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(iii) Arrangements for the 1995 LegCo elections.

The main

issue to discuss here is the question of political

handling. We have a number of contradictory requirements:

to be seen to follow through the Government's public

commitment to go back to the Chinese on the number

of directly-elected seats;

to avoid this issue becoming a litmus test of our

success in negotiating with the Chinese on electoral

arrangements (since, as the Governor says, we should

be under no illusion that anything will be obtainable from the Chinese on this score);

to push the Chinese as far as possible on a package of more limited democratic reforms, without reaching

the point where they de-rail the through train.

This will be a very difficult hand to play. The

Governor's telegram suggests that he is planning to

give a fairly full account of his approach in the LegCo speech in October. There will be political pressures on him to lean in the direction of more openness. But

I recommend that the Secretary of State should explore

with the Governor the implications of doing this in the

case of the electoral issues. As the Governor comments

in para 12 of his telegram, once we have staked out a

public position on electoral issues, it will be very damaging if we are seen to back-track from it under Chinese pressure. Announcing the substance of our proposals publicly in advance of a negotiation with the Chinese has some major drawbacks, set out in the

checklist. The handling of this point might be a main

focus for the discussion at the dinner.

B

3.

Another angle to consider at dinner will be handling the

Chinese. Peking telegram number 1054 (just received) gives

initial comments on the Governor's ideas. Peking are right to say that the Chinese will be suspicious and that no doubt

they would prefer no change. But I believe we can make a

DAWAJO/3

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