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Macao-typo victory. On the otherhand there are factors tending
towards an oxtromist policy; the commitment of Poking to the "five
demands"; the prosures of the cultural revolution call for strong
action; and the considerable confusion in the present stage of the
cultural revolution (with the "moderatos" undor strong attack and
Poking not alagys able to exert its authority). In such a situation
there is a possibility that local groups or loadors may tako anti-
Hong Kong initiativos oven against the wishes of the contral
authorities. Once any action is taken Poking could feel bound to hack
its supporters.
Futur Prospects in Hong Kong
11.If Poking decides to back its supporters in an all-out confrontation
to drive us out of Hong Kong thon our position would bo gravoly affected.
Public confidence and moralo would collapso before long and thoro would
be a rush to come to torms with the other side.
12. If the present situation continuos, with a controlled low-lovol
of activity designed to annoy and harass us, there sooms no reason
why wo should not be able to hold on in Hong Kong indefinitely (or at
least until much nearer the time when the lease of the Now Termitorios
expiros in 1997). We think this can be done ovon if the Chinese resort
to such measures as cutting off food and water supplies, although
they are unlikely to do this except as part of a policy of all-out
confrontation because it would make them unpopular with the mass of tho
pooplo, Tho koy to this situation is the maintenance of public
confidonco; and to do this wo must continuo to contain the Communist
activites with firm but rostrained measures, avoiding any action which
would make it moro difficult for Poking to disengage itself from
its present involvement,
13. There is, of course, the danger that, in the absence of
instructions from the contral authorities or in a situation of
growing confusion in China, local extremists may oscalate the /situation
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