A financial twister

Let’s prepare for an even bigger typhoon than Pedring that hit us this week. This one promises to be even bigger than Ondoy. In fact, it threatens to be as disastrous as the tsunami that hit Japan. But unlike typhoons or tsunamis, this one is not to be brought upon us by nature. It is rather a result of uncontrolled greed of capitalists whose misdeeds caused us a near depression in 2008.

George Soros argues that the impending worldwide financial meltdown is still a consequence of the 2008 crisis. It was only recently that I finally understood what caused it, thanks to a documentary with Matt Damon in it. At a time when credit was cheap and cash in abundance, Wall Street traders devised a scheme by which home mortgages, secured by insurance companies, could be traded. This became known as collaterized debt instruments. It turned out that these debt instruments were worthless since many American borrowers had no ability to repay their loans. This then led to the bankruptcy of Lehmann Brothers, an investment giant that had dealt with these instruments, and the near bankruptcy of another giant of a company that secured such instruments, AIG. In fact, many other banks and companies would have gone under in 2008 had not the US federal government made the policy decision to rescue similar companies in distress. The ultimate enemy was panic. As bank and other financial intermediaries go under, depositors panic, interest rates rise, cost of manufacturing becomes more expensive, and consequently, economic activity slowed down.

Today, the cause of the panic may be the debt crisis in Europe. This time around, it is not just private financial companies that may go under. Even developed states such as Greece, Portugal and Ireland face the possibility of bankruptcy.

What complicates the financial woes in Europe is that the European Union established a common currency for a continent with diverse economic conditions. The traditional powerhouse in the continent has been Germany with a solid manufacturing base and a proven export record. But part also of the Union are countries such as Greece whose economy, and hence, local currency, was at least 30 percent less than that of Germany. Consequently, when countries such as Greece became part of the Euro, their governments have to rely on government borrowings through sovereign bonds to shore up their fiscal position relative to the rest of Europe. These are the bonds that the Greek government is now unable to pay.

Soros warned that the situation is more perilous than in 2008 because unlike the US, Europe does not have a Central Bank that can intervene to calm the nerves of edgy investors. The matter is made worse by the fact that as much as Germany would like to intervene, its Constitutional Court has ruled that it cannot do so without the consent of its Congress, the Bundestag. Soros then advised that the best recourse would be to allow Greece and other European states similarly situated to exit from the Euro zone rather than face the possibility of a full-blown meltdown. Soros writes: ” The fact that arrangements are made for the possible default or defection of three small countries does not mean that those countries would be abandoned. On the contrary, the possibility of an orderly default—paid for by the other eurozone countries and the IMF—would offer Greece and Portugal policy choices. Moreover, it would end the vicious cycle now threatening all of the eurozone’s deficit countries whereby austerity weakens their growth prospects, leading investors to demand prohibitively high interest rates and thus forcing their governments to cut spending further”.

The last time Soros wrote about a financial disaster, the 2008 crisis occurred. At the time he wrote his warning, leading financial policy planners belittled his words as being unduly “alarmist”. Well, Soros was proven right and the rest is history. If only because of his proven track record, his latest warning as published by the New York Times should be heeded by policy makers.

The question in my mind is this: What steps has our own government taken to prepare us for this meltdown? Sure, we should be not as affected as our neighbors who have successfully developed their economies through exports. But as a country almost wholly dependent on the export of manpower—with our seamen deployed in Greek vessels and an army of domestic helpers employed in countries that have benefitted from surplus capital which is expected to dry up—the Philippines should take steps now to minimize the impact of this looming crisis.

In the past three months, what has been apparent is that after a year in office, President Benigno Aquino III has finally realized that the way to the Filipinos heart is to hit the past administration for its many sins against the people. This explains why he has recovered the public trust as reflected in his improved standing in surveys conducted by Pulse Asia and SWS. But with this looming disaster in the horizon, I would hope that all efforts should now be focused on minimizing the dire effects of this impending financial twister.

