Saturday, October 31, 2015

Frolicking on the China Sea

October 28, 2015

Frolicking on the China Sea
(Herman Tiu Laurel Blog)

The Bully treads gingerly
Instead of lording it over Asia like it used to in the 20th Century, barging around the countries of East Asia, including what used to be called Indochina, like a drunken sailorwrecking everything in its path, the U.S. now has to take gingerly steps in showing that it can still assert itself in this second decade of the Asian 21st Century.  That’s thanks to China’s rise and pushback on the U.S. hegemon’s bullying away from the shores of Asia’s mainland to the farthest reaches of the South China Sea.

Pushed 1,000 km. away from Hainan
In the 1954-1955 Taiwan Strait Crisis, the U.S. sent its Seventh Fleet to intervene in Taiwan, bullying the People’s Republic of China (PRoC) by its superior guns and warplanes.  In 2001, the People’s Liberation Army Navy (PLAN) scrambled its J-8 interceptor fighter jets to warn away an intruding U.S. Navy EP-3E ARIES II signals intelligence aircraft entering China’s air space; the encounter resulted in the crash of one J-8 fighter with its pilot never found and the U.S. plane’s forced landing and capture on Hainan Island.

In 2013, China declared an East China Sea ADIZ (Air Defense Identification Zone) overlapping Japan’s ADIZ, which the latter declared in 1969 covering its EEZ (exclusive economic zone) and protruding midway into China’s new ADIZ.  After a year of tumult in the Western press about it and a few challenges by U.S. planes flying across the zone triggering alerts and warnings from China,this new East China Sea ADIZ has already become an accepted fact. Now the hubbub is over China’s maritime-use reclamation projects in the South China Sea, near Subi and Mischief reefs, about 1,000 km. from Hainan.

But a new line has been written in the sand,as the Global Times--the most militant of the three main Chinese official newspapers (along with China Daily and People’s Daily)--of October 27, 2015 had this to say of the U.S. Navy-guided missile destroyer USS Lassen’s “tour” within the 12 nautical miles of China’s reclaimed islands:“After the show, it’s time for the U.S. destroyer to leave.”  That “tour” was essential for the U.S. to shore up its severely weakened image globally and to its few remaining admirers in Asia.

China will indulge the U.S. as long as it does not go beyond self “ego massage.”This much had been what University of the Philippines maritime law expert Prof. Jay Batongbacal phrased very diplomatically during a Round-Table-Discussion early this October at the Ateneo de Manila: “Don’t expect a U.S.-China ‘hot’ war, it won’t happen.  Soft and hard power are being employed from both sides as a new global multipolar order is an accepted, though unexpressed, given already.”

The Philippines should take its cue from Britain
President Xi Jinping of China’s 4-day visit to the U.K. from October 20to 24 has been dubbed as a new “golden era” of Chinese-British relations marked by spectacular agreements signed between the two countries that were erstwhile bitter protagonists from the 19th Century through the Opium War until the hand-back of Hong Kong to China. Even as the U.S. expressed dismay over the U.K.’s joining of the AIIB (Asia Infrastructure Investment Bank), which is seen to weaken the U.S. dollar’s domination, the U.K. has expanded its ties with China.

The U.K. and China signed agreements ensuring cooperation in economic, cybersecurity, and military matters, all marking the high point achieved in establishing a harmonious relationship between the two countries; but the most spectacular economic deal concluded was the Hinkley Point nuclear power station that a Chinese state-owned company will invest £6 billion in when it is built in 2025. Besides this, an air agreement to bolster travels between both countriesthat will boost the British economy, along with several collective oil and gas projects, were finalized, capping a total of $62 billion deals signed.

Meanwhile, still on the wish list of the U.K. is its bid to become the center of renminbi currency trading, which the People’s Bank of China has signaled to be in the offing. This is important to London as it wants to jump the gun on the rest, as one British magazine quoted Standard Chartered Europe Chief Executive Richard Holmes,“We’re seeing the internationalization of the Renminbi growing at a pretty brisk pace here… There’s a lot further to go. And that’s due to what I view as the end of U.S. dominance.”A Euronext NV commissioned study forecasts that as much as $5 trillion of Chinese money will flow into assets on European exchanges before the decade is up.

The IMF (International Monetary Fund) is set to give the green light to China’s yuan joining its currency basket this November. This will place the yuan on par with the dollar, yen, euro, and pound sterling. France and the United Kingdom are backing the yuan's inclusion and countries such as Germany and Italy have expressed openness to the inclusion of the yuan.  The Philippines, which is being stirred to “gung ho” insanity by the U.S. naval ship USS Lassen’s brush of China’s reclaimed South China Sea island at Subi, should sober up and take a cue from American’s own cousins thatcooperation with China is more beneficial than confrontation.

