PRESIDENT OBAMA’S PARENTS

About Obama’s father

By: Belinda A. Aquino
Philippine Daily Inquirer

8:06 pm | Wednesday, June 22nd, 2011

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HONOLULU– A friend of mine inHawaiiwho read my recent commentary onUSPresident Barack Obama’s mother called to say it would be in keeping with the recently observed Father’s Day to write something about his father as well. My friend thinks Barack Obama Sr. has been getting a bum rap in the media as a womanizer, alcoholic, dead-beat father, an arrogant intellectual, and so on. He must have had a story, too.

I agree, and it’s only fair to hear the other side of the narrative.

Fortunately, through the Freedom of Information Act, many heretofore unknown details about the elder Obama have surfaced. After he went to Harvard to do his Ph.D. in economics, he never returned toHawaiito fetch his wife Ann Dunham and their baby Barry, now the president of theUnited States. After he passed his comprehensive exams in Harvard for his Ph.D. in 1964, he requested the Immigration and Naturalization Service (INS) to extend his visa to enable him to finish. And this was where his troubles began.

AP correspondent Bob Salsberg reports that Obama’s request was denied by the INS. He returned to his nativeKenyawithout finishing his doctorate. This must have been painful to him. Of course, his visa was terminated.

Evidently, Harvard had written a memo to the INS expressing concern about the elder Obama’s “personal life and finances.” But this was not the first time the INS was concerned. Back inHawaiiin 1961, when Obama Sr. was still an undergraduate, the INS inHonoluluwas informed that he had married Stanley Ann Dunham, despite the fact that he already had a wife inKenya. Apparently, he had told his adviser at the university that he had divorced his wife inKenya, the same thing he told his future wife Ann, except that he was not telling the truth.

Lying to immigration was punishable then as now. In 1964, the director of Harvard’s international office wrote Obama Sr. that while he had indeed finished the academic requirements for his Ph.D., his department in the Graduate School of Arts and Sciences “did not have the money to support him.” The letter added, “We have therefore come to the conclusion that you should terminate your stay in theUnited Statesand return toKenyato carry on your research and the writing of your thesis.”

If you are a foreign student inAmerica, something like this sounds like a death sentence. It is not known whether he appealed the INS decision or not. In any case, he already had a previous record that could be counted against him. He could have consulted a lawyer but either he couldn’t afford one or it didn’t occur to him.

Frustrated and unable to stay in theUS, Obama Sr. returned toKenya. Even if he was allowed a grace period to stay, he probably was not in a financial position to send for his wife and son back inHawaii. In the first place, Ann had already divorced him, compounding his woes.

Back inKenya, he was reported to have married again a third time. Some media reports even talked about a fourth marriage. He worked as a government economist and also for an oil company. His problems with money to support his families must have added to his personal woes.

His personal as well as professional life deteriorated to an alarming degree, affecting his work. One night in 1982 as he was driving home, his car crashed head-on into a tree and he was killed. He was only 46.

His only visit back inHawaiihappened when Barack Jr. was already 10 years old. The latter would eventually write the book “Dreams from My Father,” which became a bestseller shortly before he ran for US president in 2008.

It was a tragic end because the father was one ofKenya’s most promising young intellectuals in the 1960s sent to theUSto prepare themselves for future leadership positions inKenya. He was, according to reports, a very frustrated man, which was perfectly understandable.

Now, about the rumor mills. It appears from facts now known that Obama Sr. did not exactly abandon his wife and son. In those days, as now, once the INS terminated your visit under suspicion of wrongdoing, you had to clear out as soon as you could. To defy the order was to invite deportation. The INS was not very sympathetic to his prolonged stay despite his academic promise. Harvard issued a disclaimer saying it could not find in its files the memo it was supposed to have sent to the INS objecting to Obama Jr.’s request.

As to reports that he was so drunk he drove his car into a tree, we will never know whether these are true or not. In any case, both he and his former wife Ann, had they lived to their 60s and 70s, would have been so thrilled that their little Barry would become president of the US, the first from African-American ranks to achieve this position and status in the world. It is so sad that they had to die so young, which is a reflection of the hard times they lived in.

(A retired professor of political science and Asian studies, Belinda A. Aquino was also the founding director of the Center for Philippine Studies at theUniversityofHawaiiat Manoa.)

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Obama’s mother

By: Belinda A. Aquino
Philippine Daily Inquirer

11:13 pm | Saturday, June 11th, 2011

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HONOLULU– The end of a fascinating recently published book has President Barack Obama saying: “It was a sense that beneath our surface differences, we’re all the same, and that there’s more good than bad in each of us. That’s precisely the naivete and idealism that was part of her. And that’s, I suppose, the naive idealism in me.”

Obama was reminiscing about his late mother, Stanley Ann Dunham, in a book written by journalist Janny Scott titled. “A Singular Woman.” It’s a riveting account of a feisty Kansas-born white woman with a curious mix of idealism and pragmatism. Scott interviewed about 200 people who knew Dunham intimately, including President Obama and his half-Indonesian half-sister, Maya Soetoro-Ng.

Her male first nameStanleyimmediately raises eyebrows. Her mother, Madelyn, was a Bette Davis fan and liked the film in which the actress played a character namedStanley. That was also the name of Ann’s father. But that was only the beginning of an extraordinary life for a girl born in 1942 that would spiral in and out ofKansastoHawaiitoIndonesiaand to many parts of the world. At age 17, she moved toHawaiiwith her parents, enrolled as a freshman at theUniversityofHawaii. And at 18, she married the first African graduate student, Barack Obama Sr., at the university, later giving birth to the future president ofAmerica, who was called Barry as a boy. At that time, interracial marriages were frowned upon or forbidden.

Barack Sr. went to Harvard to get his PhD and was supposed to send for his wife and Barry later. But the soon-to-be absentee husband returned instead to his nativeKenya, where he was already married before he went toHawaii.  In fact, he married again a third time on his return toKenya. It was many years before he saw Ann and Barry again.

Ann, meanwhile, had met another foreign student fromIndonesia, Lolo Soetoro, who was anEast-WestCentergrantee inHawaii.  She married him and joined him in Java, where she gave birth to Maya, who met her half-brother Barry only when he moved toIndonesiato be with the family.

But fate was unkind to the adventurous woman a second time around. Her marriage to Lolo didn’t work out either and they got divorced. It seemed Ann became more Indonesian as Lolo became more American. He worked for an American business firm in Java. Ann, determined to become an anthropologist, struggled to gather lots of field data on Indonesian village industries, like batik-making, to write up as a dissertation. She asked for extensions to finish her PhD and her understanding adviser, anthropology professor Alice Dewey, always obliged, knowing how talented Ann was.

So after two failed marriages with two young children needing care and education, an unfinished dissertation and an uncertain future, Ann immersed herself in work to tide her over. The Ford Foundation hired her and sent her to other places likeIndia,Bangladesh,PakistanandNew York, where she got involved in Women’s World Banking. Ann became an expert in microfinance, long before the term was invented, given her extensive expertise on Indonesian villages.