South Korea Court Rules Failure to Espouse Claims of its Comfort Women is Unconstitutional

A top South Korean court said Tuesday that it is unconstitutional for the government to make no tangible effort to settle disputes with Japan over its refusal to compensate Korean women mobilized as sex slaves during its 1910-45 colonial rule of the Korean Peninsula.

The Constitutional Court ruled in a 6-3 vote that the government violated the basic rights of the former “comfort women” with its inaction. 

The ruling is expected to have strong diplomatic influence as it clarified the government’s duty to do all it can do to help its citizens get compensation from the Japanese government.

Former sex slaves and local victims of the nuclear bombing in Japan have consistently demanded an apology and compensation from the Japanese government, citing diplomatic documents showing that their issue was not addressed in the 1965 treaty signed between the two governments to normalize diplomatic ties.

Historians say more than 200,000 women fell victim to the Imperial Japanese Army, which coaxed or forced young girls to work in front-line brothels.

But the Japanese government has rejected the demand, sticking to its official position that the compensation for all individuals was already addressed in 1965 with the Treaty of Basic Relations between the two nations. Seoul received $800 million in grants and soft loans under the pact.

The South Korean government has taken a lukewarm position on the victims’ call for settling the compensation issue on behalf of them, saying it may hurt diplomatic relations with Tokyo.

“When there is a dispute between the two countries over the victims’ rights to claim compensation, it is the government’s duty to move toward solving the dispute,” the court said. “The government must settle this through diplomatic channels since there exists differing views on whether the 1965 agreement covers the former comfort women or not.”

A group of 108 former South Korean comfort women filed a petition against their government in July 2006, claiming that the government infringed on their rights to pursue happiness and property rights when it made no effort to settle the compensation dispute.

Also on Tuesday, the constitutional court made a similar ruling in a petition lodged by some 2,500 South Korean nuclear bomb victims in 2008.

The court said the government’s passive attitude toward solving the victims’ dispute with the Japanese government was unconstitutional.

Seoul’s foreign ministry said the government “humbly accepts” the court’s decision but maintains that the Japanese government has legal responsibility over the issue.

The government “plans to continue to use various diplomatic channels between Seoul and Tokyo, and the international stage to demand responsible action from Japan,” the ministry said in an e-mailed statement.

The ministry also claimed the government has until now prioritized giving “practical help” to the victims, considering the difficulties of quickly reaching a legal solution with Japan.

In light of the court ruling, the government will draw up its own comprehensive response, it added. (Yonhap News)

ICC: The road ahead

Evelyn Serrano of the Coalition for the International Criminal Court asked me to confirm my attendance in this year’s Assembly of State Parties of the ICC. I’ve attended many such assemblies in the past as a delegate of civil society, but never as a national of a state party. This year, the seat of the Philippines at the Assembly would no longer be empty as we are now a full pledged member of the Court. In fact, it promises to be a very hectic for the Philippine delegation with Senator Miriam Defensor-Santiago standing for election to be a Judge of the Court. Unfortunately, I could not readily confirm my attendance to the ASP since UP only pays for our transportation expense if we will deliver papers at conferences. Since the Assembly of State Parties is not an academic conference, there’s no way that I could turn to the university to shoulder my travel expenses. I hope the International Criminal Bar, which only recently received a substantial grant from the European Union, can include me in its official delegation.

Quite apart from Senator Santiago’s election, the task ahead for the Philippines as the Court’s most recent member appears to be gargantuan. While we have only recently enacted our own International Humanitarian Law which gives our courts primary jurisdiction over crimes falling under the jurisdiction of the ICC—to wit, war crimes, crimes against humanity, and genocide—we still have to promulgate a law against aggression after the definition of the said crime as the crime of waging war was adopted by the Assembly of State Parties last year. Beyond this, the Philippines is also obligated to facilitate cooperation with the Court in areas involving the ICC Prosecutor’s ability to conduct his own investigations within the country, should he want to; the ability of the court itself to sit and hold sessions in the Philippines; and cooperation in matters involving apprehension of individuals and procurement of evidence. Already, we have identified at the Institute of International Legal Studies of the UP Law Center a host of measures that Congress, the Department of Justice, and the Supreme Court will have to adopt to fulfill our state obligation to cooperate with the ICC.