Indonesia: Third Parties, U.S. not needed
While Western and Philippine mainstream media will try to make much of the news released on October 29 of The Permanent Court of Arbitration’s(or Tribunal’s) claimed jurisdiction over the case the Philippines filed against China on the South China Sea/West Philippine Sea to declare features in the disputed area as “rocks” and not “islands,” a consequence I predicted much earlier based on understanding the self-serving interests of the Tribunal and its personnel, this involvement of “third parties” to Asian and ASEAN concerns is not universally welcomed.

Two weeks before the Tribunal claimed jurisdiction,Indonesia’s defense minister Ryamizard Ryacudu told state-run news agency Antaraat the ASEAN-China defense ministers’ meeting that countries with conflicting South China Sea claims can engage in negotiations in order to calm tensions and resolve issues on their own, saying, “There’s no need to involve other parties in resolving the dispute.”  Ryacudu was, in fact, reported to have averred to an ASEAN-China joint South China Sea patrol during Indonesian President Jokowi’s visit to the United States(see The Diplomat, Oct. 17, 2015, “China Reveals New Proposal to Boost Defense Ties with ASEAN States”).

While the U.S. and the exiting Philippine government expect to gain propaganda mileage from the Tribunal, the reality on the ground (or the waters) is that China’s reclaimed islands are there to stay and China will never participate in anything that involves third parties to the bilateral issues between it and a very small minority of ASEAN members. This tactic of rooting the Tribunal on is to provide an excuse to keep the Philippines from engaging China and to continue U.S.-Japan monopoly over Philippine foreign policy.

After provocation, U.S. talks
While the BS Aquino government continues its infantile policy of “no talks” with China and drumbeats on the USS Lassen’s excursion into Chinese waters, the U.S. does otherwise.

The commander of the US Pacific Command, Admiral Harry Harris, is scheduled to visit China on November 2, 2015 where talks with Chinese military officials will be held to discuss bilateral military exchanges. The talks were planned before the USS Lassen sailed on Subi Reef waters, which may indicate that the entire scenario was scripted and the provocation carefully timed.

Harris’ talks will certainly include discussion on measures between the two military establishments to avoid “misjudgements” and “unintended consequences” amid the tango to ensure “freedom of navigation” for both sides in the South China Sea. The frolicking of these two navies may be a prolonged dance over the next months and years.  And it is something that Asia and ASEAN will have to get used to in no time at all.

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Monday, October 26, 2015


October 23, 2015 BLOG


Privatize-failure/sabotage-bailout/buyback routine

It’s a sad storyline the Philippine ruling class inflicts on the Filipino people, played out often and wreaking havoc on the lives of Filipinos and their economy--but the tragedies and lessons are quickly forgotten.

It’s that recurrent story: Mainstream media trumpets government inefficiency and corruption while bestowing glowing praises on privatization and its promises.  But, after privatization to the oligarchs, the companiescommit wanton abuse followed by operational collapse.  Mainstream media, owned by the same oligarchs, cover up by obfuscation and corrupt oligarchy-controlled politicians sponsor measures to save these oligarch-masters’ thick hides.

The 1997 privatization of water services under Maynilad Water Services, Inc. was one such story.  Set up by the Lopez family (of the infamous privatization-of-all-privatizations,Meralco) through holding company Benpres,it took control of the West Zone of Metro Manila’s water services.  Three years later, under the dismal management of Rafael Alunan, and after failing to provide the services and improvements as promised, Mayniladsuffered currency losses due to the 1997 Asian Financial Crisis and went bankrupt.

Government later infused $31 million to assist the company and then took it back to have it re-bid.  When it was awarded to D.M. Consunjiand Manny Pangilinan (a.k.a. the dummy fronting for Indonesia’s Salim Group), the Philippine government and taxpayers not only failed to recover the$31-million golden parachute, but on top of that also had to fork out another $31 million in interest payments for loans that the MWSS (Metropolitan Waterworks and Sewerage System) shouldered,owing toMaynilad’s unpaid concession fees.  The Lopezes, thus, walked away without any scratch while the Filipino people all became poorer by $62 million in an instant.

