TNAG-1461-FCO40-1987-Future-of-the-Dependent-Territories-Hong-Kong--Gibraltar-and-1986 — Page 3

。

CONFIDENTIAL

It

3. There is one significant gap in the paper's analysis. omits a real assessment of what the proposals may mean for public expenditure, especially for the ODA and diplomatic wings of the FCO. As the paper explains, the authors believe that there would need to be some additional expenditure, but that the amounts involved would be a cost effective way of releasing us from future liabilities. The ODA rightly point out however that this initial conclusion can only be demonstrated in the light of further study. It is possible, though we believe unlikely, that a programme of economic development of the sort outlined in the paper could be paid for out of the existing aid framework allocations.

4. If Ministers agree with the general thrust of the paper's conclusions, it is suggested that the further work mentioned in the recommendations now be set in hand. If it does suggest that additional expenditure is necessary (by the ODA, FCO or other government departments), that increase would need to be considered along side other commitments as part of the priority setting process (aid framework; Top Management Round as appropriate). At this stage, therefore, Ministers are not being asked to endorse the possible expenditure implications of the attached paper but to agree that the general analysis is sufficiently convincing to justify further detailed studies. These studies would also need to include the presentational aspects, in particular consultation with the US government and others, including the dependent territories themselves, and the timing and content of the statement to Parliament which Mr Eggar is committed to making.

5. One final point. Mr Ramsay has argued that in line with the need for greater regional cooperation and as a response to the difficulty of finding Governors of the requisite quality to fill the posts in all the small territories, thought should be given to establishing a single Governor for the Caribbean territories (supported by Administrators on each of the islands) prior to independence. The idea has not been examined in the paper but bears thinking about. It might help to improve the quality of colonial administration on the islands though, as Mr Ramsay himself acknowledges, unless very carefully handled it could evoke opposition and even hinder progress towards independence.

6. It is suggested that Lady Young and Mr Patten might meet to discuss the paper's conclusions prior to the seminar on 27 November. A shorter, sanitised version is in the course of preparation for that seminar.

CONFIDENTIAL