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Mr Royle

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THE FUTURE OF HONG KONG

1.

I attach a paper for consideration by the Secretary of State.

It has been seen and commented upon by the two Deputy Under-

Secretaries directly concerned as well as by the Planning Staff

and by Hong Kong and Far Eastern Departments. In its present

form it is agreed by all concerned save only for one point, on

which I must seek ministerial guidance.

Briefly my

2. We are all in agreement on the text of the paper save in

so far as the crucial paragraph 12 is concerned.

preference would be to opt for Course 4(c)(ii)

-

that is to

have as our objective extension of the life of the Colony

post-1997 because of the dangers I foresee in trying to negotiate

a withdrawal which can only result in abandoning very large

numbers of citizens of the UK and Colonies to Communist domination

and may be even more uncomfortable for HMG than this. Only as

soon as it is clear that extension is unattainable should we go

for course 4(c)(i) negotiation of an orderly withdrawal in

1997. My preference does not exclude this as a fall back

position. Mr Cradock does not believe that my preference could

be a valid option, and both he and Mr Morgan prefer the objective

of an orderly withdrawal in 1997. Accordingly two alternative

paragraphs 12 are submitted.

3. There is also a procedural issue. A comparable paper, but

different in many important respects, was prepared by a committee

of officials representing the FCO, Ministry of Defence, Treasury

/and

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