Now it’s the MRT: $1.26-B (₱56-B) gov’t buyback from fattened “privateers”

The past week the DoTC (Department of Transportation and Communications) announced that it would obtain a ₱56-billion loan for the buyback of the MRT-3 project. In 1997 the B-O-T (Build-Operate-Transfer) commuter train line running from Taft to North EDSA was launched.  Filipinos were given the impression that the private sector financed the whole thing costing $678 million.  The truth was that these private “investors” shelled out only $190 million while it was government that borrowed $488 million, which it had since fully paid.

When the project was completed, government through DoTC leased and paid rent for the infrastructure and rolling stock from the Metro Rail Transit Corp.(MTRC) of the Ayalas, Sobrepeñas, Agustines, Camposes, and a few others.  Thus, after 20 years, government and taxpayers paid the lucky company the following sums: ₱85 billion in rental payments;₱32 billion in state-guaranteed private sectorloans;₱20 billion for private sector taxes; and ₱10 billion for maintenance.  As a result, these original private “investors” have earned at least 10 times their “investment.”

Under Gloria Arroyo, the MRT-3 infrastructure and rolling stock had begun to breakdown, but the worse was seen after the second year of the BS Aquino administration. By 2014, only 8 out of 48 carriages were in running condition while signaling equipment broke down on a daily basis at its worst point. New carriages were ordered from China; but even this the private investors tried to block.  Then, a politically sourced maintenance contractor made the breakdowns much worse, slowing down the running speed of the trains tremendously.

Thisman-made catastrophe in the MRT’s operations was blamed on government’s management; Mar Roxas and mainstream media tried to sic the provincial peoples against Metro Manila MRT riders for the false charge of “unfair subsidy” (this as commuters’ fareshave left enough surplus profit for the MRT, despite government actually subsidizing the privateinvestors’ guaranteed profits); and the crisis was touted as the compelling reason for government’s“buyback”of the MRTC from the private investors.

How investment bankers, oligarchs, and corrupt politicians connive

It’s really a triumvirate of greed and evil of Wall Street bankers, the oligarchy, and corrupt politicians that rules this land with the support of “civil society” and the neoliberal academic community that have called for “privatization, liberalization  and deregulation” that all came with the anti-State, Western-oriented, bourgeois eliteEdsa Uno revolt.

For all the imperfections of the 21-year Marcos regime, it had some of the basic qualities of many post-World War II Third World governments that were inspired by the 19th and 20th Century struggles of emerging nations: It aspired for emergence from the colonial era as the country led in initiatives and hosted a 1954 meeting in Baguio on the road towards the historic 1995 Non-Aligned Nations meet in Bandung, Indonesia.

While necessarily accommodating the demands of the United States (the dominant power of the post-World War II world), Ferdinand Marcos had tried to slowly wean the country away from that power and its economic domination. Like many Third World leaders, Marcos had to gradually strengthen the State, especially after the lesson of the early ‘70s U.S. Dollar and Oil Shock Crisis, which led government to establish many State economic institutions.

Marcos expanded the role of such government corporations and entitiesas the National Power Corp., MWSS, Philippine National Oil Corp. (PNOC), Bataan Shipyard and Engineering Co., National Steel Corp., and many more, which was clearly not to the advantage of the global economic power then, the U.S.  Moreover, the Central Bank and its Monetary Board was still dominated by government at that time.  But all this has been reversed as all these State entities have been privatized since Edsa Uno.

The main U.S. instrument to destabilize Marcos from 1983 on, using the U.S.-facilitated assassination of Ninoy Aquino, as the U.S. Dollar was (and still is essential) to the Philippine financial system was financial destabilization through capital flight. The U.S. banks in the Philippines easily triggered this, and this caused the crash of the Philippine Peso and the subsequent economic crisis, which in turn created massive disenchantment.

With the fall of Marcos, the Wall Street bankers with their Philippine subalterns went to work dismantling the economic foundation of a strong State, removing tariffs on 1,000 import goods that caused hundreds of billions of lost government revenues; the takeover of government functions (as seen through Ernesto Aboitiz’ taking charge of National Power Corp.); the removal of the foundations of energy sovereignty through themothballing of the Bataan Nuclear Power Plant; and, under Ramos, the selling off of PNOC, Petron, ad nausea.

Wall Street investment bankers back local oligarchs and “finance” takeovers of government assets signed over by corrupt politicians from Cory Aquino to Ramos, Arroyo, and Aquino on tax-free, giveaway terms with sovereign guarantees for profits, loans, price, and rate increases.  All three of them have happily laughed all the way to their banks, again, with the Filipino people picking up all the bills.

