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the reaction of the Chinese and local staff associations, and further denunciation by the Chinese of the BOR. We agree that none of the options identified is risk free. How you decide to play this will presumably depend on whether you consider that there are other reasons for changing the present policy, the Likelihood of the AECS seeking judicial review and their chances of their winning the case.
5. On the substance, our view is that if the AECS are likely to take the matter to court and win, it would be better to take the initiative and amend the policy before that happens. We are not convinced it would be necessary to consult the Chinese before doing so, although we would welcome UKREP's and Peking's views on this point. No doubt the Chinese and others would realise that the BOR was behind the decision, but we could make it difficult for them to blame the BOR by taking action before the issue was aired in court rather than waiting until HKG had lost the case specifically on the grounds of breach of Article 21 of the BOR. If the Chinese side raised the issue with us could we not defend it by saying that we were taking administrative action to align the Colonial Regulations with the Basic Law on this point: and that since Colonial Regulations will cease to apply on 1 July 1997 there was no requirement for consultation?
6. We accept that this is unlikely to cut much ice with the Chinese, who will no doubt see this move as a plot to continue British influence after 1997. If they and the local staff associations kicked up a big fuss once it became known that you were considering a change of policy, one option might be to pass the ball to a suitable body to review the policy (focusing on its relevance to present circumstances rather than the BOR angle) and put forward recommendations. Possibilities include the Public Service Commission or (more sensitive with the Chinese) a LegCo Select Committee or the LegCo Public Sector Service Panel. This option might buy time and delay the issue coming to a head until after we have completed discussions with the Chinese on the 1994/95 election arrangements.
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