Bungling

If the whole incident was not so fraught with danger bungling on all sides could lead to bloodshed, the insertion of an armed Tausog group into Sabah would otherwise be comic.

If the Sultan of Sulu intended to draw international attention to his family’s forgotten claim to Sabah, that goal was no doubt achieved. He blindsided both the Philippine and Malaysian governments. He caused enough political discomfort on all sides, reviving a question most conveniently consigned to the archives.

The point was clearly made a day or two after the Sultanate’s “royal army” landed at Lahad Datu town, across the modern-day border. Nearly three weeks after the landing, however, the “royal army” was still entrenched and Malaysian authorities threaten to assault the small force.

Since the “royal army” landed in territory they claim, the most urgent matter at hand for both Manila and Kuala Lumpur was to find a way to dissipate the crisis and convince the Sultan to withdraw his force. The Malaysians, it seems, presumed it was Manila’s problem to negotiate with her citizens and achieve the withdrawal without drawing Malaysian security forces into hostilities. Manila, however, imagined Malaysia will deal with the matter herself, since the armed intruders were on the federation’s territory.

If Kuala Lumpur gave this matter, happening in its backwaters, too much importance, that would magnify the dead claim. They enforced a food blockade and hoped the starving intruders will just go away.

If Manila took the Sultan’s claims too seriously, that will create too many complications in our foreign and domestic policies. The Sultanate, after all, has no standing whatsoever in our republican framework. We recognize no hereditary titles. An oligarchy rules us, not an aristocracy. All our dynasts are duly elected.

Understandably, there was foot-dragging on both sides. The problem, however, would not go away.

Last Tuesday, 18 days after the “royal army” landed at Lahad Datu, President Aquino finally materialized at a podium to speak on the matter. He referred to a study on the claim being submitted to him, voluminous and single-spaced. He had not yet read the study. Remember, the Atimonan massacre report is still on his desk for study as well.

For good measure, he admitted a letter sent by the Sultan at the dawn of his presidency was lost in the “bureaucratic maze.” The admission simply indicated the very low standing of the sultanate and its claim in the administration’s scheme of things.

Adding insult to injury, Aquino threatened to file cases against the Sultan. He added intrigue to insult by talking about the Sultan’s financial difficulties, raising questions about who really financed the “royal army” expedition. For good measure, Aquino questioned the Sultan’s accession to the throne on which he now sits — a matter irrelevant to the present crisis.

Whatever the legal standing of the Sultan and the validity of his claims, the point at the moment was that he was the key broker in extricating the force inserted into Sabah. Only Kiram can order the armed force to go back home. Only he could most feasibly defuse the situation.

Instead of assuaging the Sultan and winning his cooperation in the midst of a delicate situation, Aquino (and his emissaries too) bullied the royals, threatening them even as they held the key to defusing the crisis. The Sultan, as a consequence, took a harder line, refusing to withdraw his “royal army.”

Should this situation end up in tragedy, it will be due to the appalling lack of finesse in the way Manila handled things.

Roubini

Nouriel Roubini is the equivalent of a rock star in the world of economics and public policy. He correctly predicted the 2008 meltdown of the US housing market and the earthshaking financial consequences of such an event. He is mentioned high among the most influential global thinkers of this time. He served as senior economist during the Clinton administration and since 2009 has been a senior adviser to Timothy Geithner at the US Treasury.

Roubini was in Manila earlier this month to keynote the Philippines Investment Summit 2013.

In his talks, the famous economist highlighted the key elements of the Philippine success story. From the depths of the debt crisis during the eighties, the Philippines worked down its debt-to-GDP ratio to 25.6%. This is better that Thailand’s 36.3%, Malaysia’s 27.7% and Indonesia’s 27.9%. The numbers should continue to improve as our net earnings remain above our net borrowing.

In addition, debt service declined from 37% of the national budget in 1997 (the year of the Asian financial crisis) to 16.6% today. After over a decade of balance of payments surpluses, we have now amassed gross international reserves of over $85 billion. That is over 11 times what we had in 1997.

Adept fiscal management now keeps the budget deficit at only 2.3% of GDP while inflation remains benign as about 3%. Our banking system is adequately capitalized.

In a word, major indicators show the Philippine economy is healthier than others currently enjoying investment-grade ratings. One major reason we have not yet won investment grade status is the comparatively low tax effort. From the current 15% of GDP, we need to raise this to 20%. We likewise need to convince the world that the boom-bust cycles of the past is well behind us.

Roubini, after delivering his keynote speech, paid a call on Executive Secretary Jojo Ochoa at the Palace. The meeting was long and hopefully instructive. The Executive Secretary plays a strategic role in moving the policies we need to have in place to keep abreast with the rest of the world.