THE THREAT
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PART TWO THE THREAT AND PLANNING FACTORS
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12. Factors. CDS 7/87 was based on a threat assessment (Reference B) which
remains valid. This assessment indicated that a marked downturn in the domestic
economy, particularly if it led to a substantial increase in unemployment and a
fall in real incomes, could trigger unease and result in a loss of confidence in
the future of Hong Kong. In the worst case, if confidence eroded dramatically,
further investment fund withdrawals could follow, leading to spiralling
unemployment, pressure on the HK dollar and accelerating inflation a recipe
for civil unrest. In the final years it is conceivable that there will be a
flight of capital and talent, and there are already early indications of an
increased level of emigration. The loyalty of public officials and police may
be tested particularly the loyalty of those dealing with the PRCG, who may be
tempted to insure their position by adopting a low profile in areas with contact
or potential conflict with the Chinese. In the event of loss of confidence in
Hong Kong, or major civil disturbances, the loyalty and reliability of Locally
Employed Personnel (LEPs)/Locally Employed Civilians (LECs) could be affected,
possibly resulting in resignations, desertions, absenteeism or lack of coopera-
tion. This latter dimension could have a knock-on effect and inhibit reductions
in Force levels or cause their reinstatement.
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13. Chinese Intervention. There are thus a variety of factors which could lead
to domestic unrest and violence in Hong Kong in the pattern of previous
disturbances. These factors are difficult to predict. In addition, if civil
disturbances spread and intensify beyond a manageable level, there is a possibi-
ROW 113 (HONG)
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