For instance, the current rules on the conduct of preliminary investigation would have to be amended to provide the manner by which the ICC Prosecutor and his staff could conduct their own investigations in the country. An agency, most likely the DOJ, would have to be identified and tasked to cooperate with the ICC in this regard. The Supreme Court, likewise—since the ICC would be exercising judicial power in the Philippines, a first and I have to say, a possibility that I thought would not materialize—would have to amend its Rules of Court to provide the basis and the manner of the ICC sitting in session in our territory. The last time an international tribunal exercised jurisdiction in our country was the war crimes tribunal that convicted General Yamashita after World War II. The Philippine National Police and the National Bureau of Investigation will also have to shape up if they are to satisfy their obligation to cooperate with the ICC on the apprehension of individuals and the procurement of evidence. One positive result of our accession to the Rome Statute is the fact that whether they like it or not, our investigative agencies would now be constrained to modernize their capacity to enable them to cooperate with the Court.

But the biggest challenge, really, is to change the mindset of our countrymen that the commission of the most serious crimes against the international community, such as extralegal killings, torture and enforced disappearances, should be the subject of investigation, prosecution and punishment. In a country where a gunman could be hired for as little as P5 thousand, sometimes even less, the challenge is how to make the legal system work to ensure that all those who will commit these crimes will be punished. Full stop.

Even President Benigno Aquino III and all subsequent presidents should take heed that under our IHL Law and the Rome Statute, sitting presidents no longer have immunity for the commission of international crimes, a fact that Presidents Al-Bashir of Sudan and Muammar Gaddhafi only know too well.

Already, at least five journalists have been murdered under the Aquino administration, including my personal friend, Doc Gerry Ortega of Palawan. If PNoy should fail to prosecute and punish the perpetrators of these widespread killings, he himself may be the subject of a criminal prosecution under the principle of superior responsibility.

Unfortunately, the Court can only exercise its jurisdiction prospectively from November 1 of this year. This means that Gloria Macapagal Arroyo, Jovito Palparan, and the other notorious warlords of the country could not be held responsible for their acts before the ICC for acts committed prior to November 1 of this year. Hopefully, the fact that we are now under a positive obligation to reform our legal system to enable us to discharge the duty to cooperate will improve our own capacity to punish those whom we cannot try before the ICC.

As I ponder on the future of the Philippines as the latest member of the ICC, I look back to the 11 long years that took the Philippine Coalition for the ICC to finally convince the Philippines to be a member of the Court with melancholy and pride. Surely, though, we cannot afford to sit long on our laurels as the path ahead remains long and winding. Be as it may, the message has been sent: no more impunity!

NBN again?

When then-candidate Noynoy Aquino was courting the electorate, he vowed to annul the anomalous contracts of Arroyo and to hold her and her minions liable for their deeds. Primary of these sins was the scandal about the national broadband network contract with ZTE, which brought a little-known “Jun” Lozada into the limelight. It was Lozada’s foiled abduction and his contribution to modern lingo of “tongpats”, a moniker for pay-offs, that are best remembered of this scandal. Add to this the phrase “moderate your greed’ and what you have is a classic case study on how the past administration raided the public coffers for their purely private interests. The NBN-ZTE scandal, together with election fraud arising from the “Hello Garci” controversy, would also be mainstays in three impeachment complaints which I filed on behalf of civil society against then-President Gloria Macapagal-Arroyo. Two of these complaints were to be endorsed by then-Rep. and now President Aquino.

