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that it reflects a lessening in the relationship between the
UK and its dependent territories. We believe that we could
meet this need with the draft line to take at Annex A.
9.
However, SAAD argue that the impact on St Helena of abolition would be severe in economic, social and political terms and would increase pressure on the aid budget (details at Annex B). From St Helena's viewpoint the best solution would be for their part of the quota to continue indefinitely. But exempting St Helena would pose problems for our Hong Kong interests. Although we might announce that the quota scheme was being abolished for all dependent territories other than St Helena, we would not be able to conceal for very long (the Hong Kong press is very persistent) the fact that in recent years only Hong Kong and St Helena have been using the quota. We would then be thrown back on our original difficulty of explaining why in practice we were discriminating against Hong Kong.
Conclusion
10.
In view of the clash of Hong Kong and St Helena considerations we have tried to identify a possible compromise. The best option seems to be that we should
propose to the Home Office and Department of Employment:
(a) that, in order to solve the presentational problem, we would, as discussed informally, agree to an announcement of a 5-year phase-out of the Quota for all dependent territories;
(b) but, because of St Helena's unique problems and the likely recurrent costs to HMG of abolition in that territory, we should need to review its position after two years (ie end of 1992). This review provision need not be disclosed outside St Helena; and the outcome of the review would then be most unlikely to attract attention or
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