US Western Pacific geostrategy: Subic Bay before and after withdrawal

Marine Policy, Vol. 21, No. 4, pp. 325 344, 1997 ;(; 1997 Elsevier Science Ltd. All rights reserved Printed in Great Britain 0308-597X/97 $17.00 + 0.00

Pergamon PII:S0308-597X(97)00012-2

US Western Pacific geostrategy: Subic Bay before and after withdrawal

Peter J Rimmer The changing status of US naval cityports in the Western Pacific is examined during the Korean War (1950-1953), the Second Indochina War (1963-1975), the confrontation with the Soviets (1979-1989) and the Gulf War (1990-1991) in order to encompass shifts in technology, global resource economics and political rivalries. Attention is centred on the contribution of the naval cityport of Subic Bay in the Philippines in achieving US geostrategic goals. The economic and social consequences for the locality of such intensive defence development are discussed. Then there is an appraisal of the economic plans, potential and progress, and political issues involved in the transformation of the naval cityport into a freeport city since the withdrawal of the US in 1992. © 1997 Elsevier Science Ltd.

Key words--base,

geostrategy, port, Olongapo, Subic Bay

naval

Peter J. Rimmer is at the Department of Human Geography, Research School of Pacific and Asian Studies, The Australian National University, Canberra. ACT 0200, Australia. Thanks are due to Christine Tabart for a literature search; and Des Ball and Peter Urich for relevant literature. The figures were drawn by Kay Dancey, Cartographic Unit, Research School of Pacific and Asian Studies, the Australian National University, Canberra.

Who rules East Europe commands the Heartland Who rules the Heartland commands the World-Island Who rules the World-Island rules the World (Sir H.J. Mackinder, Dreams and Reality, 1919 [1944 edn], p. 14) An examination of the extensive US military basing system or network in the Pacific since the Second World W a r evokes student memories of Sir Halford Mackinder's dictums about heartland and rimland. Extrapolating the classic standoff between continental land power and Eurasian sea power identifies the US network, stretching from the Aleutian Islands to include the Pacific and Indian Oceans, and East Asia, as the direct descendant of the Portuguese, Spanish, Dutch and British global empires based upon maritime supremacy. Like its predecessors, the extraterritorial network of US ports has been of pivotal importance in replenishing consumables, providing repairs and direct combat support, as well as supplying intelligence and communications [1]. Although aircraft offer an alternative in a nuclear era, naval power has remained the foremost post-war instrument of US political intervention. This is particularly true in the Pacific, which has become a veritable "American Lake" [2]. Traditionally, responsibility for the operation of the Pacific C o m m a n d , covering navy, airforce, marine and armed forces, rests with a naval admiral with the title Commander-in-Chief Pacific (CINCPAC). F r o m headquarters at C a m p H.M. Smith in Hawaii, the C o m m a n d e r ' s jurisdiction covers the whole of the Pacific (except for the Guam-based forces of Strategic Air Command). The C o m m a n d e r has responsibility for directing the Seventh Fleet in the West Pacific and the Indian Ocean; and the Third Fleet in the East Pacific, along the littoral of N o r t h and South America. The Seventh Fleet is actively engaged in exercises, diplomacy or war and the Third Fleet is primarily oriented toward training. These are both based at Pearl Harbor. Attention here is concerned with changes in the Western Pacific theatre since the end of the Second World War, particularly with the 325

US Western Pacific geostrategy: P J Rimmer

relationships between the evolution of US strategy and naval cityport development. The network of bases is examined at different periods of time during which the US focus shifted between nations and regions. These time perspectives include the Korean War (1950-1953), the Second Indochina War (1963 1975), the confrontation with the Soviets (1979 1989), and the Gulf War (1990-1991); collectively, these reflect the influence of "changing technology, global resource economics and political rivalries" [1, p. 19]. Besides the pursuit of geostrategy by the US, interest is centred on the contribution of Subic Bay in the Philippines towards achieving these strategic goals (Figure 1). Subic Bay is the oldest and largest US foreign naval base. It is discussed here to focus on the issues of insecurity, loss of sovereignty, and the economic, environmental and social consequences for the locality that stem from such intensive defence development. The attempt at transforming Subic Bay into a freeport city once the US Navy departed in 1992 is also considered. Before undertaking these tasks, a brief history of the site prior to the Korean War, is given.

Figure 1. Location Olongapo.

326

of

Subic

Bay,

US Western Pacific geostrategy: P J Rimmer

Site history After liberation in 1945, reconstruction of the US base at Subic Bay began on the site of the original Spanish naval station built in 1885. An exceptional port, Subic Bay was part of the bloody annexure of the Philippines by the US after the Spanish-American War in 1898. After acquiring Subic Bay, Guam and Hawaii as the spoils of war, and also after purchasing Alaska, steps were taken during the 1920s and 1930s towards securing privileged access to the China m a r k e t - - a policy that offended Britain and led to conflict with Japan. Following the Pacific War the US resumed control over Subic Bay and other bases in the Philippines and Guam. It stationed troops in Japan and South Korea and acquired Okinawa and islands previously held by Japan in Micronesia (Midway, Wake, Johnston Atoll and Marshall Islands). These developments enabled the US to open "the Grand Area" for free trade and investment (i.e. the entire world except for the Soviet Union, Eastern Europe and China)--a guarantee that US corporations would have "privileged access to regional markets, natural resources, and cheap labour" [3]. Although the Philippines gained independence in 1946, its government granted the US, under the Military Bases Agreement of 1947, a rent-free, 99-year lease on Subic Bay and 22 other bases and installations in return for US$500 million worth of aid. Control over Subic Bay included administration of the town of Olongapo, which had been re-established based on an American design at a new site in 1945. (Reference to Subic Bay, therefore, refers to Subic Bay-Olongapo.) The conclusion of the Military Bases Agreement enabled the US to significantly reduce its forces in the Philippines, actively support a wealthy elite to run the country (albeit with scant regard for human rights), and concentrate on mitigating tensions in Europe. In 1949, the US preoccupation with Europe halted with Mao's victory in China. Then in 1950 Sasebo, the naval cityport in Japan, was used as an operational base for securing the Taiwan Straits against a Communist invasion

The Korean War, 1950-1953 During 1950, the onset of the Korean War prompted the US to reconsider and consolidate its network of naval bases that rimmed the Eurasian heartland from Micronesia to the Aleutian Islands, to combat the combined threat from the Soviet Union and China (and perceived world communist expansionism). Strategists immediately recognised the pivotal importance of having US naval bases in Japan, Korea, Micronesia, Okinawa, the Philippines and Taiwan. Plans to withdraw from Japan were abandoned and over 13% of Okinawa was acquired for US bases [4]. Following the outbreak of hostilities in the Korean War, mutual defence treaties were secured with Australia and New Zealand, Japan and the Philippines in 1951. Similar arrangements were made with South Korea in 1953 and Taiwan in 1954. An important side-effect was the rejuvenation of the allied economies, particularly Japan which was the primary staging area for the Korean War. As the land war had been costly in dollars and lives (100000 US soldiers and 2 million Koreans killed and wounded) the importance of seapower was acknowledged.