But her main priorities were Barry and Maya, and her love for them kept her going. She had home-schooled both of them inIndonesia, waking the boy at four in the morning to tutor him in his subjects. He would occasionally complain, but she would always say, “Look, buster, this is no picnic for me either.”

A workaholic, she barely slept, according to some friends. She was also messianic and was determined to help villagers improve their lives, crossing rivers and climbing mountains in remote places.

“She had an unusual ability to adapt,” notes Scott’s book. Despite her frenzied life, she never neglected her children. In 1984, she took Maya on a “grand tour” ofThailand,Bangladesh,IndiaandNepal. She constantly checked on Barry, now called Barack, arranging itineraries for him toHonolulu, to Java, to wherever he was at the time –Los Angeles,Columbiaand Harvard, where he was the first black president of the prestigious Harvard Law Review.

Ann was vainglorious about her “unusually gifted” son. She would continue to send him messages like, “If you want to grow into a human being, you’re going to need some values.” These values were shaped by her Midwestern roots and those of her adopted homeland,Indonesia. They include tolerance, compassion, hard work, discipline and caring for others.

The multiple stresses over her family stretching over oceans, her constant need for adequate financial resources, unfinished dissertation and work-related demands began to take a toll on her. She struggled to finish her dissertation now overdue by 20 years. Her adviser asked her to cut it down and focus on only one village industry. Still it spanned a thousand pages, a record in the annals of dissertation writing anywhere. Meanwhile, her father, Stanley Dunham, who had taken care of Barack in his teens inHawaii, died. Her mother was left alone occasionally taking care of Maya. In 1995, Ann fell ill with what was diagnosed as uterine cancer. Dreading gynecologists, she had ignored increasing signs of pain. Compounding her misery, she was denied disability benefits.

She died at age 52 with Maya and her mother at her side. Barack flew home toHonolulufromChicagowhere he was elected state legislator. In a solemn ceremony, he and Maya went over to their favorite beach on southeastOahuto scatter their mother’s ashes into the sea and wind – and into eternity.

What an incredible life indeed for a woman unlike any other. It was a bittersweet life and what was so sad was that, she didn’t live long enough to see her little boy Barry become the first African-American president of the United States. She would have been so proud!

Retired professor of political Science and Asian Studies, Belinda A. Aquino was also director of the Center for Philippine Studies at theUniversityofHawaiiat Manoa.

HISTORICAL BITS ON THE SPRATLY’S

TOMAS CLOMA

MARCOS LEGACY (OR CURSE?)

TERRITORIAL CLAIMS ON THE SPRATLY’S ANDPARACELISLAND

LEGAL VIEWS ON POSSIBLE SETTLEMENT

ADDITIONAL INFORMATION ON THE SPRATLEYS

THE VIEW OF FR. BERNAS ON THE SPRATLEYS

Outlook

The Spratlys: Marcos’ legacy, or curse?

By: Rigoberto Tiglao
Philippine Daily Inquirer

8:08 pm | Wednesday, June 22nd, 2011

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Make no mistake about it. The Spratly islands dispute could get messy. In March 1987, a clash between Chinese and Vietnamese warships in the disputed island group resulted in both sides losing a vessel, and 120 Vietnamese soldiers killed. A year later, Chinese ships sank three Vietnamese vessels in Fiery Cross Reef with 74 sailors dead. TheUnited Statesjust watched, of course.

Before President Aquino’s three spokespersons go on another flag-waving, saber-rattling tack, they should take very seriously Senate President Juan Ponce Enrile’s advice: “Don’t agitateChina.”

“What they are doing is posturing, but when things go really bad, I’m sure they will be the first to run. These subalterns are very talkative,” Enrile angrily said.

Enrile knows what he is talking about: he was there at the inception of this geopolitical flashpoint.

There is a bit of irony in that Mr. Aquino is melodramatically vowing to defend a territory that became part of our country largely through the efforts of somebody whom most knowledgeable people believe ordered the killing of his father: Ferdinand Marcos. Whether a legacy or a curse, without Marcos and his martial rule, we wouldn’t be involved in the Spratlys issue.

The story begins with Tomas Cloma (SEE ARTICLE ON TOMAS CLOMA BELOW), a courageous seafaring adventurer from Batangas, who was in the fishing business. Partly because of his search for rich fishing waters and partly because of his venturesome personality, Cloma with several of his fishing boats wandered into the Spratly islands in 1956, with his crew of over 40 men even going ashore at the group’s biggest island.

As the islands were not in any standard maps then, Cloma issued a “Proclamation to the whole world” that announced the creation of a new state he called “The Free Territory of Freedomland,” made up of most of the island group. While no nation recognized it, he persisted in asserting “sovereignty” over the area despite his obvious difficulties in occupying it. About 380 kilometers fromPalawan, it was even inaccessible in the monsoon season.

Martial law changed a lot of things. In 1974 Marcos threw Cloma in a Camp Crame cell, on grounds of “usurpation of authority” – his drinking buddies at the National Press Club (he wrote for the Manila Bulletin’s shipping section) called him “Admiral.” The real reason for his incarceration though was something else. He was released several months later when he turned over all claims to the islands under a “Deed of Assignment and Waiver of Rights” to the Marcos government –for one peso. Then in 1978, basing his claim on Cloma’s discovery of the islands, Marcos formally annexed the archipelago and made it amunicipalityofPalawanthrough Presidential Decree No. 1596.

Marcos certainly knew his international law, especially that part which in effect says that occupation is ownership. Right after Marcos got Cloma’s “deed of assignment,” the Armed Forces of thePhilippinesunder Defense Secretary Enrile quickly and covertly transformed the group’s biggest but uninhabited island into a fortification and named it “Pag-AsaIsland.” A heavily armed battalion of Marines was stationed there, and a 1.3 km- runway was constructed, making it easily accessible fromManila. Marcos even had it populated with over 200 civilians. It was the first and probably the last time our country added a new area to our territory beyond what the Spanish turned over to theUSwhen they left in 1898.

Marcos’ action angered the Chinese so much that it made moves that would profoundly affect our history. As Malaysia helped the Moro National Liberation Front in order to retaliate against Marcos’ attempt to re-incorporate Sabah into the Philippines, China sent finances and arms (the latter, unsuccessfully though) to Jose Ma. Sison’s Communist Party of thePhilippinesin the hope that Marcos would be toppled for his “aggression” in the Spratlys. It is therefore not inaccurate at all to say that our two biggest insurgencies owe much to Marcos’ territorial ambitions.

ChinaandVietnamclaim the Spratlys on grounds that these have been theirs even before thePhilippineswas born as a sovereign state. The Chinese point to documents (as far back as the Han dynasty in 110 AD) which referred to the area as part of the Middle Kingdom, where Chinese warships and fishermen sought refuge in storms.Vietnamsays that the islands it claims were already part of the 17th century Nguyen dynasty’s kingdom.

