Sunday, September 30, 2012



Elite and Deft, Xi Aimed High Early in China

Sim Chi Yin for The New York Times
The Rongguofu mansion in Zhengding, part of a profitable film enterprise that Xi Jinping promoted during his tenure as party secretary in the village.
Published: September 29, 2012
ZHENGDING County, China — Thirty years ago, a young government official with a plum job in Beijing made an odd request: reassignment to a poor rural area.

Changing of the Guard

Articles in this series are examining the implications for China and the rest of the world of the coming changes in the leadership of the Chinese Communist Party.
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Xie Huanchi/Xinhua, via Associated Press
Xi Jinping
At the time, millions of young people were still clawing their way back to China’s urban centers after being exiled to the countryside in the Mao era. But 30-year-old Xi Jinpingbucked the trend, giving up a secure post as adviser to a top military leader to navigate the tumultuous village politics of Zhengding, in Hebei Province.
The move offers a window on the political savvy of Mr. Xi, who, despite a recent two-week absence from public view that raised questions about his health, is on the cusp of taking over as China’s supreme leader at a party congress that officials announced Friday would begin Nov. 8.
Mr. Xi (his full name is pronounced Shee Jin-ping) gained a measure of credibility to speak for rural Chinese compared with many other well-connected children of the elite. He also realized, according to several inside accounts, that his powerful family stood firmly behind him, ensuring that his stint in the countryside would be a productive and relatively brief exercise in résumé building that could propel him up the Communist Party hierarchy.
His powerful father, Xi Zhongxun, a revolutionary-era military leader, helped orchestrate his transfer, selecting Zhengding because of its relative proximity to Beijing, and later having Mr. Xi reassigned when he ran into local opposition, Chinese experts who have researched Mr. Xi’s background said.
His connections allowed him to take chances in Zhengding. He pushed through market-oriented reforms when they were still considered cutting edge, and sidelined pro-Maoists. His stint in the countryside also helped him form new alliances with other offspring of the elite who would later prove important allies.
Even three decades into the country’s rapid industrialization, China’s leadership still pays heed to its heritage as a party of peasants, and it has tended to promote officials who can claim to be deeply rooted in the rural struggle. But it has also tended to favor “princelings,” the privileged offspring of former leaders who had ties to the party’s revolutionary history.
After his time in Zhengding, Mr. Xi could check both boxes.
“People think of him as being from the new generation of technocrats,” says Jin Zhong, a Hong Kong-based analyst of Chinese political leaders. “But he’s really a continuation of the red bureaucracy of his father’s generation.”
Mr. Xi’s trajectory was similar to that of Bo Xilai, another princeling who used stints in the provinces to create an image of a bold reformer and champion of the poor before his career was derailed by a major scandal this year. Mr. Xi’s stay in Zhengding, however, was characteristically more cautious, even as parts of it have entered modern Chinese political lore.
When Mr. Xi volunteered for rural duty in 1982, he did so along with two other up-and-coming officials, including Liu Yuan, son of the former head of state under Mao, Liu Shaoqi.
The men’s decision to work at the grass roots caught the popular imagination after the author Ke Yunlu wrote a 1986 novel, “New Star,” about a party secretary who takes modern, market ideas to a backward province. The official meets many troubles but manages to triumph.
The novel’s hero was a composite character based on Mr. Xi and the other two young officials. The book was soon made into a popular television series and is still widely known as a classic of that early reform era.
What Mr. Xi found in Zhengding was less romantic than the novel. He had hoped to be a party secretary with direct authority over a town or county but the conservative provincial party secretary, Gao Yang, blocked that. Disgusted by inexperienced but well-connected princelings like Mr. Xi parachuting into his domain, Mr. Gao made him deputy party secretary of Zhengding.
Still, Mr. Xi took on the assignment with gusto. He wore a green army greatcoat from his involuntary service in another rural area under Mao, roaming the town night and day to survey its problems. Wang Youhui, a local official, wrote in a published essay that he recalls seeing Mr. Xi for the first time and being taken aback by his plain style.
“I realized that this guy, who from his style of dress made him look like a lad from the canteen crew, was the new deputy party secretary,” Mr. Wang wrote.
Mr. Xi’s biggest challenge was managing the county’s roads, which were part of national north-south arteries. They were so bad — strewn with manure, dirt and grain left out to dry — that the county was labeled in government reports as “chaotic, dirty and backward.”
Sim Chi Yin for The New York Times
Chinese chess in a town built in the Qing dynasty style in Zhengding, a project of Mr. Xi’s.

