Potemkin economics

DIE HARD III

Herman Tiu Laurel

2/8/2013

Daily Tribune

The Potemkin village is an idea of a fake village built only to give a false impression of a brightly lit and prosperous place with vibrantly painted facades but with nothing behind them. The phrase symbolizes an apocryphal settlement supposedly erected along the banks of the Dnieper River in Crimea to fool a then touring Empress Catherine II that all was going well within her realm.

Today, the local and global enthusiasts for the neoliberal economy of the Philippines have been creating such a Potemkin Village around it, ballyhooing a 6.6-percent gross domestic product growth that is actually only growth in debt, taxes, "hot money," smuggling, and privatization — all of which have entailed net losses of about 400,000 jobs, the continuing erosion of public assets (such as public hospitals as well as state-owned power plants, among others), and increasing costs for Filipino taxpayers and consumers.

The World Bank (WB) is the latest to get into the act of erecting and gaudily painting this Potemkin economy, announcing that the "Philippines is Asia's rising tiger," as bannered in various newspaper headlines the past few days. I wonder if any Filipino can still be taken in by the WB's con games, given that its prescriptions have invariably proven disastrous for the country and the common folks' lives. Notably, the most notorious of these — having been accompanied by blackmail — was the Epira (Electric Power Industry Reform Act), a piece of legislation that gave us the "highest power cost in Asia" that created a major disincentive for foreign direct investments (FDI) into the country.

The first wave of trumpeting began two weeks ago; but by the second week the realities behind the ballyhooed growth began to dawn on all. It was with the insistent reiteration of the facts by such economic think tanks as the Ibon Foundation and our own financial forensics consultant, Hiro Vaswani, of KME (Kilusan para sa Makabansang Ekonomiya), as well as a handful of columns like this space that exposed the acclaimed growth as being no growth at all, and which was, in fact, even contrary to the most significant component of any economy — jobs generation.

When the adverse consequences of the current economic "gains" were understood by more and more Filipinos, economists from the Establishment began reluctantly agreeing with the critics and skeptics of this Potemkin economics. Caught "Noynoying" on the more vital aspects of the economy, such as employment and real productivity, PeNoy's Budget Secretary Butch Abad was compelled to admit the economy was "non-inclusive" in its growth. Then, the International Monetary Fund, followed by the WB, also echoed the same.

But do they really mean what they say — that they really want a more inclusive economic system? If so, then they would have to call for a reversal of economic policies, away from the orthodox "free trade" economics and back to the national development economics that nationalists advocate. To create jobs and income for the population, domestic industries must be developed, nurtured, and promoted — a stark contrast to the dictum of globalists for the Philippines to rely on imports even for its basic needs while exporting its manpower and raw materials to earn dollars for these imports.

The globalists continue to sell debt to the Filipinos on the back of the myth that the Philippines is capital starved. But how can that be when we have a GIR (gross international reserves) surplus of $27 billion (with $89 billion in reserves vs $62 billion in foreign debt) and our Bangko Sentral ng Pilipinas (BSP) holds at least P1.7 trillion in Special Deposit Accounts (SDAs)? Bear in mind that SDAs are deposits that are ready for lending; but since there is no long-term government plan for spurring investments in industry and agriculture, the only rush we see is in condominium development. Worse, instead of funding domestic "physical" economic growth, the BSP even chooses to invest in low-yield foreign T-bills.

Clearly, in order to sustain their continuing plunder and looting of the country's wealth and labors through extraction and repatriation of economic surplus or profits (as these are otherwise called), the snake oil salesmen (of globalization, liberalization and privatization) must keep the eyes of the public on the Potemkin village of growth.
If there are those in government who really want actual, physical economic investment and prosperity, they could begin with a serious plan to halve power rates to equal the rest of Asia's tariffs.

Attaining justice in the power sector may well mark a beginning for overall change in the economy. Even as we don't see much hope in winning many legal battles given the prevailing system, with our will to fight, we can certainly bring this to the people for final judgment.

