CONFIDENTIAL
114071
MDHIAN 7360
even racial grounds. After the USA, the UK is seen as the prime mover in this "conspiracy" and to have acted without regard to Hong Kong's interests. (Some even suggest that there will be a CPG backlash against the talks.) We shall play the issue down, and no doubt the territory will have overcome its disappointment by the time of the minister's visit.
THE POLITICAL PARTIES
7. LegCo views are starting to polarise along predictable lines. The various groupings are beginning to develop their strategies not just for an outright breakdown of negotiations but also against a stalemate in which the negotiations seem destined to drag on for months to come. The Liberal Party fear that failure to reach a settlement will force LegCo to face up to hard decisions on the arrangements to be made for the 1994/95 elections. This situation would compel its members to choose between their pro-Peking sympathies and their election prospects in 1995.
8. In contrast, the UDHK is pressing me to introduce the necessary Legislation as soon as possible. (Meeting Point takes the same view.) The Party is anxious about the compromises we might make, although, with some reluctance, they accept those we have made so far as part of our bid to secure a "through train". The party also fears that if we introduce the legislation, we may not fight for it, and the battle will be lost in LegCo. I have reassured them that we shall vigorously argue the case for any solution we believe it right to present to LegCo.
THE BUSINESS VIEWPOINT
9. The business community remains pretty critical about my constitutional proposals. Opinion is not uniform, and the motives for opposition vary. Many perceive themselves to be too dependent on CPG goodwill to be openly supportive. Others are genuinely nervous that greater democracy will lead to the creation of a "nanny society" or argue that a slower pace of change is necessary to accommodate CPG anxieties or to allow the community time to adjust.
10. However, senior businessmen (ranging from Simon Murray who has just left Hutchison Wamphoa to the leaders of some of the smaller local firms) have always recognised the importance of fair and open government. Examples of rampant corruption and economic mismanagement in China are beginning to force others to
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