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They could reserve their position on whether to
allow the LegCo through train to run, and pursue
preparations in fairly low-key of alternative
arrangements. This is the most optimistic end of
the spectrum of possible outcomes, and would be
satisfactory for us, particularly if coupled with
a return to cooperation on other issues. But it
is probably only attainable if LegCo watered down
the Governor's proposals to the point where they met most Chinese demands, which by definition
would be very difficult for us to justify as
meeting our objectives of free and fair
elections;
They could decide to confine the dispute with us
to electoral issues, and therefore to hold new
LegCo elections in 1997, but allow cooperation
to resume in other areas. The Chinese have an interest in a degree of cooperation with us eg particularly in the economic/financial areas,
both to keep influence over our decisions
pre-1997, and to protect their economic stake in
Hong Kong. It is not the way they have chosen to conduct the dispute so far: they have already spread it to include most aspects of our
dealings on Hong Kong and (recently) the
commercial relationship with the UK. The tone
of the NPC was strongly nationalistic on Hong
Kong, and this has made it harder for Chinese
officials to unblock other aspects of the
relationship, in the absence of a satisfactory settlement on democracy. They would probably seek a high price for doing so, including a
tighter grip on pre-1997 decisions over such
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