(Tune in to 1098 AM, Tuesday to Friday, 5 p.m. to 6 p.m.; watch GNN's HTL show, GNN Channel 8, Saturdays, 8:15 p.m. to 9 p.m., 11:15 p.m. and Sunday 8 a.m., and over at www.gnntv-asia.com, with this week's topic, "From Oakwood to Congress: Trillanes and the Magdalo's Journeys;" also visit http://newkatipunan.blogspot.com)

'Smart-magic'

DIE HARD III

Herman Tiu Laurel

2/6/2013

Daily Tribune

News reports the past week on the Commission on Elections (Comelec) "mock polls" ran under these headlines: "PCOS machine rejects ballots during mock elections;" "Dry run exposes glitches in poll equipment;" "UPIS — ballot rejections;" "Balota sa mock polls sa Maynila, 'di tinanggap ng PCOS machine;" and "Ilang balota, 'di tinanggap ng PCOS machine sa mock elections sa Maguindanao." Mock elections in Iriga City did not push through since there was no transmission signal; in Camarines Sur, the PCOS (precinct count optical scan) machines rejected the ballots. Despite these "glitches" in six out of 11 test areas (or over 50 percent of the tests), Comelec Chairman Sixto Brillantes and his "Sancho Panza," James Jimenez, say there were only a "few glitches during mock elections" and that these glitches were "manageable."

VoteReportPH and Kontra Daya volunteers monitoring the UPIS mock elections noted: "BEI and Comelec officers inside the precinct did not observe rules of the actual conduct of election. Some officials had been tinkering (with) the PCOS even after the initialization, prohibited in the Comelec General Instructions; thermal paper used (did) not properly fit in the PCOS printer; PCOS failed to accept and read ballots." In some cases where the machines did not initially perform, James Jimenez said, "This is speculative but since they have not been used the past two years maybe they have to be warmed up first."

Speculative? What happens on the day of elections when tens of thousands of the 76,000 machines don't start while voters wait if "warming up" will finally make the machines work or not? Will Comelec then be able to rush the replacements to those tens of thousands of precincts? Of the 18 remote municipalities from where the PCOS sent results to the municipal level and to the main server, only 14 were able to directly transmit electronic results from beginning to end. In response, Jimenez said, "We believe that what happened in the field test is not that critical because it's precisely just part of the shakedown process that we are doing."

The use of the term, "shakedown," is highly unsettling. Was that a subconscious slip? Jimenez adds, "So far, we believe it was a successful field test. We don't call it a failure since we have a contingency for those that are not yet able to transmit the results and they are still being tried (as of press time)." Still being tried, three months to election day? Spending billions upon billions still has not provided the reliable system the computer election proponents assured the public this would provide? There are just so many questions: The Comelec decided to keep the field test away from media and the public, which has led poll watchdog Automated Election System (AES) Watch to question the Comelec's intent. The public should be equally suspicious.

At the same time, the Supreme Court (SC) was again asked to stop the consummation of the contract between the Comelec and Smartmatic for the supply of compact flash (CF) cards. The deal smacks of a sweetheart arrangement. The lowest bidder in the CF cards bidding, LDLA Marketing, filed a protest and has gone to the SC to stop the negotiated deal, claiming "the Comelec conspired with Smartmatic in closing the P45-million deal for the 82,000 CF cards" when the poll body allowed it to lower its prices to match LDLA's.

The Comelec is really behaving in the most peculiar manner when it comes to Smartmatic, favoring it despite clear infirmities in its voting system and its contracts. Brillantes admits, for example, that he has been in communication with Smartmatic's technology supplier, Dominion Voting Systems (DVS), since 2012 and knows that the required source code Smartmatic is supplying is not certified as required by law. Despite these major infirmities, Brilliantes still assures the public that the source code and software of the PCOS machines are legal and kosher. Worse, Smartmatic's Cesar Flores insists their source code is certified, contradicting DVS' information to Brillantes. Who's lying, Flores or Brilliantes? Does Brilliantes have no shame that he will allow a foreign company's spokesman to put him in such a bad light?