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US Western Pacific geostrategy." P J Rimmer

Thus the US now sought to enhance its massive retaliation strategy to curb the spread of communism. It did this by developing both its conventional naval-base infrastructure of carrier-based aircraft and nuclear submarine capacity. Subic Bay played a key role in this arrangement. Subic B a y

With the onset of war in 1950, the US felt the need to support its rear base at Subic Bay with airpower. Construction commenced on an airfield in 1951. Located at Cubi Point, the airstrip involved clearing jungle, relocating the town of Banicain to Olongapo and moving mountains to provide the spoil for building the strip into Subic Bay. The task was completed in 1956. By then Subic Bay and Clark Air Base, home of the Thirteenth Air Force, were growing rapidly in response to the perceived communist threat in Southeast Asia. As part of a policy of containment and in an action to secure capitalist expansion in the Asia-Pacific region, Subic Bay became part of an offshore chain of military installations stretching from Japan to the Philippines. During the Korean War, the Subic Bay-Clark complex was a logistical centre for Filipino troops and military supplies sent to Korea, and also a stopover point for troops from Australia and Singapore. The complex was also used in counterinsurgency activities against the Huks. l In the late 1950s the Navy began a plan for the development of Olongapo worth US$1.5 million. By this time, however, growing resentment over American control of the town led initially to an elected town council and then to an agreement in 1959 under which the US relinquished control to the Philippines government. This arrangement reduced opposition and Subic Bay was used as a springboard for intervention in Indonesia and the Taiwan Straits in 1958, Thailand in 1962 and, above all, as a major staging area during the Second Indochina War [6].

The Second Indochina War, 1963-1973

1Huk or Hukbalahap is an abbreviation for Hukbo ng Bayan laban sa Hapon, the People's Anti-Japanese Army, organised by Communist and Socialist Party supporters during the Pacific War. Here it is used for the Hukbong Mapagpalaya ng Bayan, the post-war anti-government guerillas active in Central Luzon and the Western Visayas. See [5]. 2Okinawa was also a training, rest and recreation area for the Marines.

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The Second Indochina W a r was essentially a land war, but one in which the US Navy played a key role [8]. All naval bases in the Pacific--rear, advance and forward area facilities--were components of a tightly integrated naval offensive system comprising ships, attack aircraft and missile defences. Subic Bay (with Clark Air Base) was a major logistics hub and staging area for the Seventh Fleet; G u a m was a B-52 bomber base for sorties into Cambodia and Vietnam; Y o k o s u k a functioned as a rear base for four aircraft carriers of the Seventh Fleet; and Okinawa, Iwakuni and Subic Bay were rear bases. 2 In addition, there were four major ports and ten military ports in South Vietnam, and the major military port of Sattahip in the Gulf of Thailand supplied airbases located in central and northeast Thailand. After the loss of the W a r the US was asked to withdraw from Thailand because warships carrying nuclear weapons were a threat to the local community. There were also wider repercussions on the retention of US bases in the Pacific. Stimulated by the war the economies of US allies, particularly those with access to oil, had begun to boom, whereas the US economy stagnated. Increasingly, therefore, the US government now sought to localise its military commitments to reduce troop

US Western Pacific geostrategy: P J Rimmer

requirements. Between 1972 and 1978 forward forces were lowered from 275000 to 130000 [8]. This strategy did not benefit the naval port-cities that had become dependent upon US bases during the expansionist era. Local economies were skewed to meet the needs of sailors, often at the expense of local people. Pliant governments had invested heavily to make their ports more attractive to the US Navy. Alternatives, such as job and community programs, were neglected because the homeporting of vessels promised jobs, construction and economic benefits. Ship visits by 10000 sailors on "rest and recreation" during the Second Indochina War, for instance, stimulated specific sectors of the local economy, such as rental housing, recreation, prostitution and drug running. A marked increase in ship visits created a boom economy and led to price inflation in food and housing. Outside labour was brought in during ship visits and often stayed on to supplant local workers. But when the ship sailed, of course, the bust economy took over. These trends provided ammunition to locals opposed to the presence of US bases. There were popular anti-war movements in Okinawa in 1960. Opposition against nuclear testing and nuclear waste dumping was prominent in the Pacific Islands. Anti-nuclear feelings in the Philippines were coupled with the affront to sovereignty posed by United States bases, as illustrated by the situation of Subic Bay during the Second Indochina War and its aftermath.

Subic Bay revisited

3The incident involved an attack by North Vietnamese torpedo boats on United States destroyers in the China Sea and changed the course of the Second IndoChina War. The United States House of Representatives and Senate gave broad authority to the President to assist South Vietnam and other allies in Southeast Asia with whatever force was necessary. See [9].

After the Gulf of Tonkin incident in August 1964 Subic Bay became the "service station" for the Seventh Fleet and provided a surge capability, if required, for US operations in the North Pacific. 3 The number of ships visiting Subic Bay increased from a monthly average of 98 in 1964, to 215 in 1967, with a record 47 ships being in port in October 1968 [10]. Between 1964 and 1968, US$63 million were spent on construction projects at Subic Bay including the Main Exchange and recreation complex. In 1967, 4.2 million sailors visited Subic Bay and the Navy Exchange had the then world record sales of over US$25 million [10]. The following year, 1700 ship visits were made. About 4300 American military and civilian personnel were stationed at the base. Along with these American personnel were 15 000 Filipino workers who worked 60 hours per week at the Ship Repair Facility [10]. As existing equipment could not cope with vessels damaged in Vietnam, new machine tools and floating dry docks were imported from the United States, following the closure of the New York Shipyard. Subic Bay also served as a Naval Supply Depot handling more than 4 billion barrels of fuel oil per month. The Depot supplied both Cubi Point, which served as the primary maintenance, repair and supply centre for the 400 carrier-based aircraft of the Seventh Fleet and, via a 41-mile pipeline, the Clark Air Base, which was capable of accommodating the largest transport planes [10]. It also carried 200 000 items to support the Seventh Fleet's needs. Besides being the focus for projecting naval power during the Second Indochina War, Subic Bay, together with the Marine bases in Okinawa and the Japanese bases, provided the training ground and rear base for US marines in Vietnam. Following the withdrawal of the British fleet from "East of Suez" in the late 1960s, Subic Bay became an intermediate base for supplying the US

