Dead-end

The dogmatic position adopted by our government on the Scarborough affair dismays our allies and regional partners. It is an unimaginative and inflexible position that will lead us to a dead-end.

Our partners in the Asean feel slighted that Manila went head-on unilaterally, disregarding the consensus-based regional partnership and adopting a combative position towards China. Expect the Asean to keep a polite distance from the issue and a deafening silence about the position Manila chose to take.

It is as if Manila embarked on a crusade to humiliate China, featuring really stupid street marches that merely escalate the rhetoric without offering a way to a negotiated solution. The Palace denies it had a hand in the “global people power” carnival — although even Beijing knows that Akbayan, the group that spearheaded the show, is President Aquino’s reliable rent-a-crowd. The demonstrations echoed Aquino’s own confrontational rhetoric.

The recent meeting in Washington between American and Filipino defense and foreign secretaries did not produce the resounding superpower support for our territorial claims that Malacanang might have expected. Someone at the Palace overlooked the plain fact that the US never ratified the UN Convention on the Law of the Sea (UNCLOS) on which we base our territorial claims.

The Americans have neither the standing nor the inclination to endorse our claims. They may not say it openly, given the discretion diplomacy requires, but it is easy to see the Americans find Philippine behavior in the territorial dispute a nuisance. Washington has a much larger stake cultivating its complex engagement with Beijing.

Our prospects in bringing the case to the International Tribunal on the Law of the Sea (ITCLOS) might not be too bright either. Both the Philippines and China, it now turns out, exempted contested territories from the coverage of the convention when we ratified the document. That pulls the rug from under our projected complaint.

Starting on both the wrong foot and the wrong tone, we are now behaving like a lemming marching mindlessly into the sea. When one minor Chinese functionary described Manila’s behavior as “weird”, he was not entirely without basis.

I hate to blame the DFA entirely for putting the country on a track that leads to a dead-end. Our diplomats follow the tone set at the Palace.

Weeks after Domingo Lee finally withdrew his nomination to be ambassador to Beijing, the Palace has yet to identify a new nominee. It is strange that the Palace is moving so slowly on this. At no other time in our relationship with Beijing do we so desperately need a full-fledged ambassador taking care of business at the Chinese capital.

Jess Arranza, chair of the Federation for Philippine Industries, proposed that a delegation of Chinoy businessmen head to Beijing at once on an independent mission to soothe ruffled feathers and explore a way out of this mess. His proposal reflects the growing anxiety gripping our business community considering the way our government is handling this matter.

I am trying to pull together a roundtable discussion of academics and experts with the goal of putting out a white paper containing an alternative approach to the South China Sea issues. We urgently need a new paradigm for this. Our government’s approach is dead in the water.

Squandered

Few know that for over 25 years now, the GSIS has been holding a losing investment in what is apparently a badly run thrift bank.

The bank is said to have been losing money from the start. Today, it is reported to be in the red on the scale of P20 million a month. The only way this minor bank manages to survive is through fund infusions from the GSIS.

The GSIS, if we need to be reminded, is custodian of the money contributed by its members, all poorly paid public sector workers. Nothing justifies their hard-earned contributions being flushed down the drain, or pocketed by the unscrupulous through this process.

Rep. Rodolfo G. Valencia suspects a form of highway robbery is happening in this case. He filed House Resolution 1730 asking for a congressional inquiry into the matter. The House of Representatives Committee on Banks and Financial Intermediaries begins its inquiry on May 22.

One source familiar with the investment says the thrift bank has been prone to unsafe banking practices. In the resolution he filed, Valencia estimates that the GSIS put in about P5 billion since the investment in the thrift bank was made in 1984.

That is a staggering figure and money obviously squandered. No way can that minor bank be worth P5 billion today. Even if the bank is sold off today to any of the big banks, there is no way the GSIS can recover all the money it infused into this losing proposition.

 The GSIS is indeed trying to sell off the losing bank. It announced a public bid for it without setting a minimum selling price. Of the ten banks that initially participated in the bid, eight quickly lost interest after due diligence was performed.

 There is another hindrance to the disposal of the bank by the GSIS. The original investors in the bank, who lost control of the institution to the GSIS, are now opposing the sale. They have been able to secure a writ of injunction forestalling the planned sale. Meanwhile, the thrift bank just bleeds and bleeds.

Why did the GSIS make such a risky investment in the first place? Why did it take so long, and the squander of so much money, before the GSIS decided to step out of this investment? The congressional inquiry should tell us.