But what a difference a year and a half could make. Now that PNoy has been in power, not only has he failed to file even a single case in court against Arroyo. He also now appears to have “legitimized” some of these anomalous contracts, notably the national broadband network scandal. While he affixed his signature in the past on two impeachment complaints, alleging that Arroyo was liable to be impeached for her complacency in approving the NBN-ZTE contract despite her knowledge of bribery that attended the approval of the project, PNoy today is resurrecting the same dirty project and adopting it as his own.

The justification is that unlike Arroyo, President Aquino will not allow an overprice of the project to enable the project proponent to make pay-offs to government officials. This presupposes that the only objection against the NBN-ZTE is the mater of the “tongpats”. Nothing can be farther from the truth!

What PNoy has again completely forgotten, in addition to the fact that we had more than ample evidence to prove election fraud in the three impeachment complaints sans the self-serving and hearsay declarations of Zaldy Ampatuan, is that the overprice of the NBN-ZTE project was only one reason why it was infirmed. There were other equally important infirmities of the contract, primary of which is that observed by CCM’s co-convenor, the late Josie Lichauco, herself a former Secretary of the DOTC.

Lichauco testified in the Senate that our telecoms law and the e-commerce act prohibit government from competing with the private sector in e-commerce infrastructure projects. Furthermore, as observed by the UP School of Economics, the establishment of a national broadband network was by itself not feasible, since government will simply not be in a position to catch up with developments in the IT sector. It even remarked that by the time the network is set-up, the technology availed of would already be obsolete. Hence, while the overprice made the controversy colorful—especially since there were whistleblowers, Jun Lozada and Joey de Venecia, the original objections to the project revolved around its legality and its feasibility. How dare now this Secretary Mario Montejo resurrect a patently illegal project? The bigger question is: How could PNoy have forgotten so soon?

Part of the problem is Mr. Aquino’s reliance on either recycled figures from the Arroyo administration or his appointment of people like Montejo who did not take a stand against evil in the past dispensation. Not having risked life and limbs against an evil regime, it is indeed very easy for the likes of Montejo to literally forget the past.


I was in the Supreme Court Tuesday for the oral arguments in the case to retrain the reclamation for an expanded jetty port in Caticlan. At the end of the oral arguments, I was conferring with Solicitor -General Jose Anselmo Cadiz when he received a telephone call confirming if the Court had in fact restrained the process of choosing officers-in-charge for the Autonomous Region in Muslim Mindanao. While the SolGen himself had no comment on the now-confirmed temporary restraining order, PNoy’s miscommunication agent said a mouthful (again) against the Court.

While I have been critical of the Arroyo-appointed appointed Corona court, particularly on the issue of the legality of the appointment of Chief Justice Renato Corona, I think the administration cannot blame the composition of the Court for all of its legal setbacks. Even non-lawyers should know that while the Court has not ruled on the legality of the postponement of the ARMM elections, the Executive should at the very least, show courtesy to a co-equal branch and not proceed as if it had already won in the unresolved case. And certainly, proceeding with the process of choosing OIC’s in the ARMM assumes that a decision in Malacañang’s favor is already in the bag.

Apparently, the miscommunication agents in Malacañang and the small-time politico in the Department of the Interior and Local Government have no appreciation that those who took a stand against an Arroyo-dominated Judiciary did so because of the conviction that the Judiciary, as the guardian of the Constitution, should be truly independent and free from partisan politics. But apparently, by conducting themselves in a manner as if they are privy to how the Court will decide in an unresolved case, PNoy’s minions are now proving that they are no different from PGMA’s cronies. This is truly sad.


