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Saturday, July 21, 2012

No one can stop China in South China Sea but China - Former Philippines National Security Adviser

No one can stop China from claiming “indisputable sovereignty” over the West Philippine Sea (South China Sea)—except China itself or the authoritative power of world opinion.

Short of war, a war nobody wants or would wish, even the United States can only delay or impede the fulfillment of China’s inordinate ambition to gain sovereign control of 3 million square kilometers of this great inland sea that is also Southeast Asia’s maritime heartland.

This is the strategic context of China’s assertive ambiguity in the West Philippine Sea (South China Sea).

Just now, Beijing can only bluster and intimidate, as it probes for weaknesses in its rival claimants.

But once China can translate its economic power into military capability credible enough to challenge that of the United States—when the “time is right” in China’s terms—then the geopolitical configuration in the Asia-Pacific region will change radically.

And time and circumstances favor China. Analysts say China is likely to become the world’s largest economy in a decade or so.

If they are right, the Philippines has only 10 short years to prepare for what is likely to become an interesting Asia-Pacific future.

Long-term security

Given the constraints under which it’s working, the administration of President Benigno Aquino has so far done all that could possibly be done, in the short term, to defend our nation’s interests in the West Philippine Sea.

But in this case it’s not enough to deal with the immediate problem. Our nation’s long-term security hangs in the balance.

And to ensure our safety, we must look at the root of our nation’s security, which lies in our people—in everyone of us and nobody else.

If our country is to prevail in any challenge, if the Philippines is to become worthy of respect as a sovereign nation, we must first of all enable our people to become effective wealth creators.

We must make our country rich enough to enable us to acquire the means to defend our nation’s interests, to protect our people’s dignity and honor.

Nationhood infrastructure

To carry out the government’s strategies, policies, plans and programs to grow and develop the nation, we must strive urgently to create the four conditions necessary for growth and development.

Let us make no mistake, without these, the nation can hardly enforce its Constitution and its laws, and no development plan can succeed:

1. We must come to terms with ourselves. We must build among us the infrastructure of nationhood. We must be able to answer the basic question of who we are.

We must live the core values our forebears fought and died for: Dignity, honor, freedom, justice, self-determination, hard work, discipline, tolerance, mutual caring and compassion.

We must become a people at peace with themselves and with the world.

There is nothing our people cannot accomplish, if our identity and the goals we seek are articulated in terms of the core values taught us by our heroes and martyrs.

These core values define what is right or wrong for our people. They guide us, like our heroes and martyrs, to live only when it is right to live, and to die only when it is right to die.

2. No matter what it takes, we must end our internal wars. Our radical insurgency is kept alive by our grievous inequality and the elemental injustice of mass poverty. And both are caused by corruption and misgovernment.

The same is true of our separatist conflict in Mindanao. There popular frustrations are worsened by rivalries over land and livelihood, and the situation is complicated by ethnic and religious enmities.

3. We must complete all the land and nonland reforms we still need to do. Not only will their completion make rebellion, separatism and mutiny irrelevant but will also accelerate our nation’s growth. And, finally, it will unite our people.

4. We must transfer the power of the few over the state to the people as citizens. In the World Bank’s view, we are a country where state policies and their implementation serve not the common good but those of special interests.

The capture of the state and its regulatory agencies by vested interest groups has made our economy the least competitive among comparable economies in East Asia.

In sum, we must put our house in order. We must level our popular playing field to grow and develop the nation—and so enable our people to surmount any challenge.

No luxury of time

As we create the four conditions necessary for growth and development, we must also carry out our development plans. Given the uncertainties building up in East Asia, we do not have the luxury of time.

It is the Chinese people’s historic sense that is driving their country’s rise. They count their recovery from generations of humiliation at the hands of the great powers as lasting 150 years starting from the initial European effort to open up China around 1800.

In 1949, Mao Zedong proclaimed China had stood up. But China began to recover economically only after Deng Xiaoping’s reforms (1978). In three and a half decades, China has become the world’s second largest economy.

We, too, must tap into our people’s sense of nationality—and do no less. By creating the four conditions necessary for growth and development that I cited above, and by simultaneously carrying out the government’s development plans, we can change our country—we can modernize it without leaving anyone behind—during the next 10 years.

By that time, we will also have nurtured the inclusive institutions that will sustain our people’s capacities for wealth creation.

No primrose paths

Let us not delude ourselves. There are no short cuts—no primrose paths—to growth and development. We must never give up even if our country’s rise takes 150 years or more.

We have no choice. The alternative is too dire to contemplate.

We must work together to prevent the situation developing that reduces our country into a tributary, a vassal, a province of a great power.

Those who sacrificed and died for us and for generations yet to come will never forgive us if we fail to summon the courage and the will to take the radical steps toward the Filipino future: To deliberately put in place the four conditions necessary for growth and development without delay.