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Naval Task Force in the Indian Ocean after 1973. Given this frenetic activity at Subic Bay the population of Olongapo increased from 45 000 in 1959 to 126000 permanent residents in the 1960s with an additional 50 000 transients [11]. The value of Subic Bay and other bases to the US led to acquiescence in the declaration of martial law by President Marcos in 1972 and subsequent abuse of human rights. However, the US presence was increasingly questioned by many Filipinos concerned by involvement in the Vietnam War and irritated by the immunity of American servicemen from criminal prosecution. Given that the threat to Philippine security was internal, they argued that the bases served American regional and global interests, and provided a platform for interference in local politics [12]. In 1966 the 99-year provision over bases was shortened to 25 years. Despite the pressure, however, in 1975 the counter-argument for a strong US presence in Subic Bay was strengthened by communist victories in Vietnam, Cambodia and Laos. After the fall of Saigon, Grande Island in Subic Bay became a temporary processing centre for refugees. To the Association of South-east Asian Nations (ASEAN), Subic Bay itself became a symbol of the degree to which the US was committed to remain an Asian power and respond to the defence of the Philippines if it was attacked. Ultimately, this emerging confrontation with the Soviet Union was to lead to a reversal of the policy of retrenching US military personnel.

Confrontation with the Soviets, 1979-1989 In 1979, the occupation of the former US base of Cam Ranh B a y - - " a minor repair facility"--by Soviet forces led to a buildup of its military presence in Vietnam, and expansion and modernisation of its Pacific Fleet headquartered at Vladivostok under Admiral Gorshkov [13]. At other major bases within its Sea of Okhotsk bastion--Petropavlovsk on the tip of the Kamchatka Peninsula and Sovjetskaya Gavan the Soviet Navy sought to overcome the choke points of the Soya, Tsuragu and Tsushima Straits by developing a forward basing system in the Far East/Pacific area (Figure 2). Access to Cam Ranh Bay in Vietnam enabled the continental land power to escape its traditional Eurasian confines by deploying ships in the South China Sea and making use of anchorages south of Singapore and Subic Bay. By 1985, between 50 and 60 Soviet naval units were operating throughout the Pacific and Indian Oceans. These units were perceived as a threat by the US as, on occasion, they came dangerously close to the naval bases of Midway, Guam and Subic Bay. Indeed, the improved Soviet access to land, sea and air facilities in a growing number of Third World countries prompted the US to downgrade its support for Taiwan and improve its relations with the Peoples Republic of China (PRC) in 1979. Although the PRC government was also troubled by the remilitarisation of Japan, it had become the prime target for Soviet troop deployments and was willing to cooperate [14]. The bogey of the Soviet "bear" led to a reassessment of the US Western Pacific network of naval cityports (Table 1). Comprising major bases and less permanent facilities, the network was progressively reshaped and expanded to support US interests in Northeast Asia, particularly in Japan and Korea. The US Navy was

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•k US Naval Base O Alternative US Naval Base [] Soviet Naval Base IEEF Choke Point

Cockbum Soun

Figure 2. The strategic line up in the Western Pacific, 1990

4A base was established at Subic Bay for a permanent unit of the US elite S e a - A i r Land (SEAL) force specialising in underwater demolition, beach clearing and anti-terrorist activities.

(Source: Based on [29]).

equipped with enhanced nuclear capabilities to confront the submarine capability of the then Soviet Union in the Sea of Okhotsk, and to counter its opponent's ability to operate in the Pacific and Indian Oceans. Supported by the Eastern Pacific base of Pearl Harbor, the major bases in the Western Pacific were again Yokosuka, Subic Bay and G u a m . These served as the home ports for the US Seventh Fleet, offering maintenance, provision and repairs and providing drydocking facilities for warships. Less permanent bases (used on a regular or contingency basis for replenishment, rest and recreation and minor repairs) were at Sasebo in Japan, Okinawa, Pusan in Korea, Singapore, Jakarta and Sattahip in Thailand. These bases were used primarily by the naval units of host governments. US force levels were increased from almost 135 000 in 1980 to almost 150000 in 1988 (Table 2). The US presence in Yokosuka, and the secondary facility of Sasebo and access to Okinawa, were directed at Vladivostok and Petropavlovsk in the Sea of Okhotsk and the critical choke points of the Soya, Tsugaru and Tsushima Straits, which underpinned the security of Japan and Korea. The importance of Subic Bay, south of Yokosuka, stemmed from its proximity to Southeast Asia, the South China Sea, and the Indonesian Straits. Okinawa and the Kurile Islands off the coast of Japan could be reached within 3 days. 4 The US was able to protect the three choke points near I n d o n e s i ~ t h e Malacca, Sunda and L o m b a k Straits--which were vital to navigation. Additionally, Subic Bay was valued as an intermediate base linking the US naval presence in the Eastern Pacific, centred on

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US Western Pacific geostrategy." P J Rimmer Table 1. Location and main function ot United States bases in the Pacific in the 1980s Base

Function

Australia Cockburn Sound

Base for submarines and destroyers. Pine Gap and Nurrungar are communications and intelligence facilities. Periodic calls. Major US naval base. NW Pacific. Homeport for 10 Seventh Fleet vessels, including the carrier Midway. Logistics, repair and drydocking capabilities for Seventh Fleet including carrier. Forward port for nuclear attack submarines Naval base used jointly with Japanese Navy. Possesses logistics, huge fuel and munitions storage, repair and drydocking capabilities. Used as home and forward port for nuclear attack submarines. Munitions maintenance, naval hospital. Seventh Fleet forward port, occasional use by submarines. Operational base for Seventh Fleet in SW Pacific, Indian Ocean. Logistics, repair and drydocking capabilities, support and munitions storage. Forward port for nuclear attack submarines. Marine training: Seventh fleet and allied bombing and gunnery practice. Some overhauls, reprovisioning for US troops; potential for expanded use. Naval facilities at Korean Naval Base. Occasional use by US navy. Military port constructed by US as a major port of entry for military supplies to US Bases. Peaked during the Second Indochina War. Major naval base for logistics and repairs, forward port for nuclear attack submarines. Limited naval facilities. Port facilities.

Hong Kong Japan Yokosuka

Sasebo

White Beach (Okinawa) Philippines Subic Bay

Singapore Sembawang South Korea Chinhae Taiwan Kaohsiung Thailand Sattahip

United States Guam (Apra Harbor) Midway Island Wake Island

Sources: Refs [1]; [2]; and [3].

