behind Hong Kong's obligations in the period up to 1 July 1997 to provide services and facilities for the meetings; and that we are very unlikely

to be able to secure changes to avoid this without unpicking the

whole package. They conclude that, for the purposes of reporting

/ to Parliament..