Wall Street and oligarchy vultures pick MRT flesh

The MRT was owned by the MRTC consortium.  It was Fidel V. Ramos who signed thecontract guaranteeing the company’s 15% profit on the basis of a ₱60-maximum fare from Taft to North EDSA, which, Joseph Estrada reduced to ₱20, to make the MRT financially viable with hordes of commuters filling the erstwhile empty carriages.  But then, he was ousted early on in his term.

It should be underscored that just four years into the MRT’s operations, the original “investors” (except Ayala)had already securitized or monetized their future dividends with the MRT III Funding Corp (MRT3FC).  Thus, the dividends in the coming years directly go to the MRT3FC’s financiers--who they are we don’t know.

To illustrate the opaqueness of these financial vultures, here is an excerpt from a 2009 Philippine Starnews article by Zinnia delaPeña: “The asset-backed notes issue is a securitization of future dividends from Metro Rail Transit Corp. (MRTC) which flow through a series of holding companies and special purpose vehicles, to MRT III Funding Corp., the Issuer of the Notes.”

Even though theSobrepeñas, Ramoses, Camposeset al.had already sold their future profits, they still retain ownership of MRTC shares, which Manny Pangilinan’s MPIC (Metro Pacific Investment Corp.) bought and accumulated 48% ownership over.

At about the same time, the Gloria Arroyo governmentwas said to have fallen behind its Equity Rental Payments to the MRT3FC,allegedly due to currency problems and commuter subsidy (even as the DoTC then admitted that the financial crisis was due to financial obligations and not operational costs).

And so MRT3FC’s bondholders filed for arbitration in Singapore and The Netherlands for $230 million in damages.Ayala, on the other hand, sold its share to Wall Street top gun Goldman Sachs, reportedly to use its clout to pressure Arroyo’s thenFinance secretary, Gary Teves, ostensibly to reduce the financial obligations proposed to buyout MRT3FC bonds and 80% preferred shares of MRTC without voting rights.  Meanwhile, MRTC is still controlled by MPIC of Manny Pangilinan, from whom current DoTC Secretary Jun Abaya now wants to borrow ₱53 billionfor the MRT’s buyout.

A few years ago, the DBP and Land Bank (both being GFIs or government financial institutions) were reported tohave fundedGary Teves’ buyout plan, extending a $180-million loan (₱8.6 billion then) to an offshore company,Global Air Services (GAS),with $2 in capital and $400,000 debt obligations (and where Bobby Ongpin’ssecretary Josephine Manalo and his lawyer Rodolfo Ponferradawere company signatories).In April 2009, the GFIs bought GAS by offsetting the loan against the purchase price. So why did the GFIs need GAS to intermediate in the first place? Gary Teveswas reported to have later become a director of Ongpin’sAlphaland Corp.

So let’s sum up this Triumvirate of Evil’s take for its$190 million investment in 1995: (a) the financial transfer of $488 million paid for by the Philippine government and taxpayers to complete the financing for MRTC; (b) $2.5-billion return-on-investment via a 15% profit guarantee by government; (c) $780 million in “equity rental payments” paid for by the Philippine government; (d) $200 million for the first 10 years to private contractual management; (e) $200 million in maintenance contracts; and now (f)₱53 billion for the “buyback.”  But here’s the clincher: After the buyback and rehabilitation,the DoTC says it will privatize the MRT again.  What idiocy!

Such have been the disastrous consequences of privatization.  With more of it under the new name, PPP (Public-Private Partnership), what will be left for Filipinos?



Thursday, October 22, 2015

HTL's thoughts, October 22, 2015

October 22, 2015

It is nearing the second month of my termination of my Manila Daily Tribune column that I had been writing for almost fifteen years. Now I've decided to be completely independent and start developing this blog with the help of my young colleagues Laurence Siao who cleans up my commentaries and Richard Mendoza who manages this blog. 

The two months break from column writing wasn't all rest and recreation, its been a very busy two months. I joined an eight day official delegation of Philippine media members visit to China in September, highlighted by a visit to the mausoleum of the Sultan of Sule in Dezhou, Shandong province, and meeting the descendants. Of particular poignancy is the dinner with Ahn Jing, a young lady from the present and 17th generation of the Sultan's line.

In October I had a four day visit to Hong Kong to join family celebrations, which I devoted fare and lodging budgets I could not comfortably afford but wanted to as it was a rare opportunity to meet at the crossroad with relatives and assess the journey that we have traveled in the course of a lifetime and at the intersection of History as China rises again and changes the World.