Manila Auxiliary Bishop Broderick Pabillo has accused the Comelec of "stonewalling" on questions about the integrity of the PCOS machines to be used in the May 2013 elections. Although Brillantes gave a briefing for the bishops last January, Pabillo said Brilliantes left them with more questions than answers. According to Pabillo, he has received information that so-called election operators were offering to "fix" a provincial gubernatorial race for P20 million and P70 million for the mayoralty race in a Metro Manila. Despite all these, the Comelec seems intent in just ceaselessly reiterating the claim that Smartmatic's PCOS machines are going to run "smoothly." What magic spell has Smartmatic cast on these Comelec officials?

(Tune in to 1098 AM, Tuesday to Friday, 5 p.m. to 6 p.m.; watch GNN's HTL show, GNN Channel 8, Saturdays, 8:15 p.m. to 9 p.m., 11:15 p.m. and Sunday 8 a.m., and over at www.gnntv-asia.com, with this week's topic, "Back to the Power Struggle;" also visit http://newkatipunan.blogspot.com)

Ceasefire betrayal

DIE HARD III

Herman Tiu Laurel

2/3/2013

Daily Tribune

The public had finally begun to benefit from democratic noise and politics with the Senate imbroglio over the "Christmas gift" allocations. For once, all the cats seemed to have come out of the bag. For a while there, all the dirty linen being washed before the public seemed to portend a Senate on the road to being transformed into an institution that we can all be proud of — one that is bright and clean.

Much of the dirt and stink had been in that body's laundry bag for decades, such as Lacson's expose of Miriam's building cum Senate sub-office behind McDonald's on Quezon Avenue (that acted as the latter's campaign HQ since the 90s). Why the erstwhile fugitive solon waited 20 years and only during the majority vs minority bloc feud to bring it out, we could grudgingly excuse. But then came this "ceasefire" call, which I feel the public should feel really betrayed by.

The Palace announced its "welcome" of the ceasefire (which is again in violation of the 'separation of powers" principle). Certainly, Malacañang has no business commenting on what should or should not happen in the Upper Chamber's internal affairs. If it were to express any interest at all, it should be to respond to the public's resounding desire for a full unmasking of all the culprits in the Senate.

For that matter, the Lower House should also be made to follow, maybe with the prodding of the Commission on Audit (CoA). The CoA, for its part, has been exposed as another inutile fixture of the "checks and balance" in the system as it admitted helplessness in the face of the Senate's "fiscal independence," which renders its auditors in that body really inutile. The ceasefire was called by the Senate President purportedly in order for the senators to focus on the passage of seven measures and 90 bills that are still pending. Sen. Edgardo Angara gave another justification — the Gopac (Global Organization of Parliamentarians Against Corruption) meet ongoing now, from Jan. 30 to Feb. 2, in Manila.

But if we were to go by the record of global politicians in terms of corruption issues, the Philippine Senate has nothing to be ashamed of. If our senators do not let up in the pursuit of exposes of their fellow legislators' malfeasance, then they may still gain the admiration of more people. But, being one with the US legacy of "pork barrel" that makes it one of the most corrupted, it is unlikely that the Senate will do so. What the ceasefire will only do is push back billions of budget, "pork barrel," and conflict-of-interest issues back into the dark bag. Thus, we'll never know when the cats can come out again. The senators — except perhaps one or two who are too new to have the opportunity for fiscal abuse — have a lot of cats to hide; and it's not just the kind alluded to by Cayetano.

We've personally had our fair share of the Senate President's ceasefire tactics. In our battle against the electric power pirates in 2001 where he joined us in signing a court petition against the Epira (Electric Power Industry Reform Act), he suddenly had a ceasefire with the oligarchs. Thankfully, my colleagues and I never accepted a ceasefire and have kept fighting on.