Table 2. Foreign deployment of US military personnel, 1980, 1988 and 1990

Japan (including Okinawa) Korea Philippines Guam Australia Thailand Johnston Atoll New Zealand Marshall Islands Indonesia Midway Islands Afloat Other foreign countries Other US Territories East Asia and Pacific Western and Southern Europe Africa, Near East and South Asia Western Hemisphere and Antarctica Other non-US Areas Total deployment of US military forces in foreign countries and US territories Total active duty personnel in US armed forces

1980

1988

1990

46 121 39 795 13 714 8980 660 101 114 766 15 73 515 23 828 99 20 134801 336425 15524 18 773 2491 508 014

49680 45 501 16 655 8519 753 110 136 59 42 42 13 28 056 111 59 149736 356251 18373 28 011 360 552 731

47386 40 673 12 982 7497 732 208 178 53 50 35 12 23 835 131 58 133830 323 124 432535 27 583 818 917 890

2036387

2 138213

2 132406

Source: Based on Ref. [3].

5Diego G a r c i a w a s t h e S e v e n t h F l e e t ' s b a s e f o r t h e Indian O c e a n C a r r i e r F o r c e 77's o p e r a t i o n s in t h e I n d i a n O c e a n a n d Southwest Asia.

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the rear base of Pearl Harbor, with the Indian Ocean-Persian G u l f theatre focused on the forward base of Diego Garcia. 5 Subic Bay is over 15 days from San Diego, the home port, and 11 days from the Arabian Sea (Table 3). Transit time between these bases was vital as the key concern throughout the period of confrontation with the former

US Western Pacific geostrategy. P J Rimmer Table 3. Approximate ship transit times between Pacific bases" Base

Subic Bay

Guam

Yokosuka

Pearl Harbor

San Diego

11,2 7.7 11.6 -2150

15.5 12.5 11.6 5.0 --

Time (days) Subic Bay Guam Yokosuka Pearl Harbor San Diego

-1500 1760 4820 6700

3.5 4.0 -3.1 1350 -3320 3400 5380 5000 Approximate distance (nm)

Note: aAssuming an average speed of 18 knots.

Soviet Union was the threat of US access to Subic Bay being lost. In 1988 there were 17000 US military personnel and 15000 civilians at Subic Bay and Clark Air Base compared with 2 500 Soviet personnel at Cam Ranh Bay [15]. Access to Subic Bay

6The A n t i - b a s e C o a l i t i o n w a s o r g a n i s e d by J o s e D i o k n o a n d f o r m e r s e n a t o r Lorenzo Tanada.

In 1979, in response to continued local pressure, the Military Bases Agreement of 1947 was amended, thereby transforming the role of Americans at Subic Bay from landlord to guest [10]. Although the unhampered use of Philippine bases by the United States was confirmed until 1991, the area set aside for exclusive access was reduced from 24400 hectares to 6300 hectares. In addition, perimeter security was transferred to Filipino troops to reduce the incidence of conflict between the military and civilians. During the 1980s the bilateral relationship between the Philippines and the US improved. The emphasis shifted from President Carter's concern with human rights, to President Reagan's support for US maritime supremacy in the Indian Ocean and the Persian Gulf, and Subic Bay's role in combatting the Soviet threat in Asia and the Pacific. Thus, whereas in 1980 Subic Bay was the base for President Carter's abortive attempt to release the US hostages in Iran, in 1987-1988 it was the logistics hub in the "Tanker War" with Iran [6]. Locally, however, Subic Bay remained an affront to Philippine nationalism and the domestic political process [16]. Recurrent issues in the 1980s centred on compensation the US should pay for use of the bases, the possible presence of nuclear weapons, and the balance between Philippines sovereignty and American demands for unhampered military control [12]. In 1982 the bases contributed an estimated 4% to G D P of the Philippines. As part of the 5-year renegotiation cycle, the US offered US$900 million in security assistance in 1983. Under President Marcos the US military authorities were guaranteed free access to the bases, which at the end of 1985, employed over 42000 people [17]. Then, in February 1986, the bases debate was heightened by the People Power Revolution and the end of Marcos' 20-year rule. Under the subsequent Aquino government more "democratic space" was allowed and the Anti-Base Coalition and the Coalition for a Nuclear-Free Philippines were formed. Even so, human rights abuses allegedly continued, particularly against the Anti-bases Coalition involving Filipino nationalists. 6 They viewed the Military Bases agreement as a colonial document forced upon the country by a colonial aggressor. Apart from the loss of sovereignty, the growing opposition to US bases in the Philippines stemmed from the social and

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environmental impact of bases and the reluctance of local people to become involved in superpower nuclear rivalry [18]. Allegedly, nuclear arms were transhipped through the Philippines as its bases contributed to US capability to wage a global nuclear war. In response to this opposition the US offered, in 1988, US$431 million per year in compensation for the bases--a 140% increase on the amount current between 1983 and 1989 [6, 17]. The possible loss of Subic Bay which, despite such incentives, now looked increasingly likely, led to analyses of fall back positions in terms of sailing days or operating radii [19]. Alternatives considered on the north-south, Subic Bay-Yokosuka axis were the major ports of Guam and Yokosuka, which are within 4 days of the Philippine port, though operation and maintenance costs would be high (Table 4). Consideration was also given to Saipan and Tinian in the Marianas and the Koror anchorage in the Palau (Belau) Islands, though these would have required heavy investment if any location was to be upgraded into a naval cityport. Other possibilities in the South China Sea included Jakarta, Sattahip and Singapore, but base relocation and rental costs in these locations would have been higher. Rapprochement with Mainland China led to the rejection of the Taiwanese ports of Kaohsiung and Keelung as alternatives, and even Manus Island in Papua New Guinea and Cockburn Sound in Western Australia were considered. Clearly, the basing options did not offer the same advantages as Subic Bay for projecting US military power in the Western Pacific. Against this restrictive background, the US Navy's monopoly of Subic Bay continued to be justified in terms of its economic benefits, jobs, construction and local spending [20]. According to US sources, annual expenditure in the Philippines totalled $US507 million including a payroll of US$96 million for 68 500 workers and 2 000 local contractors [6]. It was only surpassed by the payroll of the government itself. The base proponents argued that without this support the area would not be a viable economic proposition. In the 1980s there was an emphasis on Subic Bay using Philippine goods and services whenever possible. Olongapo city's economy was narrowly focused on the naval base. In 1989, 15000 US forces were permanently stationed in the Philippines, while visits by aircraft carriers swelled their numbers to 25 000 [6]. The naval monopoly had blocked long-term commercial development of Olongapo. Unlike Angeles City serving Clark Air Base, Olongapo had an undiversified economy [21]. There was little manufacturing or even small enterprises. A "black economy" had been created heavily dependent on entertainment, domestic services and expatriate real estate

Table 4. Approximate ship transit times Irom major Pacific bases to operating stations a Base

Operating station Kurile Islands

Okinawa

South China Sea (Northern area)

5.3 1.5 6.6 11.5

2.0 1.7 8.6 13.6

0.9 4,0 11.2 16.2

Malacca Straits

Arabian Sea

2.7 6.3 13.6 18.6

11.3 13.6 21.2 26.2

Time(days) Subic Bay Yokosuka Pearl Harbor San Diego

Note: aAssuming an average speed of 18 knots. Source: Based on Ref. [1].