As I said there are many, many not only interesting but also very vital subjects we need to deal with everyday, it may be strange to some that I have requested this article about Donald Trump - but it may signal a real explosive junction in U.S. history which may break it along its seams and usher int he self-destruction of the real "Evil Empire" of human history.

Enjoy pondering the impolications of this article from Information Clearing House (ICH) and considering donating a bit to that website for the good job it is doing liberating minds of peoples on this Internet.

Over A Year Before 9/11, Trump Wrote Of Terror Threat With Remarkable Clarity

“I really am convinced we’re in danger of the sort of terrorist attacks that will make the bombing of the Trade Center look like kids playing with firecrackers.”

By Andrew Kaczynski

October 21, 2015 "Information Clearing House" - "BuzzFeed" - In 2000, 19 months before Sept. 11, 2001, Donald Trump wrote extensively of the terrorism threat the United States was facing.

Trump, who at the time was considering a presidential bid on the Reform Party ticket, went so far as to say that an attack on a major U.S. city was not just a probability, but an inevitability.

“I really am convinced we’re in danger of the sort of terrorist attacks that will make the bombing of the Trade Center look like kids playing with firecrackers,” wrote Trump in his 2000 book, The America We Deserve. “No sensible analyst rejects this possibility, and plenty of them, like me, are not wondering if but when it will happen.”

Trump even mentions Osama bin Laden by name, in a criticism of an American foreign policy that too quickly jumps from one crisis to the next.

“One day we’re told that a shadowy figure with no fixed address named Osama bin-Laden is public enemy number one, and U.S. jetfighters lay waste to his camp in Afghanistan,” The Donald wrote. “He escapes back under some rock, and a few news cycles later it’s on to a new enemy and new crisis.”

Trump started a full-on war with former Florida Gov. Jeb Bush on Friday, when he suggested Bush’s older brother and former President George W. Bush is to blame for the attacks of Sept. 11, 2001.

Jeb Bush took to Twitter to defend his brother, calling Trump’s attack “pathetic,” and told CNN’s Jake Tapper on Sunday that Trump talks about foreign policy like he’s still on his reality show, The Apprentice.

Four years before The Apprentice ever aired, Trump devoted an entire section of his book to keeping America safe from terrorism, arguing our ignorance of the threats we faced from terrorism was the biggest threat to national security.

“I may be making waves, but that’s all right,” wrote Trump. “Making waves is usually what you need to do to rock the boat, and our national-security boat definitely needs rocking. Let’s point fingers. The biggest threat to our security is ourselves, because we’ve become arrogant. Dangerously arrogant. It’s time for a realistic view of the world and our place in it. Do we truly understand the threats we face? And let me give a warning: You won’t hear a lot of what follows from candidates in this campaign, because what I’ve got to say is definitely not happy talk. There are forces to be worried about, people and programs to take action against. Now.”

“We face a different problem when we talk about the individual fanatics who want to harm us,” The Donald continued, discussing the threat from individual terrorist organizations that despised American culture.

Trump said such people were determined to attack us.

“We can kid ourselves all we want by mocking their references to the Great Satan, but also keep in mind that there is no greater destiny for many people than to deal the Great Satan a major kick in the teeth,” he wrote, adding they despised the U.S. support for Israel.

“Our teenage boys fantasize about Cindy Crawford; young terrorists fantasize about turning an American city (and themselves) into charcoal,” Trump wrote.

Trump predicted a major attack on an American city that would involved weapons of mass destruction, writing, “Yet it’s time to get down to the hard business of preparing for what I believe is the real possibility that somewhere, sometime, a weapon of mass destruction will be carried into a major American city and detonated.”

Trump added that even if the U.S. mobilized, the country probably wouldn’t be able to stop most attacks. Trump said many people would willingly sign up for a suicide mission in America, and that the many U.S. military incursions create more terrorists who want to harm us.

“Whatever their motives — fanaticism, revenge — suffice it to say that plenty of people would stand in line for a crack at a suicide mission within America,” Trump wrote. “In fact the number of potential attackers grows every day. Our various military adventures — some of which are justified, some not — create new legions of people who would like to avenge the deaths of family members or fellow citizens.

“It is one cost of peacekeeping we should keep in mind. I am not a hard-core isolationist. While I agree that we stick our noses into too many problems not of our making and that we can’t do much about, I strongly disagree with the idea that we can pull up the drawbridge to hide from rogue nations or individual fanatics.”

Andrew Kaczynski is a political reporter for BuzzFeed News and is based in New York. Contact Andrew Kaczynski at