By the way, the top power pirate has been on a PR surge of late, appearing last week in a mainstream Sunday edition, being praised to high heavens and compared to Alexander the Great (his apparent idol) for supposedly achieving a lot. Of course, Alexander killed off a great many people just as his company, the Manila Electric Co. (Meralco), has done by making many Filipinos destitute, shattering their children's dreams of decent and hopeful lives, as well as murdering our national economy with the highest power rates in Asia (the real reason for RP lagging in investments, "not" the silly claim that if s due to our Constitution's nationalist provisions).

So let us remind the public of the real economic/business, and political heroes in our midst. Right now, Jojo Boria of Iligan Light and Power and Sanlakas lawyer Luke Espiritu are valiantly slugging it out in the Energy Regulatory Commission (ERC) hearings.

Borja's case No. 2011-088-RC on the 942-percent overpricing of electric poles and the 500-percent overpricing of transformers by Meralco are in the final stages. We expect this to go to the Supreme Court where we will face an oligarchy-controlled en banc. Sixty-seven-year-old Borja last year had to be rushed for angioplasty in the midst of the hearings, and this January had to be confined due to vertigo from stress, also because of the hearings. Still, there is no ceasefire as far as he's concerned.
Our other crusader, 89-year-old Mang Naro Lualhati, called me to request that I find a lawyer to bring his case, 2012-054-RC, to lawyer Alan Paguia because the ERC cannot be relied upon. Lualhati is exposing the Meralco rate base of P129 billion as an overstatement of P46 billion, based on a 2009 CoA report of the power company's real assets at only P78 billion, where the Maximum Average Price (MAP) should only be P0.90 per kiiowatt-hour and not the present P1.6333/kWh being exacted on us with the help of the ERC, Thus, for Lualhati, there is simply no rest in this fight.

When there's no ceasefire anymore against corruption — that's when the Filipino nation will be truly liberated.

(Tune in to 1098 AM, Tuesday to Friday, 5 p.m. to 6 p.m.; watch GNN's HTL show, GNN Channel 8, Saturdays, 8:15 p.m. to 9 p.m., 11:15 p.m. and Sunday 8 a.m., and over at www.gnntv-asia.com, with this week's topic, "Ceasefire on Money Politics?;" also visit http://newkatipunan.blogspot.com)

7th Fleet bluff

DIE HARD III

Herman Tiu Laurel

1/28/2013

Daily Tribune

Provocative acts from Japan and the Philippines on territorial disputes with China are hinged on the two's "Mutual Defense Treaties" with the US, backed up with the presence of the US 7th Fleet. Thus we often hear that "China is afraid of the U.S" because of this. Is the 7th Fleet that invulnerable? Author Gary Brechter of the "The War Nerd" writes in Alternet "'Navy's Big Weakness: Our Aircraft Carriers Are (Expensive) Defenseless Sitting Ducks'… The Chinese military has developed a ballistic missile, Dong Feng 21, specifically designed to kill US aircraft carriers… the missile employs a complex guidance system, low radar signature and a maneuverability that makes its flight path unpredictable… it can evade tracking systems … travel at Mach 10 and reach its maximum range of 2,000 kilometers in less than 12 minutes."

2,000 kilometers is about the distance from China's Hainan naval base, where the closest missile bases are expectedly based, to strategic locations for any anti-China armada. Frederik van Lokeren writes In "'Implications of the Chinese naval base at Hainan' …The US 7th Fleet finds itself cornered by the newly discovered Chinese activity at Hainan. While the US 7th Fleet is capable of containing the Chinese Northern Fleet it is unable to have enough influence on Chinese activities in the South Chinese Sea …. the 7th Fleet would require a more central location such as the Philippines for example. Right now the United States military is already voicing demands for closer cooperation and basing in the Philippines." The article envisions the Japanese and Philippine navy to have a bigger naval role in the area — and right smack into the range of the Chinese missiles.