After all the debate though, “Might is right” and its corollary “Occupation is ownership” have been the supreme principles in the Spratly islands, as these have indeed been in controversies over nations’ territories.Chinaviolently evicted the Vietnamese from theParacelIslandsin 1974, and subsequent attempts at incursions by the Vietnamese were met with force. Pag-Asa is a Philippine municipality because of its occupation by our Marines starting 1974, possible only in a martial-law situation. The Chinese especially resented that, as they claim we managed to occupy Pag-Asa only because it was weak and distracted during the chaotic “Cultural Revolution” that ended only in 1976.

But withChinaresurgent in the 1990s, and since we practically had a zero naval force, we would just sit idly by whileChinabuilt, starting in 1995, military structures on atolls in Mischief Reef in the Spratlys.

This history should emphasize the need to go on a different tack other than that juvenile “just-try-crossing-my-line” dare of the Aquino administration. A shooting war in the Spratlys certainly isn’t like a video war game Mr. Aquino is fond of playing, in which after a lost “battle” one can just walk away for a smoke in the garden.

My email: tiglao.inquirer@gmail.com

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Tomas Cloma

From Wikipedia, the free encyclopedia

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In 1947, Tomas Cloma, a Filipino adventurer and a fishing magnate, discovered several uninhabited and unoccupied group of islands/islets in the South China Sea. This discovery is the principal basis for justification of Spratly islands territorial claims by the Philippines, along with basis from 1982 UNCLOS archipelagic doctrine. .^[1] Cloma, owner of a fishing fleet and a private maritime training institute, the PMI Colleges (formerly known as Philippine Maritime Institute), aspired to open a cannery and develop guano deposits in the Spratleys. It was principally for economic reasons, therefore, that he “discovered” and claimed islands in the Spratleys.^[2] The Philippines justifies its Spratly Islands claims principally on Cloma’s 1947 discoveries.

On May 11, 1956, together with 40 men, Tomas and his brother Filemon took formal possession of the islands, lying some 380 miles west of the southern end of Palawanand named it Freedomland. Four days later, on May 15, 1956, Cloma issued and posted copies of his “Notice to the Whole World” on each of the islands as a decisive manifestation of unwavering claim over the territory. On May 31, 1956, Cloma declared the establishment of the Free Territory of Freedomland, ten days after he sent his second representation to the Secretary of Foreign Affairs, informing the latter that the territory claimed was named Freedomland. On July 6, 1956, Cloma declared to the whole world his claim and the establishment of a separate government for the Free Territory of Freedomland with its capital on Flat Island (Patag Island). Cloma introduced a distinction between his “Freedomland” and the Spratleys further west. This distinction later became part of Philippine foreign policy^[3]

Cloma’s declaration was met with violent and unfriendly reactions from several neighboring countries, especially Taiwan. On September 24, 1956 Taiwan reoccupied nearby Itu Aba Island (Also known as Taiping), which it had abandoned in 1950, and intercepted Cloma’s men and vessels found within its immediate waters. The PRC also restated its own claim.^[4]

In the 1970s, after being jailed by Ferdinand Marcos, Cloma ‘ceded’ his claim to the Philippines for one peso.^[5]

[edit] Notes

1. ^ Baker & Wiencek 2002, p. 19, citing Samuels 1982, pp. 81–86.
2. ^ Baker & Wiencek 2002, p. 29 (Footnote 21, citing Samuels 2007, pp. 81–86)
3. ^ This distinction was never fully clarified. It seems that “Freedomland” encompasses most of what others call the Spratley Islands, but not Spratley Island itself and the banks and reefs lying to the west of it., Kivimäki 2002, p. 13
4. ^ Kivimäki 2002, p. 13
5. ^ Womack 2006, p. 218 (Footnote 18)

[edit] References

• Baker, John C.; Wiencek, David G. (2002), Cooperative Monitoring in the South China Sea, Greenwood Publishing Group, ISBN 0275971821, http://books.google.com/?id=y6Ad9K_dCvwC 
• Kivimäki, Timo (2002), War Or Peace in the South China Sea?, Nordic Institute of Asian Studies (NIAS), ISBN 8791114012, http://books.google.com/?id=CNVf9R_L5FAC 
• Samuels, Marwyn S (1982), Contest for the South China Sea, Methuen, ISBN 0416331408, http://books.google.com/?id=TXERAAAAYAAJ 
• Womack, Brantly (2006), China and Vietnam, Cambridge University Press, ISBN 0521853206, http://books.google.com/?id=kzBWq44_VSUC 

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FROM GLOBAL SECURITY.ORG.

Territorial claims in the Spratly and Paracel Islands

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LEGAL VIEWS ON POSSIBLE SETTLEMENT

Passion For Reason
SpratlyIslands 101

By Raul Pangalangan
Philippine Daily Inquirer
First Posted 01:09:00 03/14/2008

Filed Under: Spratlys, Foreign affairs & international relations, Constitution

MANILA,Philippines– Joint Development in Mineral Agreements is not controversial in international law. What makes the China-Vietnam-Philippines 2005 Joint Marine Seismic Undertaking (JMSU) suspect, if not downright unlawful, is that it was signed in violation of the Philippine Constitution, and may have been signed in exchange for bribe-tainted loans. It isn’t that we sold potentially oil rich shores so cheaply, but that we bartered our souls.

One, we must distinguish between title over land and title over the waters surrounding the land (or to be more precise, over the maritime territories, which will include the submerged lands and the resources beneath what is called the continental shelf). Each kind of title is derived from a different source.

Our title over our islands derives from the 1898 Treaty of Peace between Spain and the United States: “Spain cedes to the United States the archipelago known as the Philippine Islands, and comprehending the islands lying within the following line: ….” Significantly, the Spratlys lie within those lines demarcated within the treaty limits. (TheUnited StatespaidSpainthe sum of $20 million. It could’ve been a neat real estate deal, except that we, the dark-skinned natives, were only accidentally part of the package—and proudly waged war.)

On the other hand, our claim over the waters and the maritime zones derive from the 1982 Convention on the Law of the Sea, which grants us the sole exploitation rights over our natural resources within our Exclusive Economic Zone (which extends to 200 nautical miles around the coastal state) and, more relevant to fossil fuel extraction, to our continental shelf (defined as the “natural prolongation of the land mass” up to the same 200 nautical mile limit).

Within that framework, “joint development zones” are not a problem. Indeed, in our part of the world, there have been other such cooperative regimes:ThailandandMalaysia; East Timor andAustralia;MalaysiaandBrunei; andChinaandVietnam.

These are in fact fostered as provisional regimes so that states can access their mineral assets without having to wait until a final “boundary delimitation” that typically takes one or two generations.

That is exactly what the Chinese are saying: The JMSU is a way of “shelving disputes and going in for joint development.” That is what the ASEAN’s Manila Declaration of 1992 says: “South China Seaissues involve sensitive questions of sovereignty” and so its members should “explore the possibility of cooperation … without prejudicing the[ir] sovereignty.” That is also what the 2002 ASEAN-China Declaration on the Conduct of Parties in the South China Sea urged: to “exercise self-restraint [and] refrain from [engaging in] activities that would complicate or escalate disputes.”