By:

China launches Sansha City Maritime management in South China Sea

Sansha City to administer South China Sea

HAIKOU: Maritime management has begun in the newly established city of Sansha in the South China Sea, as local Chinese authorities hope to enhance maritime safety there and protect the environment.




 The building on Yongping Island will be home to the Sansha city government. [File photo]

The State Council, or China's cabinet, approved the establishment of Sansha, a prefectural-level city in south China's Hainan province, to administer the Xisha (Paracels) , Zhongsha (Middles Sands) and Nansha (Spratlys) islands and their surrounding waters in the South China Sea on June 21.



"We began maritime management there soon after the State Council's decision was made," a spokesman with the Hainan Maritime Safety Administration said Thursday.

Maritime personnel are working to build infrastructure, buoy tenders, supply bases, light stations and radio stations in order to enhance maritime supervision and rescue capabilities, the spokesman said.

Maritime authorities are also studying sea travel routes in the area and considering introducing new laws to regulate traffic, as Sansha will develop its own tourism industry in the future and receive more ships, he said.

In addition, the Hainan Maritime Safety Administration is now researching the disposal of waste and pollutants and the supervision of yachts in an effort to keep a clean marine environment, the spokesman added.

"We are also planning to cruise regularly in the area in the future and set up a daily cruise mechanism when conditions are ripe," he said.

China on Tuesday set up an organizing committee for the legislative body of Sansha, officially beginning the formation of the government of the newly established city.

The government seat of Sansha will be stationed on Yongxing Island, part of the Xisha Islands.

Sansha administers over 200 islets, sandbanks and reefs in the Xisha, Zhongsha and Nansha islands.

China said it first discovered and named the reefs, islets and surrounding waters of Xisha, Zhongsha and Nansha islands. In 1959, it became the first country to set up an administrative office to exercise sovereignty over the area.

By Lu Hui. Xinhua

Mayor elected in China's newly established Sansha city

  
Representatives pose for group pictures after the first session of the first Sansha Municipal People's Congress held on Yongxing Island, the government seat of Sansha City, in south China's Hainan province, July 23, 2012. Forty-five deputies to the municipal people's congress attended the first session of the first Sansha Municipal People's Congress and cast their votes. Xiao Jie was elected the first mayor of the newly established Sansha city Monday afternoon. (Xinhua/Hou Jiansen)
 
YONGXING ISLAND, Hainan, July 23 (Xinhua) -- The newly established city of Sansha in the South China Sea elected its first mayor Monday afternoon.

Xiao Jie, 51, head of the Hainan Provincial Agriculture Department, was elected mayor in the first session of the first Sansha Municipal People's Congress held on Yongxing Island, the government seat of the city.

Xiao was also appointed secretary of the Sansha Municipal Committee of the Communist Party of China (CPC).

Fu Zhuang, 56, deputy director of Hainan Provincial Civil Air Defence Office, was elected director of the standing committee of Sansha Municipal People's Congress, the city's legislative body.

The legislative conference also elected three deputy mayors, head of the city's intermediate people's court and procuratorate. It also elected another five members of the standing committee of the Sansha Municipal People's Congress.

"It's a great honor to be the first mayor of Sansha, and it's also a brand new mission, challenge and test for me," said Xiao.

The first Sansha municipal government will be devoted to administrative management, economic development, people's livelihoods and environment protection in the coming five years, Xiao said.
The deputies and members of the standing committee of the municipal People's Congress should make positive contributions to the management, development and protection of the islands as well as the sea waters surrounding Xisha, Zhongsha and Nansha, said Fu.

Forty-five deputies to the municipal people's congress attended the first session of the first Sansha Municipal People's Congress and cast their votes.

The deputies, divided into groups from the Xisha, Nansha and Zhongsha islands, were elected Saturday by 1,100 residents from the islands.

The State Council, or China's cabinet, in June approved the establishment of Sansha, a prefectural-level city in south China's Hainan province to administer the Xisha, Zhongsha and Nansha islands and the surrounding waters in the South China Sea.

China's central military authority has approved the formation and deployment of a military garrison in Sansha.

Sources with the People's Liberation Army Guangzhou Military Command said Friday that the Central Military Commission had authorized it to form a garrison command in the city.

Yongxing Island is part of the Xisha Islands.

Anarchy in the financial markets!

 If regulators don't fix the lawlessness in international financial markets, future losses might us all in

THE lawlessness that pervades the international banking industry and especially the large Western banks must raise serious questions as to what perpetuates such barbarous behaviour among the custodians of people's money.

A big part of it is that the banking industry operates on greed rewarding its key employees via commissions for businesses brought in, deals made, and products sold even if they were dubious in the first place.

This encourages among the industry a bunch of highly dishonest salesman who shield themselves behind a veil of professionalism to dupe and seduce customers into believing their products are good and their processes are strong, secure and fair.