Brecher writes further, "Every single change in technology in the past half-century has had 'Stop building carriers!' written all over it." Aircraft carriers are good for psywar and bullying, but not much more. The Western fleets are even uncertain of victory against Iran's land launched missiles in the Straits of Hormuz, and have not launch a "no fly zone" in Syria for fear of anti-aircraft missiles. Then this from Weapons and Technology: "'China's Buying a Fleet of Russian Bombers Perfect for Taking on the US Navy'… Tupolev Tu-22M3 bomber at a cost of $1.5 billion…. supersonic, swing-wing, long-range strategic and maritime strike bomber … it will get updated with indigenous systems and an extended range making it a significant threat to many latest generations weapon systems."

The Department of Foreign Affairs under green card holder Alberto del Rosario raised the Philippines-China territorial dispute to the ITLoS (International Tribunal on the Law of the Sea). China ratified the United Nations Convention on the Law of the Sea only to the extent that it does not impinge upon its sovereign claims and does not submit to Article 298 arbitration as UNCLoS provides. Due to this, diplomatic experts say the Philippine case in ITLoS would not prosper if Beijing refuses to participate in the arbitration. Also, as condition to it ratification China stipulated that, "The PROC reaffirms its sovereignty over all its archipelagos and islands as listed in Article 2 of the Law of the People's Republic of China on the territorial sea and the contiguous zone…. promulgated on Feb. 25, 1992." The Philippines also posited conditions for ratifying UNCLoS.

RP also stipulated that UNCLoS "shall not diminish … (its) rights and obligations… under the Mutual Defense Treaty" with the US" and "…shall not in any manner impair or prejudice the sovereignty of the RP over any territory over which it exercises sovereign authority…" But the DFA reveals its real helplessness in saying, "What we want to do is to form an arbitral panel and we invite China to do so," unfortunately the guest won't be coming to dinner. The result of the Japanese "nationalization" of the Diaoyu and Philippine diplomatic escalation actually conforms to US strategic plans instead of the national interest of the respective countries, the region and the peaceful and balanced development of the World economy is the loss of badly needed economic cooperation and impetus; but that is good for the economic recovery of the US with arms sales and depressed intra-Asian trade.

Lawyer Harry Roque in an article supported the DFA's ITLoS case, then ironically concludes: "Lest I be accused of being overly optimistic, the truth is China may very well argue that its legal entitlement to the disputed waters is based on its 'uncontroverted' sovereignty to land territories… it may be enough to remove jurisdiction from it (ITLoS) because the matter, as phrased by China, may no longer be an issue of 'interpretation' and 'application' of the UNCLoS. If this happens, we will be back to where we were: a standoff." BS Aqino III has been led into a fiasco by the DFA green card holder. Their 7th Fleet card is a bluff. RP loses goodwill as most of Asean enjoy boom trade with China.

(Watch Destiny Cable GNN's HTL edition, Talk News TV, Saturdays 8:30 to 9:30 p.m.: "Against Money Politics," also on www.gnntv-asia.com; tune to 1098AM radio Tuesday to Friday 5 to 6 p.m. http://newkatipunan.blogspot.com)

Money, debt, freedom

DIE HARD III

Herman Tiu Laurel

1/25/2013

Daily Tribune

The BS Aquino government is nearing its full third year in power. Despite the hullabaloo about the so-called seven-percent growth and more in the coming years from government, the Yellow parrots, and the international finance cliques, along with up and coming credit upgrades, it is still acknowledged without any doubt that the Filipino people are getting poorer and hungrier. And even as the Senate still squabbles over money gifts from savings that should have reverted to the people, the humongous burden carried on the backs of the populace has just grown heavier by tons and tons. In less than three years, outstanding Philippine government debt has already grown to P5.381 trillion, almost P500 billion from the last year of Gloria Arroyo when it stood at P4.9 trillion — this when Aquino boasts of lending $1 billion to Greece to aid in its financial debacle.

