9. Hungary/Czechoslovakia: the Gabcikovo Dam.
Scenario 1: Slovak government unilaterally proceeds with construction. Hungary takes hard line in border incidents and closes interstate border. Hungarian minority in Slovakia faces nationalist reprisals and becomes radicalised: Hungarian minority declares secession. Scenario 2: Hungary insists that continuation of the work constitutes a change in the borders. CSCE abandoned. Hungarians no longer advise its minority to curb demands for self determination.
Moderate nationalist government in Budapest
replaced by extreme right wing one.
CONFIDENTIAL
Another failure for the EC in international arena, plus failure of democratic transition. Possible demand for British contribution to peacekeeping force.
Trilateral expert commission is expected to produce solution (to essentially political problem.) We need to be ready to back up its conclusions through CSCE.
10. South Africa:
breakdown
of the constitutional process, escalation of conflict in Natal, breakdown
of internal order and ethnic conflict.
We have major commercial and investment interests in South Africa. 350,000 South Africans hold British passports; a further 850,000 are eligible.
Support for constitutional negotiations; UN/EC/Commonwealth observers
up to 60 are operational, as are police experts for the Goldstone Commission.
11. Gibraltar: a major financial scandal and/or a constitutional crisis.
There are large potential costs for the UK both in compensation in the event of a financial scandal or in ruling Gibraltar directly if the Government there refused to
CONFIDENTIAL
Discussion under way in new Dependent Territories Board of Management and OPDK. We have been putting pressure on Bossano to improve standards of