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Mr. Xi took firm action. According to internal government histories, he held mandatory classes for 43,200 people — 10 percent of the county’s population — on how the roads should be handled. As a member of the county’s Politics and Law Committee he also helped lead a draconian crackdown on crime, part of a nationwide attack on “Spiritual Pollution.”
The county began holding show trials of criminals through the summer and autumn of 1983, according to these government accounts. Four people were executed in public on one occasion.
Later in 1983, Mr. Xi was promoted to party secretary and kept a firm hand on social issues. Under his leadership the local government strictly enforced the national one-child policy. According to internal government documents, the county sterilized 31,000 women and fit another 30,000 with intrauterine contraceptive devices.
Like the crime campaign, the family planning measures were part of a national policy and there is no evidence that Mr. Xi was more zealous than others. But it illustrates a truism for successful Chinese leaders — that social issues have to be dealt with firmly to create political space for market-opening economic measures.
It was in economics as well as personal connections that Mr. Xi stood out.
Zhengding was a grain-growing center, with peasants forced to grow huge amounts for central granaries. Mr. Xi formed a clever alliance with Maoists and used his family ties in Beijing to cut Zhengding’s grain quota by one-quarter. That freed up farmers to use their land more lucratively, such as for raising fish, geese or cattle.
Mr. Xi caused even more of a stir in Zhengding when he tried to make it a center of television filming. State television was filming the classic novel “Dream of Red Mansions,” which is set in a palace and surrounding grounds. Crews had already built an enormous replica of the park in Beijing. But Mr. Xi used his political connections to get the mansion built in Zhengding, meaning the cast had to travel six hours to Zhengding to shoot indoor scenes.
Despite local opposition, Mr. Xi pushed through a plan to spend three times the original amount in a bid to make the set permanent.
The story of building the television studio is now firmly part of Mr. Xi’s official lore, touted as an example of his visionary economic leadership. In justifying the costs, he said it would help create a tourist attraction, and for many years it was popular because the television series was a huge hit. Several other shows were also filmed there in the 1980s and early 1990s. But what is rarely mentioned is that the Rongguofu mansion now gets few visitors and has not been used as a set for 20 years. It also spawned two spinoffs in Zhengding that are bankrupt, with one torn down and the other shuttered.
Despite his clout, and unlike the character in the novel “New Star,” Mr. Xi was not able to vanquish all his enemies.
He was never promoted beyond county chief. He was blocked, local residents and biographers say, by Mr. Gao, the provincial party secretary. According to Hu Lili, one of the authors of a new biography published by Mirror Books, Mr. Xi’s family decided that three years in Zhengding was enough. In 1985 his father arranged to have him transferred to China’s wealthier and more reform-minded coast, where he served under a more sympathetic party chief with ties to his father.
Yet the time in Zhengding helped Mr. Xi hone his skills, setting a template for his rise. It also cemented his bond with Liu Yuan, who is now a senior leader in the People’s Liberation Army. He also made an ally in Li Zhanshu, who was a local official in Hebei at the same time as Mr. Xi. Mr. Li has now been tapped to take over the party’s nerve center, its General Office.
“You can’t separate his accomplishments from his political support,” said Yang Zhongmei, a Xi biographer and lecturer at Yokohama City University. “This is the model you see today: if you have enough political support and money, you can accomplish a lot.”

Saturday, September 29, 2012

Revealed: Army scientists secretly sprayed St Louis with 'radioactive' particles for YEARS to test chemical warfare technology


Revealed: Army scientists secretly sprayed St Louis with 'radioactive' particles for YEARS to test chemical warfare technology