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US Western Pac([ic geostrategy: P J Rimmer

7Because the cost of redeployment from Subic Bay was likely to be between US$5 billion and US$19 billion, there was another search for alternatives [6] (p. 162). As Darwin (Australia) and Brunei were eliminated on the grounds of lack of infrastructure the most likely fallback locations were Guam, Okinawa, Yokosuka, Palau and Singapore. Apra Harbor, Guam (140000 population) had been developed as a naval transit base for anti-submarine activities and as a nuclear stockpile (now removed) for Strategic Air Command's superseded B52 bombers. In 1990 the military area housed 16000 US personnel, covered one-third of the land area, and included the best farmland, fishing rights and drinking water [24]. The choice of Okinawa, like Guam, would have probably required an influx of trained Filipino shipbuilders and would have caused consternation as 20% of the land was already occupied by US bases [4] (p. 183). (The rape of a Okinawan schoolgirl by US military in 1994 reinforced this observation.) Expansion of the Yokosuka naval complex would have been problematical because of (1) opposition to US encroachment on a forestry reserve in suburban Zushi to provide additional housing, and (2) resistance to a US marine training base on Miyakejima ("Bird") Island 100km south of Tokyo. Palau would have been a prime candidate but it was also likely to generate opposition as referenda had rejected devoting scarce land to the expansion of US bases. In 1990 Singapore offered to act as a repair facility for the US to put pressure on the Philippine senators, in order to vote in favour of retaining Subic Bay because Southeast Asian countries feared that any US (or Soviet) pullout would lead to greater Chinese and Vietnamese involvement; increased Japanese and Indian naval presence; and the intensification of regional disputes, such as competing claims over the Spratlys [25, 26]. Also it was emphasised that relocation at less efficient sites than Subic Bay would be mitigated by developments in mobile basing, which made a fixed location less important in prosecuting wars in the Third World.

[22]. Further, the naval cityport was criticised as a centre for the distribution of illegal weapons for " g o o n armies" and dissidents in the Philippines; the smuggling of goods, which undermined domestic industrial development and aggravated unemployment; and prostitution, drug addiction and gangsterism. Although these problems were seen by the US government as a small price to pay for regional security, they were an important issue in Philippine domestic politics [17, p.36]. Military-generated sex work was the main source of income in Olongapo. "The main gate of Subic Base leads directly onto Magsaysay Avenue ("the strip") lined with bars, massage parlors, hotels, souvenir and T-shirt shops and money exchanges. When a ship from the Seventh Fleet docked at Subic, up to 10000 American servicemen crossed the bridge into Olongapo..." [11]. Estimates of the number of female and child sex workers engaged in more than 500 bars, brothels and massage parlours around the naval base varied between 10000 and 23000 (i.e. up to 10% of Olongapo's population). Although women (and children) were forced to work out of economic necessity, the beneficiaries of this relationship were the bar proprietors. While funds were provided by the US to ensure local prostitutes were "clean", sexually transmitted diseases and the incidence of AIDS-related illnesses grew. Abandoned or neglected children compounded the problem, to the extent that their plight has been taken up by G A B R I E L A , a Philippine women's organisation which opened a centre for female sex workers in Olongapo. Local efforts by womens' groups have had minimal impact on antibase organisations. The lack of a unified front has led to the unequal relationship between men and women of different ethnic groups and classes in Subic Bay being increasingly resented. Ignoring the role of women who live or work on, or near, the base has led to the naval cityport being portrayed as a masculine institution. This systematic and institutionalised exploitation of women has compromised the government's position on post-base development of the naval cityport [23]. Without a long-term economic plan and financial guarantee by the Philippine government to recast Subic Bay as a commercial port, the closure of the bases would inevitably result in job losses.

The Gulf War, 1 9 9 0 - 1 9 9 1 The end of the Cold War, increased interest in Eastern Europe and disintegration of the Soviet network of naval bases (including Cam Ranh Bay) led to a further reassessment of the role of US naval cityports. 7 Yet, rather than running the bases down, the US took on the role of global policeman and enforcer of world order in the Third World [7]. Thus, in 1989 it sought to maintain its presence in Panama by overthrowing President Noriega, pressurising Cuba from its base at Guantanamo, and thwarting a military coup against the Aquino government in the Philippines by mobilising US troops based in Okinawa. Then, in 1990, the US countered Saddam Hussein's invasion of Kuwait, in what became known as the Gulf War, by mobilising half of its combat strength in the Middle East. Once again, Marines were despatched from US stand-by facilities in Japan and the Philippines and, as there were restrictions on what is euphemistically known as "rest and recreation" in Saudi Arabia, the Philippines again fulfilled

335

US Western Pacific geostrategy: P J Rimmer

this function for US troops on rotation from the front [16]. In both these respects, Subic Bay proved to be a vital hinge between the Pacific and Indian Oceans. Subic B a y - - t h e last stanza

But, although Subic Bay remained of great strategic value, legally its existence was about to expire because of the earlier agreement. Negotiations on the Military Bases Agreement due to expire on 13 September 1991 commenced 1 year earlier, at a time when the former Soviet Union was scaling down its presence in Cam Ranh Bay. Continuation of the agreement was supported by the then Mayor of Olongapo, Richard (Dick) J. Gordon, because the Subic Bay base underpinned the local and national economy, provided employment and local procurement, generated sales by permanent and temporary military staff and their dependents, and provided pensions [12]. Opening Subic Bay to Philippine warships was one of the alternatives canvassed. The joint Philippines-US negotiators proposed a Treaty of Friendship, Cooperation and Security to resolve the bases issue. On 13 September 1991 the Philippines Senate rejected the Treaty of Friendship, Peace and Cooperation that would have enabled the US to have retained Subic Bay for 10 years for US$203 million per year [27], [28]. In a 12-11 vote the anti-base Senators wanted to remove the last vestige of colonialism and pursue a non-aligned and neutral policy [29]. By removing the United States bases there would be no pretext for intervention in Philippine affairs as occurred during the 1989 coup attempt [30]. Withdrawal would overcome the false sense of security and stimulate national defences against external aggression (e.g. in the Spratly Islands dispute). The then Aquino government countered by proposing a referendum. Before its constitutionality could be tested a compromise agreement was reached in October 1991, which extended United States control until 1994 [31]. Until then the US could continue to occupy Subic Bay rent-free and use it as the primary port, training area and logistics support to the Seventh Fleet and "Task Force 77", a carrier task force assigned to the Indian Ocean. Given that the ultimate issue is not the preservation of Subic Bay but the maintenance of stable and friendly government in the Philippines, the US abandoned Subic Bay in November 1992, leaving behind installations valued at US$8 billion [32]. The ditty " W o n ' t Go Back to Subic Anymore" incorporated in the Book o f Navy Songs published in 1926 proved prophetic [10, pp. A1 l-A13]. No longer will the ships' bands play it when US sailors leave the ship, homeward bound, for discharge or transfer. The last American warship, USS Belleauwood, left in 1992.

