TNAG-2732-FCO40-3938-Future-of-Hong-Kong-constitutional-development-1993 — Page 123

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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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