Moreover, cooperative zones do not entail loss of territory. Indeed, considering that thePhilippineshas neither the capital nor technology, the only thing it can share with its partners is exploitation rights over part of its territory. That is why the JMSU contains this disclaimer: the agreement “shall not undermine the basic position held by … each Party on the South China Sea issue,” adverting to the perennial debate over who owns the disputedSpratlyIslandsin what some Chinese experts call “a Chinese pond.”

The real problem lies elsewhere. It lies in the Philippine Constitution, which reserves to the state the exclusive power of “exploration, development, and utilization of natural resources,” although it can choose to do so through cooperative agreements with Filipino corporations. That clause ends with the reporting requirement—not complied with, either—namely: for the President to notify Congress of every such contract within 30 days.

The official Malacañang line now is that the JMSU is “purely scientific in nature”—not exploratory—and is solely for geological data-gathering to test a portion of the Spratlys for possible oil reserves. However, its worst enemy is itself, via its own statements in the website of the Philippine Information Agency (PIA).

According to the PIA, Press Secretary Ignacio Bunye said at a press briefing in the Shangri-La Hotel: “The discussion (between President Arroyo and Premier Wen) centered on the joint exploration of the three countries…. The first phase or the exploration phase has been completed and the Chinese Premier expressed hope that the three countries would continue the cooperation on the developmental level.” Finally, contemporaneous statements by the other partners,ChinaandVietnam, and by Malacañang itself, repeatedly use the word “exploration.”

Finally, it is not as if there is a bright-line distinction that divides the “scientific” from the “exploratory.” Eduardo Mañalac, former president of Philippine National Oil Co., has stated that from an engineer’s standpoint, what the JMSU contemplates is already “exploration” for all practical intents. But the Palace could have been more believable if the scientific study had been undertaken by an academic or scientific agency. What makes the official line implausible is that the deal was signed by three commercial corporations engaged in actual petroleum extraction. A geological study does not become “scientific” merely because it uses expert methods. It becomes so because it aims to discover truths that lie beneath the surface, whoever profits or loses. Just like the protesters atMendiola Streetare scientific, while Ms Arroyo’s minions are exploratory.

* * *

I will give a five-day lecture on this topic (Aug. 11 to 15) this summer at The Hague Academy of International Law, entitled “Disputed Islands in the South China Sea and Southeast Asia under International Law.” If interested, check out the website at http://www.hagueacademy.nl.

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ADDITIONAL INFORMATION ON THE SPRATLYS

IsaRic

August 10th, 2006, 12:49 AM

The Spratly Islands

The Spratly Islands are a disputed group of approximately 100 reefs and islets in the South China Sea. Part of the South China Sea Islands, the Spratly Islands are surrounded by rich fishing grounds and gas and oil deposits, whose true extent is unknown and disputed. The People’s Republic of China (PRC), the Republic of China (Taiwan), and Vietnam each claim sovereignty over the entire group of islands, while Brunei, Malaysia, and the Philippines each claim various parts. Several of the nations involved have soldiers stationed in the Spratlys and control various installations on different islands and reefs. The Republic of China (Taiwan) occupies one of the largest islands, Taiping. In February 1995, the PRC occupied Mischief Reef, creating a political crisis in Southeast Asia, especially with the Philippines. In early 1999, these disputes escalated as the Philippines claimed that the PRC was building military installations on the reef.

Although the disputes have calmed to some degree, they still remain one of the most plausible scenarios for a major East Asia war involving the PRC or a smaller war between other claimants, a scenario depicted by Tom Clancy in his novel SSN.

Political Dispute

The first indication that the Spratly Islands were more than merely a hazard to shipping was in 1968 when oil was discovered in the region. The PRC’s Geology and Mineral Resources Ministry has estimated that the Spratly area holds oil and natural gas reserves of 17.7 billion tons (1.60 × 1010 kg), as compared to the 13 billion tons (1.17 × 1010 kg) held by Kuwait, placing it as the fourth largest reserve bed in the world. Naturally, these large reserves assisted in intensifying the situation and propelled the territorial claims of the neighbouring countries. On 11 March 1976, the first major Philippine oil discovery occurred off the coast of Palawan, within the Spratly Islands territory, and these oil fields now account for fifteen percent of all petroleum consumed in the Philippines.

The claimants to sovereignty have not awarded offshore concessions in the islands for fear of provoking an immediate clash. Foreign companies have not made any commitments to explore the area until the territorial dispute is settled or the claimants come to terms on joint development.

An additional motive is the region’s role as one of the world’s most productive areas for commercial fishing. In 1988, for example, the South China Sea accounted for eight percent of the total world catch, a figure which has certainly risen. The PRC has predicted that the South China Sea holds combined fishing and oil and gas resources worth one trillion dollars. There have already been numerous clashes between the Philippines and other nations — particularly the PRC — over foreign fishing vessels in its EEZ (Exclusive Economic Zone) and the media regularly report the arrest of Chinese fishermen.

The region is also one of the busiest shipping lanes in the world. During the 1980s, at least two hundred and seventy ships passed through the Spratly Islands region each day, and currently more than half of the world’s supertanker traffic, by tonnage, passes through the region’s waters every year. Tanker traffic through the South China Sea is over three times greater than through the Suez Canal and five times more than through the Panama Canal; twenty five percent of the world’s crude oil passes through the South China Sea.

There have been suggestions that the PRC has annexed and occupied islands not for resource exploitation but rather for surveillance. For example, Mischief Reef would be an ideal site from which to observe United States naval vessels traveling through western Philippine waters. The PRC’s occupation of the islands may be also be aimed at opposing the ROC rather than the Philippines as the Spratlys lie across water essential to the ROC. It could also simply be part of the PRC’s efforts to announce its solidifying regional hegemony.

There have been occasional naval clashes over the Spratly Islands. In 1974, after South Vietnam had allowed Western oil companies to explore the Paracel Islands, the PRC reacted by seizing control of them following a short naval battle; in 1988, China similarly annexed another six islets in a region otherwise controlled by Vietnam. An incident involving a civilian vessel occurred on April 10, 1983, when a German yacht was fired on and sunk. No responsibility has yet been indicated for this action.

In response to growing concerns by coastal states regarding encroachments by foreign vessels on their natural resources, the United Nations convened the United Nations Convention on the Law of the Sea (UNCLOS) in 1982 to determine the issue of international sea boundaries. In response to these concerns, it was resolved that a coastal state could claim two hundred nautical miles of jurisdiction beyond its land boundaries. However UNCLOS failed to address the issue of how to adjudicate on overlapping claims and so the future of the islands remains clouded.

In 1984, Brunei established an exclusive fishing zone encompassing Louisa Reef in the southern Spratly Islands, but has not publicly claimed the island. Then, in 1988, the PRC and Vietnam again clashed at sea over possession of Johnson Reef in the Spratlys. Chinese gunboats sank Vietnamese transport ships supporting a landing party of Vietnamese soldiers. The two countries normalized relations in 1991 and President Jiang Zemin subsequently made two trips to Vietnam, but the two nations remain at loggerheads over the Spratlys’ future.