Thanks to Julian Assange, we have today the benefits of WikiLeaks. This is an anti-secrecy campaign that has enabled the public to read confidential cables on various topics sent by American diplomats to their home office in Washington, DC. While the American position is not to comment on the substance of these cables, the fact that they have branded Assange as a terrorist of sorts for releasing them indicates that we’re looking at a genuine breach of diplomatic inviolability albeit facilitated apparently by American nationals. This is why we should take these “leaks” rather seriously. They are reflective of American policies and as records of facts duly reported by American diplomatic personnel to their home office.
Of these many cables, three recently released ones caught my attention. The most recent is about how then-President Gloria Macapagal-Arroyo, upon the prodding of her National Security Adviser Norberto Gonzales, considered the declaration of martial law as a result of the “Hello Garci” controversy. This confirms what we, in the anti-Arroyo movement (which unfortunately have become rare in the Aquino administration) have thought all along: that Mrs. Arroyo will do anything and everything in order to stay in power. The report indicated that Arroyo gave an American diplomatic personnel a “defiant stare” when told that the US will not support such a declaration. This also confirms that as part of her “stay-in-office-at-all-costs” policy, she ceased courting the support of the United States to bolster her legitimacy. The fact that she would later enter into very strong relationship with rival China to the point of sacrificing our national territory is evidence of a clear intent to play the China card as a means of counter-balancing the critical views of Uncle Sam.

And yes, “Hello Garci” will simply not go away. The more we are reminded of it, the more we realize what a farce the Arroyo administration truly was. Imagine, nine years of the presidency without a popular and a legal mandate! Worse is that apparently, we have not learned from it. The same individuals who sang, “they will stand together” with Arroyo continue to be in power, wreaking havoc on various aspects of our national life from the disbursement of huge taxpayers money in aid of 2013 elections to disrupting peace and order. At least some of them have already had the decency to resign when confronted with the fact of obvious incompetence. But most of them remain in positions of power and influence, as if their support for a fake president is a commendation in their résumés rather than a condemnation.

The second release that caught my attention was the one detailing a dinner conversation with Michael Mastura, Steven Rood, and Michael Pignatelo, among others. There, the MILF warned that they could “Balkanize” Mindanao, as if it hasn’t happened yet. Actually, in the words of Dr JP Baraybar, a respected forensics expert, Mindanao was more like “Rwanda” than the Balkans. Mastura was also quoted as saying that P-Noy does not “understand the complexities of the situation”, a fact which they apparently exploited when they successfully met with him in Tokyo only recently. And while our own peace negotiators boasted, soon after the Tokyo meeting, that the “MILF has given up on secession,” it is still clear from the cable that the MILF was firm in its demand for a “sub-state or a federated state” which Rood said would require a constitutional amendment.

Hence, it was very clear at the onset that the MILF knew that what it wanted was precisely something that required tinkering with the 1987 Constitution. This was why the Supreme Court declared the previous memorandum of agreement on ancestral domain as being unconstitutional in the first place. Another dinner participant was further quoted as pleading to the Americans: “Listen to how we feel x x x The Filipinos are the rulers, and we (Moros) are slaves. It is a lopsided relationship.” The cable ended with assurances of continuing US involvement in the peace process pursuant to a US Institute of Peace program. What exactly this program is will be the subject of my research within the week.

Finally, there is of course the infamous assessment made by the former US Ambassador Kristie Kenney that former President Corazon Aquino was somehow “tarnished”. Much has already been said about this particular cable. I will no longer contribute to the very long list of condemnations. But perhaps, we should learn our lesson: that is, never trust an American diplomat engaged in a charm campaign. They could be saying very nasty things about our national heroes behind our backs.

Meanwhile, on Assange himself, I was told that while he has been successful at delaying his extradition to Sweden to face trial for so-called “unconsented unprotected sex” which to the Swedes is a form of rape, the inevitable deportation will still happen. Let’s hope that when this happens, the Swedes will not ship him out across the Atlantic to the US where he will certainly be sent to Guantanamo and be treated as a world-class terrorist. If you ask me, given the quality of the cables being released, the world does owe him a heap of gratitude.