By Emily Anne Epstein
PUBLISHED:09:16 EST, 29 September 2012
The United States Military conducted top secret experiments on the citizens of St. Louis, Missouri, for years, exposing them to radioactive compounds, a researcher has claimed.
While it was known that the government sprayed 'harmless' zinc cadmium silfide particles over the general population in St Louis, Professor Lisa Martino-Taylor, a sociologist at St. Louis Community College, claims that a radioactive additive was also mixed with the compound.
She has accrued detailed descriptions as well as photographs of the spraying which exposed the unwitting public, predominantly in low-income and minority communities, to radioactive particles.
Scroll down for video
Test: Sociologist Lisa Martino-Taylor, right, a sociologist at St. Louis Community College, has spent years tracking down declassified documents to uncover the lengths which the US experimented on people without their knowing. At left, cadmium sulfide, the 'harmless' chemical sprayed on the public is pictured
Spray: She has accrued detailed descriptions as well as photographs of the spraying, which took place as part of Manhattan-Rochester Coalition, which was an operation that dispersed zinc cadmium silfide particles over the general population, a compound that was presented as completely safe
'The study was secretive for reason. They didn't have volunteers stepping up and saying yeah, I'll breathe zinc cadmium sulfide with radioactive particles,' said Professor Martino-Taylor to KSDK.
Through her research, she found photographs of how the particles were distributed from 1953-1954 and 1963-1965.
In Corpus Christi, the chemical was dropped from airplanes over large swathes of city. In St Louis, the Army put chemical sprayers on buildings, like schools and public housing projects, and mounted them in station wagons for mobile use.
Despite the extent of the experiment, local politicians were not notified about the content of the testing. The people of St Louis were told that the Army was testing smoke screens to protect cities from a Russian attack.
'It was pretty shocking. The level of duplicity and secrecy. Clearly they went to great lengths to deceive people,' Professor Martino-Taylor said.
Controversial: But Professor Martino-Taylor says that it wasn't just the 'harmless' compound, radioactive particles were also sprayed on the unwitting public. A woman refills the spray canisters in this archive picture
Scope: In St Louis, the Army put chemical sprayers on buildings, like schools and public housing projects, and mounted them in station wagons for mobile use
She accrued hundreds of pages of declassified information, which she has made available online.
In her research, she found that the greatest concentration of spraying in St Louis was at the Pruitt-Igoe public housing complex, which was home to 10,000 low income residents. She said that 70 per cent of those residents were children under the age of 12.
Professor Martino-Taylor became interested in the topic after hearing independent reports of cancers among city residents living in those areas at the time.
'This was a violation of all medical ethics, all international codes, and the military's own policy at that time,' said Professor Martino-Taylor.
How To: Despite the extent of the experiment, local politicians were not notified about the content of the testing. In this picture, a man demonstrates how to spray the canisters
How To: Despite the extent of the experiment, local politicians were not notified about the content of the testing. In this picture, a man demonstrates how to spray the canisters
School: The people of St Louis were told that the Army was testing smoke screens to protect cities from a Russian attack. A canister is positioned on top of a school in this photo
'There is a lot of evidence that shows people in St. Louis and the city, in particular minority communities, were subjected to military testing that was connected to a larger radiological weapons testing project.'
Previous investigations of the compound were rebuffed by the military, which insisted it was safe.
However, Professor Martino-Taylor believes the documents she's uncovered, prove the zinc cadmium silfide was also mixed with radioactive particles.
She has linked the St Louis testing to a now-defunct company called US Radium. The controversial company came under fire, and numerous lawsuits, after several of its workers were exposed to dangerous levels of radioactive materials in its fluorescent paint.
Contaminated: The Army has admitted that it added a fluorescent substance to the 'harmless' compound, but whether or not the additive was radioactive remains classified
Exposed: In her research, she found that the greatest concentration of spraying in St Louis was at the Pruit-Igoe public housing complex, which was home to 10,000 low income residents. She said that 70 per cent of those residents were children under the age of 12
'US Radium had this reputation where they had been found legally liable for producing a radioactive powdered paint that killed many young women who painted fluorescent watch tiles,' said Professor Martino-Taylor.
In her findings, one of the compounds that was sprayed upon the public was called 'FP2266', according to the army's documents, and was manufactured by US Radium. The compound, also known as Radium 226, was the same one that killed and sickened many of the US Radium workers.
The Army has admitted that it added a fluorescent substance to the 'harmless' compound, but whether or not the additive was radioactive remains classified.
Professor Martino-Taylor has not been able to find if the Army ever followed up on the long term health of the residents exposed to the compound. In 1972, the government destroyed the Pruitt-Igoe houses.
Upon learning of the professor's findings, Missouri lawmakers called on the Army to detail the tests.
'I share and understand the renewed anxiety of members of the St. Louis communities that were exposed to the spraying of (the chemicals) as part of Army tests during the Cold War,' Senator Claire McCaskill wrote to Army Secretary John McHugh.
'The impacted communities were not informed of the tests at the time and are reasonably anxious about the long term health impacts the tests may have had on those exposed to the airborne chemicals.'
Senator Roy Blunt called the findings 'absolutely shocking.'
'The idea that thousands of Missourians were unwillingly exposed to harmful materials in order to determine their health effects is absolutely shocking. It should come as no surprise that these individuals and their families are demanding answers of government officials,' Senator Blunt said.

The weaknesses of 'national security'

The weaknesses of 'national security'
By Dallas Darling

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing.

It has become common to argue that appeasing Adolf Hitler and the Nazi Third Reich was a major cause for the slaughter that occurred during World War II. Absent from this argument, however, is that Hitler's and the Nazi Third Reich's "security through superiority" doctrine was their undoing and led to their devastating, including the military occupation of their nation.