In 1992, the PRC and Vietnam granted oil exploration contracts to U.S. oil companies that covered overlapping areas in the Spratlys; and in May 1992, the China National Offshore Oil Corporation (CNOOC) and Crestone Energy (a U.S. company based in Denver, Colorado) signed a cooperation contract for the joint exploration of the Wan’an Bei-21 block, a 25,155 km² section of the southwestern South China Sea that includes Spratly Island areas. CNOOC was to provide seismic and other data regarding the seabed in the contract area, while Crestone agreed to cover all costs and conduct follow-up seismic surveys and drilling in the area. The contract was extended in 1999 after Crestone failed to complete the exploration. Part of the Crestone’s contract covered Vietnam’s blocks 133 and 134, where PetroVietnam and ConocoPhillips Vietnam Exploration & Production, a unit of ConocoPhillips, agreed to evaluate prospects in April 1992. This led to a confrontation between China and Vietnam, with each demanding that the other cancel its contract.

Further escalation occurred in early 1995 when the Philippines discovered a primitive PRC military structure on Mischief Reef, one hundred and thirty nautical miles off the coast of Palawan. This prompted the Philippines government to issue a formal protest over the PRC occupation of the reef and the Philippine navy to arrest sixty-two Chinese fishermen at Half Moon Shoal, eighty kilometres from Palawan. A week later, following confirmation from surveillance pictures that the structures were of military design, then Philippine President Fidel Ramos ordered military forces in the region strengthened. The PRC had claimed that the structures were shelters for fishermen.

Following this dispute an ASEAN-brokered agreement was reached between the PRC and ASEAN member nations whereby a nation would inform the others of any military movement within the disputed territory and that there would be no further construction. The agreement was promptly violated by the PRC and Malaysia. Claiming storm damage, seven PRC naval vessels entered the area to repair “fishing shelters” in Panganiban Reef. Malaysia erected a structure on Investigator Shoal and landed at Rizal Reef, both places situated within the Philippines EEZ. In response the Philippines lodged formal protests, demanded the removal of the structures, increased naval patrols in Kalayaan and issued invitations to American politicians to inspect the PRC bases by plane.

By 1998, as the PRC continued its creeping annexation of the islands, placing sovereignty markers or buoys on First and Second Thomas Shoals, Pennsylvania Shoal, Half Moon Shoal and the Sabina and Jackson atolls, the Spratly Islands area was listed as one of eight flashpoints[citation needed] for conflict in the world. By late 1998, PRC bases had surrounded the Philippines’ outposts. A British Royal Navy Commander analyzed pictures of the Chinese structures and announced that PRC “appeared to be preparing for war”[citation needed]. The relationship between Manila and Beijing had deteriorated to the point where war seemed imminent.

In the early 21st century, as part of foreign policy initiatives known as the “new security concept” and “China’s peaceful rise”, the PRC became much less confrontational about the Spratly Islands. The PRC recently held talks with ASEAN countries aimed at realizing a proposal for a free trade area between the ten countries involved. The PRC and ASEAN also have been engaged in talks to create a code of conduct aimed at easing tensions in the disputed islands. On 5 March 2002, an agreement was reached, setting forth the desire of the claimant nations to resolve the problem of sovereignty “without further use of force”[citation needed]. In November 2002, a Declaration on the Conduct of Parties in the South China Sea was signed, easing tensions but falling short of a legally-binding code of conduct.

People’s Republic of China claims on the Spratly Islands

The People’s Republic of China (PRC) bases its claim to the islands on historical grounds. They state that the Spratly Islands have been an integral part of China for nearly two thousand years and point to ancient manuscripts claiming to refer to the Spratly Islands and remains of Chinese pottery and coins on the islands as proof. Using this argument, the PRC states that the Philippines have taken 410,000 square kilometres of its traditional maritime boundary, having taken advantage of the PRC’s poor condition during its exile from international affairs, but some analysts question these claims.

However, many official records and maps dating back to Han Dynasty, Yuan Dynasty, Qing Dynasty and Republic of China did include the Spratly Islands in Chinese territory. (See the Chinese version of this page for document details and dates). However, these same maps also claim the northern Philippine archipelago, Palawan, Vietnam, Korea, Malaysia among others. If China’s can claim the Spratly Islands on such grounds then they should do so with these other countries, making the argument somewhat absurd. In addition, China claimed these areas more as protectorates rather than as a true part of China since they still had their own kingdoms and governments.

Philippine claims on the Spratly Islands

While the Philippine claim to the Spratly Islands was first expressed in the United Nations General Assembly in 1946, Philippine involvement in the Spratly’s did not begin in earnest until 1956, when on 15 May Philippine citizen Tomas Cloma proclaimed the founding of a new state, Kalayaan (Freedom Land). Cloma’s Kalayaan encompassed fifty three features spread throughout the eastern South China Sea, including Spratly Island proper, Itu Aba, Pag-asa and Nam Yit Islands, as well as West York Island, North Danger Reef, Mariveles Reef and Investigator Shoal. Cloma then established a protectorate in July 1956 with Pag-asa as its capital and Cloma as “Chairman of the Supreme Council of the Kalayaan State”. This action, although not officially endorsed by the Philippine government, was considered by other claimant nations as an act of aggression by the Philippines and international reaction was swift. Taiwan, the PRC, South Vietnam, France, the United Kingdom and the Netherlands lodged official protests (the Netherlands on the premise that it considered the Spratly Islands part of Dutch New Guinea) and Taiwan sent a naval task force to occupy the islands and establish a base on Itu Aba, which it retains to the present day.

Tomas Cloma and the Philippines continued to state their claims over the islands; in October 1956 Cloma traveled to New York to plead his case before the United Nations and the Philippines had troops posted on three islands by 1968 on the premise of protecting Kalayaan citizens. In early 1971 the Philippines sent a diplomatic note on behalf of Cloma to Taipei demanding the ROC’s withdrawal from Itu Aba and on 10 July in the same year Ferdinand Marcos announced the annexation of the 53 island group known as Kalayaan, although since neither Cloma or Marcos specified which fifty three features constituted Kalayaan, the Philippines began to claim as many features as possible. In April of 1972 Kalayaan was officially incorporated into Palawan province and was administered as a single “poblacion” (township), with Tomas Cloma as the town council Chairman and by 1992, there were twelve registered voters on Kalayaan. The Philippines also reportedly attempted to land troops on Itu Aba in 1977 to occupy the island but were repelled by ROC troops stationed on the island. There were no reports of casualties from the conflict. In 2005, a cellular phone base station was erected by the Philippines’ Smart Communications on Pag-asa Island.

