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would be paid at a fixed sterling rate of exchange (usually the rate prevailing at the effective date of the POA). Because of the unique circumstances of Hong Kong and the safeguards already contained in the Joint Declaration, it is most unlikely that there will be a POA for Hong Kong. Another difference between Hong Kong and those Dependent Territories which became independent before the collapse of Bretton Woods was that in other territories the local
currency was usually already linked to sterling.
5. We are in a difficult position in dealing with OSPA over this issue because we maintain that sterling safeguards are a matter for the Hong Kong Government, whereas the Hong Kong Government have told OSPA that they consider it is a matter for HMG. The Hong Kong Government's position is set out in the Chief Secretary's letter of 9 April 1990 to Colvin Haye. Hong Kong's main argument is that the Hong Kong civil service is a unified service (unlike other Dependent Territories where local and overseas officers had completely different terms of service) and that to introduce a sterling safeguard for one particular section of the civil service would be highly divisive.
6. HMG's public position is set out in your letter of C 5 June to Mr Pusinelli. Our attitude to sterling safeguards
is also influenced by the fact that (a) such a scheme would be extremely costly; and (b) HMG has never accepted this responsibility in the case of other Dependent Territories (although in practice we have sometimes taken over the payment of pensions following independence if the successor government has failed to meet its obligations). We have been helped in our case by the fact that Sir Phillip Haddon Cave also considers that this is a matter for the
Hong Kong Government.
7. Mr Fish in the ODA Pensions Department believes that if
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