Government leaders typically argue that their prime responsibility is the maintenance of national security. They do so by propagating the "security through superiority" doctrine. It is an

ideology that is often invoked but rarely scrutinized. It is easy and all to simplistic to equate strength with military power and safety. Vulnerability and weakness, or small militaries, are usually derided and associated with danger and insecurity. [1]

Fearing to be viewed as too weak, too appeasing, too easily pushed around, some government leaders are prone to build and maintain large land and sea armies. They either spend enormous resources on developing massive and deadly weapons systems, or at least try and purchase them. These same government officials are usually prone to use threats of military force in efforts to coerce or bully opponents.

Strong and superior national security states appear more belligerent and more likely to initiate conflicts and wars than vulnerable national security states that pursue political, diplomatic, and more peaceful-oriented strategies. Powerful and overbearing national security states misinterpret their opponents actions, imagine fears and threats, justify their actions, and pursue "any means necessary" to prevent embarrassing mistakes.

Strong national security states have to distort geopolitical processes and history while devouring their own. For decades, the US has declared that "any attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States". In hindsight, Persian Gulf nations merely wanted to develop petroleum resources to improve their economies and societies.

The US justified a superior national security state, expanded its military presence around the world, and even committed genocidal policies against more weaker and vulnerable nations, like Vietnam, to prevent the supposed spread of communism and due to the Domino Theory. While the Domino Theory never transpired, communism was not always spread by steel but popular, democratic movements.

Strong national security states increase international tensions, making their nation and the world less secure. They project hostility, aggressiveness, and belligerency onto more vulnerable countries. Cuba's communists never did launch an assault against the US - but the US did attempt to invade Cuba. Neither did the Sandinistas invade or bomb the US as the Reagan Administration propagated. But the US did attack and bomb Nicaragua.

The John F Kennedy administration constantly verbalized a "missile gap" theory. What this really meant was a massive increase of nuclear-biological-chemical weapons that led to the illogical Mutually Assured Destruction (MAD) doctrine. The Ronald Reagan administration, along with those that followed, argued for a "margin of safety". This actually meant superiority through military strength. The George W Bush administration's ill-fated preemptive wars in Iraq and Afghanistan revealed a kind of "absolute" national security.

But like the Third Reich, a strong absolute national security state and its "security through superiority" doctrine is having a devastating impact on the US In retrospection, a more stronger national security would have sought diplomacy, appeasement, accommodation, and would have trusted other nations to help bring to justice those responsible for September 11. Real superiority would have meant pursuing a policy of patience and "smart" power.

In the great majority of species, conflict between two animals of the same kind almost invariably stops short of slaughter. The fight continues until one of the combatants gives in and retreats, or appeases, the other combatant. The jackdaw will offer the vulnerable back of his skull to the beak of his attacker. An appeasing wolf will avert his head and present his jugular vein to his assailant's teeth.

A submissive rat will roll over and expose his soft underbelly to the victor. A turkey will acknowledges defeat by stretching its neck out. Some animals will utterly stop fighting, signaling a peaceful compromise and truce. [2] Still yet, and even in hierarchical orders, alpha-leaders will not fight to their death. Instead, they carefully and cautiously choose their battles. These instincts help them survive and to save their strength.

Animals practice a "balance of power", more so than humans. Unlike animal kingdoms, human kingdoms are more likely to commit massacres and engage in genocidal wars. In the 20th century, and with reference to World War I, World War II, and the Cold War, tens of millions of humans were killed and slaughtered. Such extreme national security and violent aggression would have caused mass extinction among many animal species.

To prevent more regional human-like extinction, perhaps its time to scrutinize major national security states that practice security through "military" superiority. Again, real national security may be better realized through diplomatic, peaceful, and other more "vulnerable", overtures. Superiority through strength might be realized by trusting other nations and being susceptible to the ideals of appeasement and smaller militaries.

Dallas Darling is the author of Politics 501: An A-Z Reading on Conscientious Political Thought and Action, Some Nations Above God: 52 Weekly Reflections On Modern-Day Imperialism, Militarism, And Consumerism in the Context of John's Apocalyptic Vision, and The Other Side Of Christianity: Reflections on Faith, Politics, Spirituality, History, and Peace. He is a correspondent for You can read more of Dallas' writings at and

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing. Articles submitted for this section allow our readers to express their opinions and do not necessarily meet the same editorial standards of Asia Times Online's regular contributors.