The Philippines base their claims of sovereignty over the Spratly’s on the issues of res nullius and geography. The Philippines contend Kalayaan was res nullius as there was no effective sovereignty over the islands until the 1930s when France and then Japan acquired the islands. When Japan renounced their sovereignty over the islands in the San Francisco Peace Treaty in 1951, there was a relinquishment of the right to the islands without any special beneficiary. Therefore, argue the Philippines, the islands became res nullius and available for annexation. Philippine businessman Tomas Cloma did exactly that in 1956 and while the Philippines never officially supported Cloma’s claim, upon transference of the islands’ sovereignty from Cloma to the Philippines, the Philippines used the same sovereignty argument as Cloma did. The Philippine claim to Kalayaan on geographical bases can be summarized using the assertion that Kalayaan is distinct from other island groups in the South China Sea because:

It is a generally accepted practice in oceanography to refer to a chain of islands through the name of the biggest island in the group or through the use of a collective name. Note that Spratly (island) has an area of only 13 hectares compared to the 22 hectare area of the Pag-asa Island. Distance-wise, Spratly Island is some 210nm off Pag-asa Islands. This further stresses the argument that they are not part of the same island chain. The Paracels being much further (34.5nm northwest of Pag-asa Island) is definitely a different group of islands

A second argument used by the Philippines regarding their geographical claim over the Spratly’s is that all the islands claimed by the Philippines lie within their archipelagic baselines, the only claimant who can make such a statement. The 1982 United Nations Convention on the Law of the Sea (UNCLOS) stated that a coastal state could claim two hundred nautical miles of jurisdiction beyond its land boundaries. It is perhaps telling that while the Philippines is a signatory to UNCLOS, the PRC and Vietnam are not. The Philippines also argue, under Law of the Sea provisions, that the PRC can not extend its baseline claims to the Spratly’s because the PRC is not an archipelagic state. Whether this argument (or any other used by the Philippines) would hold up in court is debatable but possibly moot, as the PRC and Vietnam seem unwilling to legally substantiate their claims and have rejected Philippine challenges to take the dispute to the World Maritime Tribunal in Hamburg.

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HOW MANY  ISLANDS  AND REEFS ARE THERE IN SPARTLYS AND WHO ARE CLAIMING THEM?

SOURCE: ‘Spratly 5’ go swimming in Pag-asa

By Philip C. Tubeza
Philippine Daily Inquirer

2:40 am | Thursday, July 21st, 2011

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52 islands, reefs

Besides thePhilippinesandChina,Vietnam,Malaysia,TaiwanandBruneiare claiming wholly or partly the Spratly group of islands.

Out of around 52 islands and reefs in the Spratlys, thePhilippinescontrols five islets, two sandbars and two reefs, Mayor Bito-onon said.

On Ajungin shoal, the military had to put a wreck of a ship as a sign of the Philippine claim but the wreck needs replacement as it is too old.

According to the Western Command,Vietnamcontrols 22 isles and reefs;China, six; andTaiwan, one.

The Air Force has 12 patrol routes in the area, making sure that landmarks are visited at least “twice a month.” The military also relies on Filipino fishermen for information.

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Sounding Board

The Spratlys

By: Fr. Joaquin G. Bernas S. J.
Philippine Daily Inquirer

To begin to understand the controversy over the South China Sea, a helpful backgrounder is a book by Rodolfo C. Severino, “Where in the World is the Philippines?” Chapter 5 of the book is about the South China Sea controversy. But if you are looking for a solution to the problem, you probably will not find it there. Nevertheless let us see the beginning of the story in brief.

During World War II Japan had occupied the Spratly Islands. From there Japan had launched its attacks against the countries in the region. If Japan had won the war, Japan would be a major actor in the contest over the South China Sea and would probably be lording it over the rest. But Japan lost.

The Treaty of Peace of 1951 ending the war was signed in San Francisco by 49 nations. By this treaty Japan renounced all claim over the Spratly Islands and the Paracel Islands. The Philippines and Vietnam were parties to the treaty, but neither Mainland China nor Taiwan was.

The Treaty, however, is no help to the settling of the current controversy. The Treaty does not say which country should have a legal claim over the island. A subsequent treaty between Tokyo and Taipei and a still later Treaty of Peace and Friendship between Tokyo and Beijing do not touch on the territorial issue either. Thus the squabbling remains until today.

How did the Philippines get involved? It started with Tomas Cloma, a Filipino educator and entrepreneur, who had planned to open an ice plant and cannery in one of the islands. But Cloma went beyond his interest in an ice plant and a cannery. In 1956 he sent a private training ship on an expedition to the islands. Subsequently he released a “Notice to the Whole World” claiming a vast area of the South China Sea which included the Kalayaan islands. He also sent a letter to the secretary of foreign affairs of the Philippines, Carlos P. Garcia, that with a crew of about 50 persons he was undertaking a survey and occupation of an area outside of Philippine territory and belonging to no one. Shortly thereafter he called the area “Freedomland.”

Cloma stressed that the claim had not been made by the Philippines but was being made by himself as a Filipino citizen. He followed this with what may be called a “constitution” for the area prescribing a form of government and incorporating the Universal Declaration of Human Rights and the Philippine Bill of Rights. By these acts he said that he hoped to deter other nations from claiming the territory.

Although the Philippine government under Ramon Magsaysay was taking all this as a “comic opera,” it was serious enough to provoke protests from Taiwan, Beijing and Vietnam. Beijing even took naval action against the Cloma activities. And when Cloma wrote a letter to the Philippine secretary of foreign affairs reporting Taiwanese activities in the area, the secretary in 1956 expressed the view that the islands were res nullius. He said that the Philippine government considered the islands to be under the de facto trusteeship of the Allied Powers since there had been no territorial settlement by those same Powers.

The winds of change in the Philippines began in 1971 under President Marcos. The government expressed concern about the security implications of what was happening in the area. Taiwanese forces were reported to have occupied some islands.

While maintaining that the area was res nullius and that no state could introduce troops into the area without the consent of the Allied forces, the Philippine government nevertheless maintained that such res nullius could be acquired by “occupation and effective administration.” Marcos in fact announced that the Philippine government was in “occupation and effective administration” of some islands. Naturally protests came from Taipei and Beijing.

Things became more complicated in 1971 when Secretary of Foreign Affairs Carlos P. Romulo recommended more development of the area and the augmentation of the military forces already deployed there. Moreover, the foreign affairs undersecretary had asserted in the Seabed Committee of the UN that the Philippines was in effective occupation of Kalayaan Islands.

Protest, however, came not just from China and Taipei but also from within. A former Philippine diplomat wrote to President Marcos claiming that what the government was doing contradicted a commitment made by Secretary Garcia in 1957 that the Philippines recognized the Free Territory of Freedomland.

This internal conflict, however, seemed to find a solution in a “Deed of Assignment and Waiver” of all rights won by Cloma over the islands through development and effective occupation. But biographers of Cloma claimed that the Deed had been executed under duress and in exchange for the release of the aging Cloma after 57 days in detention in Camp Crame during martial law. Thus, in the freer atmosphere after Edsa I, Tomas Cloma & Associates submitted a claim to President Cory Aquino asking for reimbursement of expenses incurred from 1947 to 1974 in the “exploration, occupation, development, administration, organization and settlement of Freedomland.” What this seems to mean is that Tomas Cloma & Associates have already affirmed that a transfer of rights had indeed been made to the Philippine government.

