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2.

The paper's general prognosis (paras' 12-13) is that

unless there is early action to contain the problem, the

·

situation is likely to deteriorate. On reasonable

assumptions it could deteriorate quite rapidly between

now and 1988. We could eventually face rioting in the

camps: such a situation, besides creating difficult

security problems and much human misery, would certainly

result in widespread criticism or condemnation of HMG,

who would generally be seen as responsible. We cannot

avoid our constitutional responsibility for Hong Kong.

For these reasons a policy of inaction at this stage

seems neither viable nor sensible.

3. On the other hand there are no easy options, nor can

we say with any certainty that any of the courses of

action which have been identified will be successful in

containing the problem. A full solution to the problem

would require both success in increasing the rate of

departures, and in decreasing the rate of arrivals.

Il the

reasons given below the latter objective for the

moment is not likely to be attainable: this makes the

former objective doubly important.

For

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