(Copyright 2012 Dallas Darling)

US 'pivots' on the Philippines

US 'pivots' on the Philippines
By Richard Javad Heydarian

MANILA - With tensions intensifying between China and Japan over contested islands and reefs in the East China Sea, the Philippines is exploiting the distraction to push its claims vis-a-vis China in the South China Sea, via a controversial and potentially destabilizing administrative order.

On September 5, Philippine President Benigno Aquino issued Administrative Order 29, which officially renames the South China Sea as the West Philippine Sea on national maps. After making the executive order, he notably failed days later to meet Chinese President Hu Jintao on the sidelines of the recent Asia Pacific Economic Cooperation (APEC) meeting held in Russia.

The controversial order, which will be submitted to the United Nations, aims to firm up Manila's claims to disputed maritime


territories lying within its Exclusive Economic Zone (EEZ), including over the hotly contested Scarborough Shoal. Chinese and Philippine military vessels squared off over the disputed outcropping for several weeks earlier this year.

Aquino justified the action by saying "it is important to clarify which portions we claim as ours versus the entirety of the South China Sea." At the same time, he expressed hopes for "a dialogue [with China] where we can have a heart-to-heart talk and share our thoughts in total honesty and openness".

China's Foreign Ministry swiftly dismissed the order, saying in a statement that "China claims indisputable sovereignty over islands in the South China Sea." Invoking Beijing's wide-ranging nine-dash map of its claimed territories over the maritime area, those claims include areas within the Philippines' 200-mile EEZ.

The Philippines' growing assertiveness in the face of veiled Chinese threats is more than a calculated strategy to push claims while China is preoccupied with a potentially more volatile dispute with Japan. Rather, Manila's emboldened position banks on expected United States' assistance in the event heated rhetoric boils over into armed confrontation.

Outmanned, outgunned
In terms of military expenditures, China's spending on naval capacities dwarves that of other claimants in South China Sea. While the Philippines' decrepit and under-equipped armed forces subsists on annual expenditures of around US$1.5 billion (ranking 59th in the world), China is the world's second-largest military spender with a scheduled annual budget of $129 billion in 2015.

Much of that spending is focused on the country's fast expanding naval capabilities, including ramped up "anti-access" and "blue water" capabilities. Many strategic analysts contend that China's official military expenditure is grossly understated to avoid panic among its lesser armed Southeast Asian neighbors.

The Philippines' acute military weakness is a reflection of many factors, including an excessive strategic orientation towards internal threats such as insurgency and terrorism, chronic under-investment in military modernization, high levels of official corruption in military procurements, and a heavy strategic reliance on treaty allies such as the US.

Two decades after the closure of American bases in the country, the Philippines has failed to establish even a minimum deterrence capability. When faced with Chinese incursions in 1995 at Mischief Reef, Manila had no choice but to rely on moral suasion and regional multilateral mediation. Over the next decade-and-a-half, Manila's foreign policy with Beijing focused on diplomacy and trade to avoid any territorial confrontation.

That changed in 2010 when China stepped up its paramilitary and military activities in adjacent waters, pressing its territorial claims with a new sense of vigor and destiny. To many Southeast Asian states, those military moves marked the end of China's two-decade long "charm-offensive", where its diplomacy focused on economic aid and exchange, and the beginning of rising territorial tensions in both the South and East China Seas.

"The situation is made more complex with China's navy becoming more influential within the internal power equation in China, using the territorial issue as a springboard to legitimize their rising influence within the establishment," says prominent Filipino intellectual and legislator Walden Bello. "There is a new sense of China in the region. In the past, it was seen as a big and influential neighbor, focused on internal development with low profile external posturing. But now we are entering a 'post-Deng Xiaoping' era of greater assertiveness, whereby you have a big neighbor that is laying claim to the whole South China Sea."

Enter Uncle Sam
The Philippines is arguably at the center of the US's declared "pivot" policy towards Asia. Already zeroed in on Asia's booming markets as an antidote to its flailing domestic economy, and seemingly aware of its strategic over-extension in the Middle East, the US has returned to the region in force to counterbalance China's rising power and influence.

Rhetorically the pivot's accent has been on benign issues such as trade, investment and economic integration. But strategic analysts believe the policy is a clear attempt to draw lines against heightened Chinese assertiveness and preserve America's national interest in freedom of navigation in economically important Asian waterways.

"You are talking about a US that understands it is overstretched in its commitments in the Eurasian region. However, on the question of the pivot to Asia, a large part of US interest in the region is centered on China," says Herman Kraft, former director of the Manila-based Institute for Strategic and Developmental Studies (ISDS). "In one sense it is a logical rebalancing. But the primary push in pivot to Asia is strategic competition with China."