But what did Tomas Cloma & Associates transfer? China, Taiwan and Vietnam are asserting that Nemo dat quod non habet.

Only the UN can settle this controversy authoritatively; but no one wants to accompany the Philippines to the UN.

WHAT IS AQUINOMICS?

TRACKING INVESTMENTS

AQUINOMICS: HOPES UP, INFRA DOWN

No Free Lunch

‘Aquinomics’: What difference has it made?

By: Cielito F. Habito
Philippine Daily Inquirer

5:33 am | Tuesday, June 21st, 2011

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In a recent Inquirer Briefing attended by business leaders and other movers and shakers, I was asked to speak on the state of the Philippine economy one year into the Aquino administration. I titled it “A Year Under ‘Aquinomics’,” prompting someone to ask me if there was something to “Aquinomics” beyond playing on the President’s name. Not that I can claim to be a spokesman for the President’s economic team; I am not, and am not aspiring to be one, nor seeking to be part of his government. (It was “the other yellow candidate” whom I supported in the last two presidential elections, after all.)

Addressing the question, “Aquinomics” cannot be likened to, say, “Reaganomics” of the 1980s, which was defined by a distinct economic philosophy known at the time as “supply side economics.” This had challenged traditional demand-side or “Keynesian” economics, which until then was the mainstream thinking in macroeconomics. More recently, we heard of “Thaksinomics” espoused by the former leader ofThailand, which appeared to be defined by his business-friendly yet pro-poor approach to running the Thai economy.

What defines “Aquinomics,” then? One description that comes to mind is “economics of business confidence,” as that has been the driver of the economy under Aquino’s leadership so far. Over the past four quarters, growth in private domestic investment has been consistently surging, based on the quarterly National Income Accounts. This investment surge comes after many years of relative stagnation. Cross-country data from the Asian Development Bank reveal that in 2002-2007, our annual growth in total investment—that is, putting public and private, and foreign and domestic investments together—averaged zero percent. In contrast, our neighbors posted positive investment growth ranging from 3 to 19 percent per year. For most of the past decade, then, our neighbors were leaving us behind in building even greater productive capacity in their respective economies.

What is remarkable about the investment growth we are seeing lately is that it comes in the face of a significant drop in foreign direct investments (FDI). Latest Bangko Sentral ng Pilipinas data report that actual net FDI inflows so far this year are 17 percent lower than in the same period last year, a steep drop by any standard. Similarly, latest data on foreign investment approvals by the different investment bodies taken together (namely the Board of Investments, Philippine Economic Zone Authority, Subic Bay Metropolitan Authority and Clark Development Corporation) report a 53 percent drop from last year. And yet, overall investment has jumped 37 percent, implying that domestic investments must have jumped by much more, far overcoming the foreign investment decline.

What makes it even more remarkable is that the public component of domestic investment (government construction) also suffered a deep decline of 37.3 percent. Again, private domestic investments must have zoomed so much that not even this steep fall prevented total investment from surging the way it did.

At face value, the drop in government spending appears to be a downside to the Aquino government’s performance. Data from the Department of Budget and Management (DBM) indicate that disbursements in the first four months of the year were P60.5 billion or 11.6 percent lower than in the same period last year. Some observers now fault the new administration for “underspending,” for indeed, not only has it spent less than it did last year, it has also spent even farther less than what had been programmed to be spent by this time. But before casting this government as inept and lacking absorptive capacity, one must remember that this year’s budget was still drawn up by the previous administration. And if the current government has been more prudent about spending the money, it could well be because they have found that they don’t have to spend as much as the former government would have, to accomplish as much.

And it seems they have. The Department of Public Works and Highways is one of the biggest “culprits” in the underspending. It turns out that the agency has made dramatic changes in the way public works projects are costed out, leading to substantial savings. For one thing, Public Works Secretary Rogelio Singson has significantly reduced allowable “indirect costs,” including contractors’ profit margins (and quite likely the so-called “bukol”), in public works projects. Coupled with a strict policy on transparent public bidding, the agency boasts of more than P2 billion in savings from 2,797 projects over the past year.

Another reason for the underspending is that much of the large lump sums allocated by the previous government to various departments remain unspent. These are substantial amounts that the previous leadership gave department secretaries the discretion to allocate and spend—and it’s not hard to imagine how much of it must have gone to less than responsible uses. If the current department secretaries are slow in spending such sums, it could be because their predecessors had over-provided them in the first place. The new administration intends to cut these “lump sums” to a bare minimum in the 2012 budget, the first budget they truly own.

Aquinomics, then, might also stand for economics of fiscal responsibility—and the government now has a rare budget surplus to show for it. And while their underspending normally would have dragged the entire economy down, fortunately for them (and for us), the tremendous boost in private domestic investments that Aquinomics also brought about more than made up for the gap.

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AQUINOMICS, A SEQUEL

No Free Lunch

Tracking investments

By: Cielito F. Habito
Philippine Daily Inquirer

6:13 am | Tuesday, June 28th, 2011

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If responses to last week’s piece on “Aquinomics” are any reflection of the President’s approval rating, recent polls showing that those who are satisfied with his leadership still far outnumber those who are dissatisfied are confirmed by our readers. But there will always be a few who, because of innate pessimism or blind affinity to the previous leadership, still chose to focus on the negatives, and on that basis end up condemning the present state of events.

There were essentially two negative points that I mentioned last week: the decline in government construction spending (by 37.3 percent), and the decline in foreign direct investments (FDI, by 17 percent). I had made the observation that in spite of these, aggregate investment was still recorded to have jumped 37 percent. One need not be a math wizard to infer from this that the remaining component—domestic investments from the private sector—must have grown by far more than that, to have led to such a high growth rate when all three are combined. And because I had offered possible explanations for the first negative point, it was the drop in foreign direct investments that the doubters took me to task for. Hence I felt it useful to look more closely at what happened to investment spending in the past year under “Aquinomics.”

At the outset, it must be pointed out that the drop in foreign direct investments cannot be taken as any indictment of the current government. Two facts are relevant here: one,Japanwas the top source of foreign direct investments last year; and two, the three-way disaster that hitJapanin the first quarter must have dramatically reduced FDI flows therefrom. Having accounted for 28.7 percent of net FDI inflows in the country last year,Japancould very well have accounted for the bulk if not all of the 17 percent drop in FDI recorded by the Bangko Sentral ng Pilipinas (BSP). But aside fromJapan’s woes, the rich economies, especially theUnited States(the next biggest source of our FDI), have not quite bounced back from where they were before the recent global recession hit them. In short, the drop in FDI over the past year is not President Aquino’s black eye. If it were, we would not have received the unprecedented series of recent credit rating upgrades from Fitch Ratings, Standard & Poor’s, and Moody’s Investors Service, concrete manifestation of heightened confidence in the management of the economy under the new leadership.

