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4. Although the Basic Law makes it clear that the Election Committee described in Annex I is not the election committee which chooses the 1995 LegCo members, we think the Chinese are likely to argue that in the interest of continuity this is the model which should be adopted (perhaps in reduced format for this first exercise they may feel that an 800-member Committee would be too difficult to manipulate at this stage). We do not think the Chinese are likely to budge from hostility to our preferred option, however long we discuss the matter with them. However, if the Governor and Ministers decided that they were prepared to take the bumpy ride this would involve, we would be justified in arguing that the Basic Law does not have anything relevant to say about the 1995 Election Committee and in going ahead unilaterally on that basis, if our consultations with China had failed to reach agreement.

3. If on the other hand, in the interests of improving the prospects for continuity through 1997 and again through 1999 and of avoiding confrontation with China meanwhile, we decide to seek to negotiate the best possible Election Committee on lines acceptable to the Chinese, we shall face a long period of haggling with no certainty that at the end we shall arrive at agreed arrangements which command confidence in Hong Kong, here or abroad. The Court of Final Appeal row could seem small beer beside the outrage that might be expressed if we collaborated in constructing an "Election" Committee which simply rubber-stamped the two Governments' nominations. Moreover this would raise fresh doubts about what interpretation China intends to put on many of the other fine-sounding words in the Joint Declaration.

4.

On presentation, it will clearly be difficult to draft a passage in the LegCo address, which makes the preferred option sufficiently clear as to generate community support for it while at the same time leaving a plausible enough space for the discussions we have undertaken to have with the Chinese before firm decisions are taken (we take it that in fact the assumption remains that once having decided what we want and the Governor having flagged it in the LegCo speech, there can be no question of our backing down under later Chinese pressure). No doubt, in the tradition of our approach to the development of representational government in Hong Kong, you will also wish to make it clear that the Government wants to hear the views of the community on its ideas for the formation of the Election Committee before making final recommendations to LegCo. Meanwhile it will be helpful if we can avoid the Chinese unleashing an immediate propaganda onslaught on our proposal. William Ehrman has his work cut out!

But we

We have previously undertaken, in the interests of continuity, to discuss the arrangements for the 1995 elections with the Chinese and to reach agreement where possible .

5.

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