Frontline treaty allies like the Philippines and Japan have been among the most vocal proponents of a stronger American presence in the region, legitimizing Washington's long-time claim to serve as the Pacific's "anchor of stability and prosperity." China's recent actions, fueled in part by growing popular nationalism, have pushed a new convergence of American and its Asian treaty allies' strategic interests.

Whether that convergence fosters stability or stokes confrontation is yet to be seen. When US allies such as the Philippines openly called for enhanced military relations and defense cooperation to counterbalance China, a flustered Beijing has responded with even greater assertiveness in recent months.

"Ironically in its attempt to avoid strategic encirclement, China has - through its increasingly aggressive posture - legitimized the US's pivot to Asia, which is obviously to contain Beijing," says Bello.

Crucial node
True to its historical role as an American colony, the Philippines is emerging as a crucial node in America's "pivot".

Subic and Clark, the former site of the US's largest overseas military bases, are expected to play a key role in the implementation of the US's new strategic policy. Although there is an explicit constitutional prohibition against the establishment of permanent US bases in the Philippines, Manila has recently expressed its willingness to host an increased "rotational" US presence at the bases.

In June, Defense Undersecretary for defense affairs Honorio Azcueta said, "They can come here provided they have prior coordination from the government." Manila has recently welcomed US warships and fighter planes to enhance the two sides' interoperability. The US is set to deploy its most advanced jets and warships to the region, including the EA-18G fighter plane which is capable of flying faster than the speed of sound and is geared to jam enemy air defense capabilities.

Washington has said it intends to deploy 60% of its surface ships to the region, amounting to six aircraft carriers and the majority of its submarines, littoral combat ships and destroyers. It has already reportedly deployed 60% of its aircraft carrier battle groups and nuclear submarines to the region.

Despite growing fiscal challenges, Washington recently tripled its Foreign Military Fund (FMF) allocation to the Philippines, from $11.9 million to $30 million. Apart from selling two Coast Guard Cutters to the Philippines, Washington has also apparently agreed to provide Manila with the P-3 Orion, the US Navy's frontline maritime patrol aircraft. The US has also recently deployed the USS North Carolina nuclear submarine to Subic, a move met by increased Chinese naval activity in nearly waters.

In April, the US and Philippines conducted their annual joint Balikatan (Shoulder-to-Shoulder) exercises with notable modifications. The site of the exercises was shifted to an area nearer to the disputed maritime territories off the coast of Palawan); the number of United States Air Force trainers was double the size of the Armed Forces of the Philippines trainees; and, the mission was primarily focused on enhancing combined planning, readiness and interoperability, including for sea-based operations. All of these efforts came under US's expressed commitment to enhance Manila's "minimum credible defense posture".

In that direction, reports revealed last month that the US intends to install a second land-based early detection radar system against ballistic missiles, known as X-Band 2, in Japan. The US has claimed the radar is aimed against the threat of North Korea, but strategic analysts view the installation as part of an emerging wider regional missile defense shield against China's growing anti-access and ballistic missile capabilities.

Those same analysts believe that the Philippines could be a primary site for expanding such a defensive arc into Southeast Asia. The US is known to have concerns about China's ability to target with ballistic missiles US forces based on the Pacific island of Guam, making the installation of X-Band radar in the Philippines a potential frontline strategic priority.

Fiscal, geopolitical realities
That said, there are several considerable constraints against a full and credible American "pivot" towards Asia. Manila and other Asian allies are now anxiously evaluating the extent of American assistance they can expect to receive should tensions with China flare up into armed conflict.

With an anemic economic recovery and constant bipartisan wrangling over fiscal and debt legislation, the US Pentagon now faces across-the-board budget cuts to the tune of $500 billion. America's weak fiscal position could thus badly undermine its ability to redeploy forces to the Asia-Pacific.

Treaty allies such as the Philippines are already complaining about their small absolute and relative share of FMF allocations. Despite a recently tripling of Manila's allocation, the Philippines' share of FMF earmarked for East Asia is half the amount it received in 2006.

"We hope this is not indicative of the priority placed on the Philippines as a regional partner, as even non-treaty allies appear to be getting a bigger share of the FMF allocation," lamented Philippine Foreign Secretary Albert del Rosario in recent public comments.

The interpretation of the US-Philippine 1951 Mutual Defense Treaty is a thornier issue. Unlike previous US administrations, including the Jimmy Carter and Bill Clinton administrations, Barack Obama's government has yet to explicitly affirm its commitment to come to the Philippines' defense over contested maritime territories. Some analysts believe Aquino pushed through the recent Western Philippine Sea order to compel Washington to take a stronger public stand on the issue.

