CONFIDENTIAL
with them covering Hong Kong companies. Having done further work on this problem he may seek our advice on an approach to the Bermudan authorities.
6
12 If what is said above suggests that the prevailing note is confidence about 1997, this is not entirely the case. The Foreign Affairs Committee of the House of Commons, which recently visited Hong Kong to look at the way in which the Joint Agreement was being implemented, had evidence of the strong feelings in the Colony over the issue of passports. While there is no realistic expectation that HMG can or will offer UK passports to all Hong Kong residents, recent sympathetic articles in the Economist and the Sunday Times, which were widely noted in Hong Kong, have brought perceptions of a softening of opinion in the UK, and there is concern (voiced by Jacobs, Nendick and Yam among others) that if, following the FAC's report, whatever that may recommend, HMG makes no concession at all to Hong Kong, this would be likely to stimulate anti-British sentiment in the Colony which, at the very least, could result in an acceleration of the brain drain.
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More generally, I found a slight unease among some of the British bankers about the outlook. They reported a quite widely held view that, at some time within the next few years, perhaps around 1992, which would represent the start of the last investment cycle of five to six years before 1997, there was a strong possibility that some shock to the system such as a case of fraud within the Colony itself or possibly some development in the mainland, could precipitate a serious loss of confidence. Robert Owen himself accepted this as a likely scenario. Lacey of Nat West thought that he perceived a gradual weakening of law and order as the police lost trained manpower, attracted elsewhere by higher salaries. Government would be increasingly affected by difficulties in attracting and keeping good people. The attitude of the local Chinese who were now out to make as much money as possible as quickly as possible was not a particularly healthy background to all this.