Refrain: "Oh, We Won't Go Back to Subic Anymore" Having pulled out of Subic Bay the United States has revised its strategic options. Changes have occurred in the role of the US Navy and its basing network in the Western Pacific because its forces have been considerably reduced from past levels. Attention has shifted to relying on governments that support US presence and retaining selected bases. The logistic support force for the Seventh Fleet, for instance, has been switched from Subic Bay to Singapore and some units have been relocated in Guam. In the process, security has been redefined so that it relates to

336

US Western Pacific geostrategy: P J Rimmer

Figure :3. P r o p o s e d Maritime on [16]).

Complex

layout,

Subic

(Source: B a s e d

new international economic forces and covers non-military issues such as the environment. Also the US needs fewer bases because navy ships powered by gas turbines need less maintenance and could lead to the use of floating bases. Although this possibility may result in the abandonment of the entire US network of naval cityports in the Western Pacific this scenario is unlikely given the propensity of the US military to seek at least a residual presence to engage in flexible and rapid deployment when conflicts occur in the Third World. Although Subic Bay seemed so vital in the past, the US military has successfully reorganised its operations. For Subic Bay itself the situation has been rather different. Subic Bay." a freeport city

Any appraisal of the transformation of Subic Bay from naval cityport into a freeport city since 1992 is problematical. 8 An examination is made of economic plans, potential and progress, but any assessment has to be conscious of Filipino politics and the boosterist role of the media. Subic Bay is entrapped in rival presidential ambitions, regional jealousies and family political dynasties. These local factors make it difficult to distil clear lessons from Subic Bay for those involved in converting US bases in Guam, Okinawa and Panama, and former Soviet bases in Lithuania and Vietnam into commercial and industrial hubs. Plans 8An early assessment of the transformation of Subic Bay into freeport city appears in [33] and in [45].

A comprehensive conversion plan was promoted for transforming Subic Bay into a Maritime Industrial Complex and Clark Air Base into a Civilian Aviation Complex the new site for Manila's Ninoy Aquino Airport (Figure 3). As part of an overall Clark-Subic regional

337

US Western Pacific geostrategy: P J Rimmer

development plan the Maritime Industrial Complex was to include a container port, ship repair and shipbuilding facilities, and an industrial estate [16], pp. 70-93. There were even ideas for an Olongapo Freeport and an agro-industrial estate [22]. Before an agreement was reached, a major natural disaster overtook the bases, which halted the conversion plans. On 15 June 1991, Subic Bay was buried under 30cm of ash from the explosion of Mount Pinatubo, 32kin from the base [10]. The collapse of buildings under the ash's weight and lack of water and electricity led to the transfer of 20000 US dependents. Clark Air Base was a total loss and everything from hospital equipment to lavatory fittings were looted once the US left. Subic Bay had fared better and US dependents returned in September 1991. After a clean-up renewed attempts were made by the Government of the Philippines to transform Subic Bay. These led to the designation of the former US Naval Base, the City of Olongapo and the Muncipality of Subic as the Subic Bay Freeport and Special Economic Processing Zone (EPZ). The Freeport was declared a national priority program by President Fidel V. Ramos through Proclamation No. 50 on 18 September 1992, in a bid to make use of existing facilities and to foster private participation. Its designation as a special EPZ entitled the Freeport to offer income tax holidays, exemption from import and export duties and taxes, financial assistance from government institutions and simplified export procedures. 9 The Subic Bay Metropolitan Authority (SBMA) was established under the Bases Conversion and Development Act of 1992 (R.A. No. 7227) and charged with the overall management of the 60000-hectare Subic Bay Freeport and Special Economic Zone. Specifically, the Authority, with a force of some 8 000 workers, is responsible for transforming the area into a self-sustaining industrial, commercial, financial and investment centre, l0 9There are 10 special Export Processing Zones (EPZs) in the Philippines, which are managed by the Export Processing Zone Authority (EPZA). This government corporation was established by Presidential Decree (P.D. No, 66) in 1972. An Executive Order (E.O. No. 567) dated 13 November 1979 granted the EPZA further power to designate a specific plant of an industrial firm or a group of firms as a special economic zone. 1°The Bases Conversion Development Authority (BCDA) strategy is to sell the Fort Bonafacio bases adjacent to Manila's financial district of Makati to fund its three "flagship" projects involving the conversion of Subic Bay, Clark and Baguio City's Camp John Hay. Other BaseCon programs did not involve the creation of an authority, but were corporations created and subject to the Securities and Exchange Commission. ~lTelecommunications are provided by Subic Telephone Co owned 40% each by AT and T of the United States and the Philippine Long Distance Telephone Co. Enron Corporation is engaged in power generation through its US$128 million 116-megawatt power plant in Subic Bay. 12A ferry service was instituted between Manila and Subic by Eagle Ferry Cruises Inc. in October 1996.

338

Potential

Available for immediate use in the 18 000-hectare Freeport Zone were a range of transport facilities (berthing facilities at the naval station, a naval air station, ship repair and naval ship repair facilities and an excellent internal road network). In addition, there were large fuel storage facilities, public utilities (power plants, electricity, water and sewerage, and telecommunications systems), 600 administrative buildings, over 1800 housing units, a hospital, schools and sport facilities (a golf course, six swimming pools, a bowling facility and 38 tennis courts). II All of these were within a security fence. Further Subic Bay has an inexpensive, reasonably well-trained, English-speaking workforce. Some had skills derived from maintaining American warships. Subic has relatively lower land costs compared with other sites in Asia and duty-free privileges on all raw materials used in manufacturing. The freeport city is easily accessible by air to major cities within the Asia-Pacific (Table 5). It is 2 hours from Taipei. Also Subic Bay has obvious tourist potential with its beaches, mountainous coastline and natural forests. The presence of the Aeta aboriginals in the forests offers the possibility of cultural tourism and there are good game fishing prospects. A major drawback to Subic Bay's potential is the poor land transport connections with Manila, which take at least two hours.12 On occasions, the mixture of mud and volcanic debris (lahar) from the Mount

US Western Pacific geostrategy." P J Rimmer Table 5. Subic Bay's access to major Asian-Pacific cities City

Airhours

Shippingdays

Landhours

Manila

0.3

--

Kaohsiung Hong Kong Ho Chi Minh City Singapore Shanghai Seoul Jakarta Kuala Lumpur Tokyo

1.5 1.5 2.0 3.5 3.5 3.5 4.0 4.0 4.0

3.0 3.0 3.0 4.0 4.0 5.0 7.0 7.0 7.0

2.0 ----------

Source: Subic Bay Metropolitan Authority.