So far, America's expressed commitment has been vague and scenario-based, meaning there has been no clear indication of where, when, and how Washington will come to Manila's rescue in the case of an armed clash with China over disputed territories. Washington has maintained this vague footing despite frequent requests from Philippine leaders to make a public statement in defense of their claims.

Many in the Philippines are thus wary of the centrality of US-China relations. Locked in virtual economic co-dependence, Washington likely sees its ties with Beijing as the most consequential bilateral relationship of the next few decades. Many in Manila fear America could for the sake of systemic stability give policy priority to the preservation of great power harmony over defending marginal treaty allies like the Philippines.

Moreover, it is not clear whether the US will be able to disengage quickly from the Middle East and South Asia and place strategic priority on its Asia-Pacific "pivot". With Iran threatening to close the strategically important Strait of Hormuz if it comes under attack from Israel, America has recently rapidly bolstered its naval presence in the Persian Gulf.

"I doubt that US will be able to fully and smoothly pivot to Asia because it is heavily pinned-down in the Middle East, especially in light of growing tensions over Iran's nuclear program and Israel's constant blackmailing," says Filipino legislator Bello. "Russia and China also have an interest in keeping US pinned down elsewhere, away from Asia."

Richard Javad Heydarian is a foreign affairs analyst based in Manila. He can be reached at

(Copyright 2012 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing).

Friday, September 28, 2012



By George P. Shultz, Michael J. Boskin, John F. Cogan, Allan H. Meltzer and John B. Taylor

September 16, 2012

Sometimes a few facts tell important stories. The American economy now is full of facts that tell stories that you really don't want, but need, to hear.

Where are we now?

Did you know that annual spending by the federal government now exceeds the 2007 level by about $1 trillion? With a slow economy, revenues are little changed. The result is an unprecedented string of federal budget deficits, $1.4 trillion in 2009, $1.3 trillion in 2010, $1.3 trillion in 2011, and another $1.2 trillion on the way this year. The four-year increase in borrowing amounts to $55,000 per U.S. household.

The amount of debt is one thing. The burden of interest payments is another. The Treasury now has a preponderance of its debt issued in very short-term durations, to take advantage of low short-term interest rates. It must frequently refinance this debt which, when added to the current deficit, means Treasury must raise $4 trillion this year alone. So the debt burden will explode when interest rates go up.

The government has to get the money to finance its spending by taxing or borrowing. While it might be tempting to conclude that we can just tax upper-income people, did you know that the U.S. income tax system is already very progressive? The top 1% pay 37% of all income taxes and 50% pay none.

Did you know that, during the last fiscal year, around three-quarters of the deficit was financed by the Federal Reserve? Foreign governments accounted for most of the rest, as American citizens' and institutions' purchases and sales netted to about zero. The Fed now owns one in six dollars of the national debt, the largest percentage of GDP in history, larger than even at the end of World War II.

The Fed has effectively replaced the entire interbank money market and large segments of other markets with itself. It determines the interest rate by declaring what it will pay on reserve balances at the Fed without regard for the supply and demand of money. By replacing large decentralized markets with centralized control by a few government officials, the Fed is distorting incentives and interfering with price discovery with unintended economic consequences.

Did you know that the Federal Reserve is now giving money to banks, effectively circumventing the appropriations process? To pay for quantitative easing—the purchase of government debt, mortgage-backed securities, etc.—the Fed credits banks with electronic deposits that are reserve balances at the Federal Reserve. These reserve balances have exploded to $1.5 trillion from $8 billion in September 2008.

The Fed now pays 0.25% interest on reserves it holds. So the Fed is paying the banks almost $4 billion a year. If interest rates rise to 2%, and the Federal Reserve raises the rate it pays on reserves correspondingly, the payment rises to $30 billion a year. Would Congress appropriate that kind of money to give—not lend—to banks?

The Fed's policy of keeping interest rates so low for so long means that the real rate (after accounting for inflation) is negative, thereby cutting significantly the real income of those who have saved for retirement over their lifetime.

The Consumer Financial Protection Bureau is also being financed by the Federal Reserve rather than by appropriations, severing the checks and balances needed for good government. And the Fed's Operation Twist, buying long-term and selling short-term debt, is substituting for the Treasury's traditional debt management.

This large expansion of reserves creates two-sided risks. If it is not unwound, the reserves could pour into the economy, causing inflation. In that event, the Fed will have effectively turned the government debt and mortgage-backed securities it purchased into money that will have an explosive impact. If reserves are unwound too quickly, banks may find it hard to adjust and pull back on loans. Unwinding would be hard to manage now, but will become ever harder the more the balance sheet rises.