And they are aided by ineffectual regulators who parrot the trite phrase that free markets should not be overly regulated but turn a blind eye when the biggest financial institutions amass massive positions to fix markets and deceive customers, making a mockery of market freedom.

The Angel of Independence monument stands in front of HSBC’s headquarters in Mexico City. Europe’s biggest bank has been found laundering billion of dollars for drug cartels, terrorists and socalled pariah states, in a scandal which almost overshadows the Barclays’ one. — Reuters

The integrity of free markets was compromised because big players could affect the direction of markets, making the markets way less than perfect. Free markets basically became unfettered freedom to make money even at the expense of the market and the potential collapse of the world's financial system.

They did it yet again or to be more accurate they did it earlier but their misdeeds surfaced once more recently. UK's Barclay's bank made a US$453mil settlement with regulatory authorities in the United Kingdom and the United States for fixing the London interbank offered rate (Libor).

Now, it turns out that Barclay's may not be the only one. According to a Reuter's report, other major banks are likely to be involved and may try and go for a group settlement with regulators, the US' Commodities Futures Trading Commission and the UK's Financial Services Authority.

The banks being investigated include top names such as Citigroup, HSBC, Deutsche Bank and JPMorgan Chase. They all declined to comment to Reuters.

And one of these banks, Europe's biggest HSBC, has been found laundering billion of dollars for drug cartels, terrorists and so-called pariah states, in a scandal which almost overshadows the Barclays' one. That leads to the question of whether other banks were involved as well.

If they jointly fixed the Libor, the world's most used reference rate for borrowings and derivatives with an estimated US$550 trillion, yes trillion, of assets and derivatives tied to the rate, it will be a scandal of epic proportions and may result in settlements of an estimated US$20bil-US$40bil.

That settlement will only scratch the surface. Just 0.1% of US$550 trillion is US$550bil. That implies that if banks had been able to fraudulently fix Libor so that it was just 0.1 percentage points higher, customers throughout the world would have had to pay US$550bil more in interest charges in a year.

In March this year, five US banks, including Bank of America, Citigroup and JP Morgan Chase, made a landmark US$25bil settlement with the US government for foreclosure abuses.

Even so, only a small fraction of affected house buyers are expected to benefit from this. Many other banks, however, are relatively unaffected and have not been fully called to account for their role in the US subprime crisis, which could have caused a collapse of the world's financial system.

Banks which bundled together risky housing loans into credit derivative products and passed them off as those with higher credit rating than their individual ratings, aided by ratings agencies, got off scot free. No one was called to account.

That the financial system is still vulnerable and that all gaps have still not been closed is JP Morgan's recent loss of up to US$4bil from rogue trading by a London trader going by the name of The Whale.

There needs to be a new set of rules, regulations and behaviour one based on ethics, honesty, competency and checks and balances. Custodians of public money should be required to be above all else honest first and foremost.

They should be consummate professionals whose first duty should be to protect the deposits of customers and the bank's capital. They should not do anything which puts the bank at undue risk.

The insidious habit of rewarding those who bring in revenue with hefty commissions have to be stopped so that bankers do not take risks which put their banks at undue risk which will eventually require trillion of dollars in rescue from governments.

Regulators should again make clear demarcations between those financial institutions who are custodians of public money and those who are not and hold the former to much higher standards of accountability and integrity.

Shareholders of financial institutions who are custodians of public money should be led to expect a lower rate of return on their investments but they should also be led to expect a lower corresponding rate of risk befitting that of major institutions which are so vital for the proper functioning of the economy.

Enforcers should focus on bringing individuals responsible for these losses to book and throwing criminal charges at them which will put them behind bars for long periods of time, befitting their severity. Society at large tends to treat white-collar criminals with kid gloves.

When derivatives trading and deception brought major Wall Street firms such as Enron and WorldCom to their knees and eventual collapse in the early 2000s, enforcers brought to book key executives who are spending time behind bars.

But despite the near collapse of the world's financial system, despite fraudulent behaviour, despite misrepresentation and deception, despite selling structured products of dubious value and then promptly taking positions against them, despite fixing of reference interest rates, despite money laundering and despite many other crimes still to be unearthed, no one has been brought to account.

Fining institutions leaves those individuals responsible free. In fact, settlements made come with the agreement that there will be no prosecution of individual bank staff and gives major incentive for others to do the same.

They are safe in the belief that the institution will pay the price and they will go free in the event things turn wrong. Otherwise, they will end up millionaires and even billionaires. How convenient an arrangement!

There is anarchy in the financial markets and a state of lawlessness which encourages heists of unimaginable proportions without risk of punishment. If we don't watch it, the losses will do the world economy, and all of us, in.

A Question of Business
By P. GUNASEGARAM

> Independent consultant and writer P. Gunasegaram (t.p.guna@gmail.com) is amazed that people can get away with so much by just repeating two words: free markets.

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