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instability, and accentuate an erosion of the Governor's authority which is in any event likely to prove inevitable.

If institutions

and the community could direct themselves to an appropriate

alternative locus of authority within the Government structure such destabilising and divisive effects could be lessened.

The retention of influence

7. An important objective for us in this connection will be to

retain the maximum influence in Hong Kong before 1997, and to

project our influence into the life of the SAR after 1997. We can

best do this if we can manage to play a role in establishing the

office of Chief Executive, identifying its first incumbent and

establishing the means of his selection. We need to define what we want for Hong Kong in this connection and how it might be achieved.

The options

8.

Against this background there are, in general terms, two possible approaches to the question of the Chief Executive:

Option (A). To allow the powers and the role of the Governor to

remain as they are now until 30 June

Chief 1997, when a

Executive would assume office.

Option (B). To create before 1997 a post which would in effect that of Chief Executive (Designate) and gradually to delegate or devolve powers to him.

Option (A)

with present

the

9. Option (A) is consistent

Chinese thinking, dangers of which are described in para 6 above. Although we would be fulfilling the letter of the Joint Declaration by maintaining direct responsibility for the administration of Hong Kong

Kong until 1997, in practice our authority would be weakened by the existence of a Chinese-appointed Chief Executive waiting in the wings. choice would be entirely a matter for the PRC. We would have no means of influencing the establishment or the filling of his post.

His

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