But a reader was not satisfied. He wrote: “If you can say with certainty that neighboring countries also experienced a similar decline in FDI, and that the decrease in our FDI was not primary caused by discouraging words or acts of this administration, then I shall have no conflict with you.” Well, I can. I was moved to Google my way to the latest Thai FDI data from the Bank of Thailand (their counterpart to our BSP), and found that—guess what—Thailand’s cumulative net FDI inflows in the first quarter of this year fell a steep 95 percent (against our 17 percent drop), i.e., from $1.536 billion to only $69.5 million! IfThailand, long the darling of foreign investors who come to our neighborhood (also dominated by the Japanese, by the way), is seeing such drastic decline, I am willing to bet that our other Asean neighbors have suffered a similar fate. And so I decided to stop Googling for now.

I used to joke, every time our foreign investment trends moved the other way from those of private domestic investments, that “either the foreigners know something our own investor’s don’t—or it’s the other way around.” While I always felt that there is an element of truth to this half-joking observation, my little research tells me this is not what is happening this time. This suggests to me that the moment investment appetite in Japan, the US and other sources of our FDI returns to normal, we will see these ratings upgrades translate into actual inflows of FDI—lots of them. And if we can sustain the momentum of private domestic investment we are seeing right now, and then, with improved government finances, also reverse the decline in public sector investments, I am excited to imagine what our economy can achieve.

What have the private domestic investors been investing in? Indicative data are available on this from the same National Income Accounts that gave the GDP growth figures. The data reveal that the 16.7 percent rise in durable equipment investments went to things like pulp and paper machineries, farm machineries, textile machineries, metal working machineries, air conditioners and refrigeration equipment, mining and construction machineries, pumps and compressors, railway transport equipment, road vehicles, and other industrial equipment—all of which rose by double- up to triple-digit growth rates. In other words, real investments were growing almost all across the board. New factories are being built, or existing factories are being expanded. Even farms are seeing a surge in new investments at a rate not seen for many years. Some may not trust these aggregate data from government statistical bodies, but one doesn’t even need to rely on them entirely. We only need to note how publicly listed companies are announcing, one after another, substantial capital expansion programs within the year and in the years ahead.

To me, there’s no question that there is overwhelming confidence in “Aquinomics” at this time. This makes the challenge all the more daunting for President Aquino: he needs to get his act together and shun the many missteps he has made, lest he himself dissipate this confidence surge before we begin to see Filipinos’ lives get better irreversibly.

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Aquinomics: Hopes up, infra down

By Riza T. Olchondra
Philippine Daily Inquirer

2:55 am | Friday, July 1st, 2011

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One year into the Aquino administration, much improvement is needed to support investor confidence like speeding up public-private partnership (PPP) projects and achieve government targets, economists said.

The Aquino administration inspired business confidence, resulting in increased private investment, according to five economists interviewed separately by the Inquirer.

But the economists said public spending and timely interventions must support business confidence or it would not translate into widespread economic gains.

Cielito F. Habito, a former socioeconomic planning secretary, said on the sidelines of a recent Inquirer forum that “Aquinomics” seemed good enough in the first three months of 2011 using an annualized quarter-on-quarter gross domestic product (GDP) growth as yardstick.

GDP rose 1.9 percent in the first three months of the year from 0.5 percent and 0.3 percent in the two preceding quarters.

An annualized quarter-on-quarter comparison takes away the so-called base effect from the first quarter of 2010, which Habito said was “warped” by election spending.

Using a year-on-year comparison, the first quarter GDP growth, however, slowed to 4.9 percent from 8.4 percent in the first quarter of 2010.

Habito attributed the good quarter-on-quarter GDP performance to aggressive private investment, which he said was fueled by investor confidence in Mr. Aquino and his administration’s drive for corruption-free and inclusive growth.

Slow-moving PPP

Yet, despite the gains, one particularly sticky issue is that PPP projects, a cornerstone of the administration’s strategy, are perceived to be moving slowly, Habito said.

For investor interest to be sustained, he said, the government must also invest in infrastructure even as it continues to push further reforms to curb red tape and corruption.

Gilbert M. Llanto, an economist with the Philippine Institute for Development Studies, a government think-tank, said the administration “needs a lot of improvement in performing the task of market coordination.”

Concrete interventions

The challenge lies in translating good ideas in the Philippine Development Plan into concrete interventions and measurable outputs, such as tax policy and industrial policy, Llanto said.

Cid Terosa, an economist from the University of Asia and the Pacific, said it was too early to tell if the country was better off than a year ago.

Terosa said the economy and economic management had been “good” so far, but from a scale of 1 to 10, he gave the Aquino administration a score of 7.

“A big letdown would be the seeming lack of authoritative actions on government officials who have not performed up to par. Also the slow realization of PPP projects is a letdown,” Terosa said. “Yes, I am optimistic but governance has to be stronger and more decisive.”

Arsenio M. Balisacan, dean of the University of the Philippines School of Economics (UPSE), said the economy was not doing too badly despite major challenges.

Balisacan said the administration sometimes seemed “distracted” with trying to clean up controversial deals and projects that came about in the previous administration.

However, this cannot be helped as the Aquino administration wants to drive home its anticorruption crusade, he said.

As for the seemingly slow pace of PPPs, Balisacan said it was understandable for the Aquino administration to be careful.

Sin taxes

Balisacan said Mr. Aquino should seriously consider raising taxes or focus on revenue measures like sin taxes that do not really hurt the poor.

The revenue raised should be promptly spent on infrastructure, rural health and education.

The UPSE dean said incentives for companies must be rationalized so that growth areas such asMindanao, where political and security risks need balancing, would benefit instead of established growth areas like Metro Manila.

“Incentives are not serving their purpose if we’re giving them to companies that would otherwise invest or expand, anyway, such as BPO (business process outsourcing) firms. We should give incentives in industries that are just starting out, or as growth boosters in areas with high risk, such asMindanao,” Balisacan said.

He said companies like La Frutera Inc. of Senen Bacani, which invested in the Autonomous Region in Muslim Mindanao, must be encouraged because they improve the livelihood and confidence of residents in the region.

“We don’t need to give incentives for companies putting up more high-rise buildings in Metro Manila under the label of ‘economic zones,’” Balisacan said.

Joblessness serious

The appropriate rating for the Aquino administration at this time is “NI (needs improvement),” said Benjamin E. Diokno, an economist with the University of thePhilippines, in an e-mail.

“After a year in office, the economy is slowing, joblessness remains serious, and poverty continues to deepen. Of course, it is unfair to expect him to solve these decade-long problems within a year. But after a year in office, Mr. Aquino has yet to unveil his vision and concrete road map of how he will solve these problems,” Diokno said.

He said that while the budget was approved on time, the administration failed to spend efficiently and speedily to perk up the economy.

Diokno said he was not optimistic that Mr. Aquino would meet the target of an average 7 to 8 percent economic growth during his entire term.

The economist noted that the expansion of the pork barrel system was inconsistent with the Aquino administration’s anticorruption crusade.

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