Pinatubo volcano has necessitated numerous detours and rerouting during the typhoon season from July to mid-October. In September 1995, Subic Bay was isolated by the lahar flows following heavy rain. Only 8.8km of the proposed SUS600-million, 187-km expressway leading to Subic had been completed by November 1996.13 No construction has been undertaken on a planned rail link between Subic and Clark. 14 Other drawbacks were the Subic Bay airport at Cubi Point, which was stripped of any equipment the US Navy could reuse following the looting of the Clark airbase. There are no direct international air passenger services. The port also lacks facilities that could make it a hub such as a local commercial court. Clearly, the provision of infrastructure will be the key to Subic's ultimate success. Progress

13The Manila Subic Tollways Corporation has been formed as a joint v e n t u r e by the government-owned Philippine National Construction Corporation and the Lopez f a m i l y - o w n e d First Philippine Development Corporation (a n e w l y incorporated firm formed by Benpres Holding Corporation and First Philippines Holding Corporation). Subsequently, renamed Manila-North Tollways the venture is essentially a Benpres company. Complaints in Congress that Benpres had obtained an exclusive contract w e r e overruled by President Ramos. The new highw a y will not be completed until 1998. 14A feasibility study has yet to be undertaken of the proposed US$900 million Spanish rapid rail system linking Subic Bay, Clark and Manila. 151n N o v e m b e r 1996, Subic Bay Metropolitan Authority a n n o u n c e d there w e r e 217 projects worth o v e r 1.5 billion [44]. 16The general cargo port has one fixed pier, two berths, a cold storage facility and a container stacking yard. There is an 800hectare airport facility with a 2744-m r u n w a y capable of handling j u m b o jets. ~71n 1994 the US i n d e p e n d e n t Coastal has leased storage at Subic Bay. With Petroleum A u t h o r i t y of Thailand it intends to establish an e x p o r t base to cater for the markets in China and Vietnam.

In appraising progress towards converting bunkers into warehouses, airstrips into commercial airports, and barracks into hotels, attention is focused on the statistics supplied by the Subic Bay Metropolitan Authority. By 31 December 1995, investment in the Freeport totalled almost US$1.3 billion. This figure covered 190 proposed international and domestic projects of which 107 were in operation (Table 6). Is Small companies predominated. About half were foreign. Filipino companies were well represented in transport services and tourism/retailing, and the Taiwanese in manufacturing. Three areas of operation are worth further investigation: regional transhipment hub services; tourism/ retailing; and manufacturing. Regional transhipment hub services involving sea and air transport and warehousing are provided primarily by both Filipino and American companies, t6 The seaport handles the container feeder services of the Philippines-based Madrigal Wan Hai Lines. Also bi-weekly feeder services in vessels around 1500 TEU capacity are offered from Subic Bay to the major hub ports of Kaohsiung by Maersk and American President Lines, and to Singapore jointly by Pacific Eagle Lines (Singapore), Regional Container Lines (Thailand) and Singha Shipping Ltd (a subsidiary of Singapore's Neptune Orient Line). 17 The airport was opened to commercial and cargo traffic on 30 April 1995 after upgrading of the airport's runway and apron parking. Its main user is an American firm, Federal Express (Fedex), which is the market leader in the overnight small package business. Since September 1995, Subic Bay has been the regional hub for Fedex's "AsiaOne" air cargo operations serving leading Asian commercial and financial centres including Beijing, Hong Kong, Kuala Lumpur, Manila, Osaka, Penang, Seoul, Shanghai, Singapore, Taipei and Tokyo; with part of the

339

US Western Pac![ic geostrategy: P J Rimmer Table 8. Cumulative number and average size of Subic Bay freeport approved projects at 31 December 1995 Nationality Filipino

Taiwanese

American No

Japanese

No

Av. size US$ 000

No

Av, size US$ 000

Av. size US$ 0O0

16 15 23

1393 2029 495

--2

--50 250

17 15

5902 2184

1

48 000 .

6

1455

21

1904

1

500

2

--

--

21

6829

1

5000

1 93

2482 2241

5 50

6005 7238

2 11

200 31 915

Others

No

Av, size US$ 000

----

----

Total

No

Av, size US$ 000

No

Av, size US$ 000

2 6 5

586 386 678

34 23 19

6498 6110 7432

2

48 152

20 15

12 231 2184

6375

7

509

37

3121

2

1520

6

1615

30

5371

1 5

216 3201

3 31

1442 3896

12 190

1771 5569

Hub services

Transport Warehousing

1 2 4

100 000 53 885 34 350

Others Tourism a Retailing

.

.

.

.

. .

. .

.

.

Manufacturing

Light industries Appliances/ electronics Machinery Total

Note: alncludes hotels and restaurants. Source. Ref. [39].

18Employing 320 people, Subic Bay is the only Federal Express site in Asia that can handle heavy freight, document sorting and express freight. Six freighters, comprising Airbus A-320s and McDonnellDouglas MD 11s, are based at Subic, which offers 24-hour operation and self-handling rights. Originally, Federal Express had favoured locating in Taiwan but the authorities required a higher mix of transhipment cargo than the American company could guarantee. Its rival United Parcel Service, however, has reached an agreement with the Taiwanese authorities. TNT Worldwide Express is located in Manila. A study by Schwieterman [34] confirms Taiwan is the best location followed by Hong Kong. But these are being bypassed by express carriers because of restrictive aviation policies and airport problems. If these problems are resolved, the Philippines may lose its current dominant position as the Asia-Pacific centre for express freight in the longer-term. 19Clark Development Corporation has control over 33600 hectares. The government has declared the airport a Special Economic Zone with incentives to attract investors to the stripped-down military buildings. Some 140 foreign and local firms have signed lease and sub-lease agreements. Their numbers include Kita Corporation, a Filipino-British firm assembling colour television sets, video players a n d cassette tapes, Yokohama Tyro Co. a n d Sampo Technology, a T a i w a n e s e appliance manufacturer. A t e m p o r a r y air terminal was constructed for the APEC summit meeting as Subic Bay did not have sufficient parking space. DHL, a major rival of Federal Express, is reported to be considering using Clark as a cargo a n d distribution hub. The Mondragon Group are also intending to develop an entertainment city at Clark.