Freedoms and the Spratlys

I’m still abroad as I write this column. I am currently in Bangkok, Thailand doing a training on freedom of expression for Burmese, Laotian, and Cambodian lawyers. It is a bit of an irony that while I am training members of civil society in Southeast Asia on the value of this freedom in creating a free marketplace of ideas, I had also just come from China where I had first hand experience on the Chinese “great wall”, that is, a successful effort on the part of authorities in Beijing to insulate their people from information derived from sources such as Facebook, Twitter, and even Skype!
It is amazing that while the world has already acknowledged the value of ideas in formulating solutions to problems in modern-day societies, some states, including China, Burma, Laos, Cambodia and Vietnam have still been successful at curtailing the full development of the marketplace of ideas. The Internet used to defy these efforts as in fact; its developers envisioned it to be literally a superhighway of information. But China is evidence that even this superhighway may be interfered with. Aside from successfully filtering these hugely popular social networking sites, it has also successfully filtered sites that authorities may have felt were ”unfriendly”. Unfortunately, I found out that one such unfriendly site is my own blog, which I could not access when I was in Beijing. I could only surmise that my entries on the West Philippine Sea, my many entries on freedom of expression, and perhaps pieces I have written on anomalous Chinese contracts such as NBN-ZTE and Northrail may have something to do with the fact that 300 million Chinese Internet users, equivalent to the population of the United States, could not access my blog. How I wish there could be an appeals mechanism for banned blogs in societies such as China as I cannot help but speculate on how much more hits my blog would have had it not been banned in China.

It was also interesting to attend a conference in China on international law that featured one, and only one panelist on the Spratlys islands dispute. Prof. Robert Beckman, Director of the Center of International Law of the National University of Singapore presented the thesis that there has been a remarkable shift in the position of some of the claimant countries to the Spratlys as a result of recent in initiatives from Vietnam and the Philippines redefining their baselines on the basis of base points and baselines drawn pursuant to the provisions of the United Nations Convention on the Law of the Seas. While I have been firm in my position that it would not be in the Philippines’ national interest to utilize these optional base points and baselines — since it would mean the loss of tremendous internal waters and territorial waters subject to full Philippine sovereignty in favor of an Exclusive Economic Zone where we could only exercise the exclusive right to explore and exploit resources found thereat —Beckman was rather convincing when he argued that at least China is now alone as a renegade in the region as far as the UNCLOS is concerned. Where I differed profoundly from him is his assertion that the Treaty of Paris could not be used as basis for claiming Philippine territorial seas since the Americans only intended it as delimitation on land boundaries. This is the classic American position belied by the language of the Treaty of Paris itself when it said that the cession involves an “archipelago”. My own son’s grade three textbook on social studies defines an archipelago as a “group of islands surrounded by water”. How could the Americans then claim that what they acquired from Spain was only land territory when what it allegedly purchased from Spain was an “archipelago?

It was even more interesting to see how Chinese international lawyers reacted to the issue. One senior academic took the floor after Beckman discussed his paper and was shaking out of anger at the thought that any one would question Chinese sovereignty over the Nansha islands. One female academic from Shanghai did clarify that the nine dash lines that China had made public only in 2009 was not a delimitation line. This was a source of relief since in the absence of clarification from China, the said lines could be read as delimiting the scope and breadth of Chinese territorial sea in the disputed South China Sea, thereby depriving us even of a 12-nautical-mile territorial sea in the West Philippine Sea. Unfortunately, though, despite the opinion of the academic from China, we still do not know for sure what China is claiming pursuant to these lines.

Back to Bangkok, meanwhile, it is inspiring to know that while despotic regimes thrive in many parts of Southeast Asia, more and more individuals have opted to take an uncompromising stand in favor of democracy and freedom. We have lawyers from Laos, Burma, and Cambodia expressing the view that human rights are inalienable. Many of them in fact are in search of international remedies to address the failure of their governments to protect and promote these rights, most specially that of freedom of expression. And yes, it is a source of pride that through the Center for International Law, we have pioneered in using these international mechanisms to promote human rights in the Philippines and the rest of Southeast Asia. Given the passion and perseverance exhibited by the participants in these training sessions on freedom of expression, I make the brave prediction that despots in the region are now in peril and that their days are numbered.