This week, a trumpeted delegation of US business personages, claiming to be on the hunt for investment opportunities, arrived in Manila. Led by former Ambassador to the Philippines John Negroponte (1993 to 1996), the group is under the auspices of what has been described as a non-profit entity called the US-Philippine Society.
Certainly, putting "non-profit" beside such big names and giant corporations is oxymoronic, especially in light of the fact that many of these are tainted with scandals.

Let us make a short run-through: Citigroup collapsed in 2008; Chevron imposed on us the grossly one-sided Malampaya deal; JP Morgan Chase has just paid $153.6 million to settle a US fraud case; and Maurice Greenberg was indicted for fraud by former New York attorney general Eliot Spitzer. Those are just for starters.
Federal Express closed its hub in the Philippines in 2009 (and no one thinks it will return); Peregrine Development International is suspected of being a British Virgin Islands registered company; US Education Finance Group is a lobby group; GE also collapsed in 2008 but got a $140-billion bailout; while Spence, which is in seafoods, is alleged by McLarty's site to have only six dozen employees and advisors but wants to get multibillion-dollar PPP (public-private partnership) businesses in this country.

These US transnationals are seeking investment prospects in the country alright, but haven't they been investing in the Philippines the past century and with a vengeance in the last decades in the power industry, like Mirant cashing in and getting out pronto?
What the initial reports of the aims of the delegation did not mention were two worrying agenda items. The first, a meeting with SC Chief Justice Maria Lourdes Sereno for "American businessmen to get a feel of how legal issues will play out in the Philippines over the next few years (something foreign businessmen have always complained about in the past)."

Just what is a chief magistrate doing meeting with foreign businessmen whose issues can definitely reach the highest court of the land one day? That will surely compromise the SC, especially when the CJ faces the super-special envoy of the US (Negroponte) known for being the alleged "butcher of Honduras" in the "dirty war" there in the 80s and the alleged "butcher of Iraq" in the "Iraq surge" of 2005, where it will be another case of "sheep justice" arising from it. The second alarming item: Lobbying for the TPP (trans-Pacific partnership) agreement proposed by the US for a new economic community countering the Apec (Asia-Pacific Economic Cooperation) forum and explicitly excluding China, which plan was reiterated to the Asia-Pacific community by Obama in 2012 but was roundly rejected by its target nations.

David Goldman writes in Asia Times ("Post-US world born in Phnom Penh"): "It is symptomatic of the national condition of the United States that the worst humiliation ever suffered by it as a nation, and by a US president personally, passed almost without comment last week. I refer to the Nov. 20 announcement at a summit meeting in Phnom Penh that 15 Asian nations, comprising half the world's population, would form a Regional Comprehensive Economic Partnership excluding the United States." So is the US now trying to break Asian unity through the Philippines?

In a country where the people carry the debt and where politicians and business oligarchs have all the money, with the US controlling the political-economic ruling class — conditions that have prevailed over the past decades — all one has to do is put one and one together to know the primary causes of the Philippines' financial, economic and political crisis. Unless these basic conditions change, poverty and decay will continue to rule.
Thus, we need to end the rule of money in our politics, starting with the end to the "pork barrel," as well as a drastic cut to the national debt using our Gross International Reserves surplus, in order to start the path toward economic independence.

(Tune in to 1098 AM, Tuesday to Friday, 5 p.m. to 6 p.m.; watch GNN's HTL show, GNN Channel 8, Saturdays, 8:15 p.m. to 9 p.m., 11:15 p.m. and Sunday 8 a.m., and over at www.gnntv-asia.com, with this week's topic, "The Criminal Cyber Law" with the Philippine Internet Freedom Alliance; also visit http://newkatipunan.blogspot.com)