The issue is not merely how much we spend, but how wisely, how effectively. Did you know that the federal government had 46 separate job-training programs? Yet a 47th for green jobs was added, and the success rate was so poor that the Department of Labor inspector general said it should be shut down. We need to get much better results from current programs, serving a more carefully targeted set of people with more effective programs that increase their opportunities.

Did you know that funding for federal regulatory agencies and their employment levels are at all-time highs? In 2010, the number of Federal Register pages devoted to proposed new rules broke its previous all-time record for the second consecutive year. It's up by 25% compared to 2008. These regulations alone will impose large costs and create heightened uncertainty for business and especially small business.

This is all bad enough, but where we are headed is even worse.

President Obama's budget will raise the federal debt-to-GDP ratio to 80.4% in two years, about double its level at the end of 2008, and a larger percentage point increase than Greece from the end of 2008 to the beginning of this year.

Under the president's budget, for example, the debt expands rapidly to $18.8 trillion from $10.8 trillion in 10 years. The interest costs alone will reach $743 billion a year, more than we are currently spending on Social Security, Medicare or national defense, even under the benign assumption of no inflationary increase or adverse bond-market reaction. For every one percentage point increase in interest rates above this projection, interest costs rise by more than $100 billion, more than current spending on veterans' health and the National Institutes of Health combined.

Worse, the unfunded long-run liabilities of Social Security, Medicare and Medicaid add tens of trillions of dollars to the debt, mostly due to rising real benefits per beneficiary. Before long, all the government will be able to do is finance the debt and pay pension and medical benefits. This spending will crowd out all other necessary government functions.

What does this spending and debt mean in the long run if it is not controlled? One result will be ever-higher income and payroll taxes on all taxpayers that will reach over 80% at the top and 70% for many middle-income working couples.

Did you know that the federal government used the bankruptcy of two auto companies to transfer money that belonged to debt holders such as pension funds and paid it to friendly labor unions? This greatly increased uncertainty about creditor rights under bankruptcy law.

The Fed is adding to the uncertainty of current policy. Quantitative easing as a policy tool is very hard to manage. Traders speculate whether and when the Fed will intervene next. The Fed can intervene without limit in any credit market—not only mortgage-backed securities but also securities backed by automobile loans or student loans. This raises questions about why an independent agency of government should have this power.

When businesses and households confront large-scale uncertainty, they tend to wait for more clarity to emerge before making major commitments to spend, invest and hire. Right now, they confront a mountain of regulatory uncertainty and a fiscal cliff that, if unattended, means a sharp increase in taxes and a sharp decline in spending bound to have adverse effect on the economy. Are you surprised that so much cash is waiting on the sidelines?

What's at stake?

We cannot count on problems elsewhere in the world to make Treasury securities a safe haven forever. We risk eventually losing the privilege and great benefit of lower interest rates from the dollar's role as the global reserve currency. In short, we risk passing an economic, fiscal and financial point of no return.

Suppose you were offered the job of Treasury secretary a few months from now. Would you accept? You would confront problems that are so daunting even Alexander Hamilton would have trouble preserving the full faith and credit of the United States. Our first Treasury secretary famously argued that one of a nation's greatest assets is its ability to issue debt, especially in a crisis. We needed to honor our Revolutionary War debt, he said, because the debt "foreign and domestic, was the price of liberty."

History has reconfirmed Hamilton's wisdom. As historian John Steele Gordon has written, our nation's ability to issue debt helped preserve the Union in the 1860s and defeat totalitarian governments in the 1940s. Today, government officials are issuing debt to finance pet projects and payoffs to interest groups, not some vital, let alone existential, national purpose.

The problems are close to being unmanageable now. If we stay on the current path, they will wind up being completely unmanageable, culminating in an unwelcome explosion and crisis.

The fixes are blindingly obvious. Economic theory, empirical studies and historical experience teach that the solutions are the lowest possible tax rates on the broadest base, sufficient to fund the necessary functions of government on balance over the business cycle; sound monetary policy; trade liberalization; spending control and entitlement reform; and regulatory, litigation and education reform. The need is clear. Why wait for disaster? The future is now.

The authors are senior fellows at Stanford University's Hoover Institution. They have served in various federal government policy positions in the Treasury Department, the Office of Management and Budget and the Council of Economic Advisers.

A version of this article appeared September 17, 2012, on page A19 in the U.S. edition of The Wall Street Journal, with the headline: The Magnitude of the Mess We're In.

Copyright 2012 Dow Jones & Company, Inc. All Rights Reserved

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