340

shipments going to the US for next day delivery. 18 The Hong Kongbased Cathay Pacific Airways Ltd, however, abandoned plans for frequent international passenger flights to Subic Bay International Airport because they were not financially viable. Clark Development Corporation has also refurbished the 4400-hectare Clark airbase, which is being transformed into an international commercial airport. 19 Tourism~retailing facilities are dominated by Subic Bay Resort and Casino Inc. 2° The casino resort complex, comprising two hotel~casinos, had a 100-room addition and developed an international convention centre to accommodate plenary sessions of APEC's meeting held in the Philippines during November 1996. 2i Twenty-one villas were also constructed for VIP guests (afterwards they were leased out as part of a seaside club). Grande Island, site of the former refugee processing centre, now houses Subic International Hotel. Subic Bay has also been developed as a duty-free shopping centre. In 1995 some 2.5 million people visited Subic Bay. Initially, Filipinos living outside the Special Economic Zone were allowed to spend US$200 on goods at its six duty free stores. Appliances, jet skis, cars and yachts were untaxed provided they remained in the Freeport. After claims of rampant smuggling and corruption, these privileges were withdrawn, at the beginning of 1996, though residents could continue to purchase goods duty-free up to $100 per month. 22 Mam4facturing activities are concentrated on light industries. Ninetythree companies have committed $US615 million and promised over 13000 low-paid jobs. By the end of 1995, 60 companies were operational. Half were foreign, attracted by a raft of incentives. 23 A major feature is the 320 hectare Subic Bay Taiwanese Industrial Park, a joint venture between the Subic Bay Metropolitan Authority and Taiwanese developers, China Development Corporation and Century Development Corporation. 24 Envisaged as part of Taiwan's "southward strategy" designed to offset any overconcentration of Taiwanese direct investment in Mainland China, this project has attracted 39 Taiwanbased companies engaged in light industry such as electronics, garments and footwear. 25 The firms include Acer Information Products (Philippines) Inc., the Taiwanese manufacturer of motherboards, and

US Western Pac(fic geostrategy." P J Rimmer 2°Initially, 55% was owned by Resort World Bhd and Genting International PIc, but they withdrew because the state-run Philippines Amusement and Gaming Corp (Pagcor) objected to Genting poaching Filipino customers from its casinos. In July 1994 their stake was sold to Metroplex Bhd, which brought its stake to 85% (the other 15% is owned by Paxell Investment, a private company). Metroplex is managed by the daughter and son-in-law of Chan Teik Huat, founder of the Genting casino in Malaysia. Metroplex plan to have three casino resorts operating in Subic. 21The APEC convention centre was the former US Navy Officers Club. A cruise ship has also been acquired to serve as a 240-room floating hotel. 22Duty-free vehicles have allegedly left the zone. 23Incentives included: 100% foreign ownership, the waiving of taxes on import-export operations; a corporate tax rate of 5% (high by Hong Kong and Singapore standards but no other taxes were levied); and permanent residence visas for firms investing over US$250,000. 24These Taiwanese firms are run by the ruling Kuomintang. The Taiwan government's overseas industrial zone development program also includes sites in Paraguay, Panama, Batam Island and Hanoi, Vietnam. Loans for the Subic Bay project had come from Taiwan's International Cooperation Development Fund under the Ministry of Economic Affairs. As loans have exceeded its ceiling of US$400 million, Subic Bay may not receive US$19 million for the second stage of the project. 25These incentives have attracted Subic Star Inc. a subsidiary of Frolics the Taiwanese manufacturer of Reebok, LA Gear and Timberland footwear employing some 1 000 people, and Subic Bay Apparel employing 450 workers in manufacturing brand-name suits for the US market. Superior Star, however, has closed its operations due to the worldwide decline in the market for Reebok shoes. 26Acer's first manufacturing centre at Subic commenced operation in June 1995. Acer is now proceeding with two more factories at Subic Bay and a repair centre. 27The Subic Bay Shipyard Corporation comprises a 30000-deadweight-tonnes graving dock and three repair berths, and repair shops for hull and machinery work. 28japanese manufacturers have preferred to locate in a large industrial park near Manila promoted by Japanese trading houses. Potential investors say it is too far from Manila and that ground access is poor. 29The steaming distance from Subic Bay to Hong Kong is 590 miles (14-hours berth-to-berth at 16 knots), 500 miles to Kaohsiung, Xiamen a little further, and Shanghai 1080 miles. It would cost an estimated US$55 for one TEU to be shipped from Subic to Guangzhou. Hong Kong, Kaohsiung or Xiamen [35].

Hitachi Taiwan. 26 Already these electronics firms are being touted as the base for a future "cybercity". The Subic Bay Shipyard Corporation is being operated by Keppel Corporation of Singapore. 27 Other activities, include container crane manufacturing and assembly, and appliance manufacture. An agreement between the Japan Industrial Development Organization to develop a 53-hectare technology park has been less successful because of the recession in Japan. 28 Further, the US$750 million Asia-Pacific regional assembly plant of the American firm, General Motors, Inc., which could have anchored Subic Bay's development, preferred to locate in Thailand's Eastern Seaboard Region, south of Bangkok, rather than Subic Bay. Expectations of thousands of companies touted by the Philippines government based on the initial enthusiasm following the US pullout, however, have not materialised. Collectively, regional transhipment hub services, tourism/retailing and manufacturing provide an estimated 44000 jobs (including construction workers). Jobs are still scarce. Complaints abound about non-payment of minimum wages. Unemployment in the area is still high. The freeport zone still has the air of a naval cityport with its remaining missile silos and large sheds. The conversion of Subic Bay from naval cityport to freeport city goes modestly ahead. The region has recovered to a large degree from the withdrawal of the US military, which pumped billions of dollars into the region. Clearly, dreams of turning Subic Bay into a trade, industry and distribution centre rivalling Hong Kong or Singapore by taking advantage of its strategic location in the South China Sea are farfetched because it lacks hinterland trade. Clark will also not be a "second Las Vegas". More could be done with Subic Bay if port dues are reduced below those of Hong Kong and working and berth ability were made available around the clock. There would then be the prospect of 5000 T E U mother ships by-passing Hong Kong and its sister ports of Shekou and Yantian, and docking in Subic Bay, feedering from there to the shallow ports in southern China. 29 Politics is the biggest threat to the realisation of this economic opportunity and future progress. Politics

Since its inception, Subic Bay Metropolitan Authority has been chaired and administered by Richard Gordon, the former Mayor of Olongapo. Concerns have arisen over possible further eruptions of Mount Pinatubo; the past failures of Filipinos to turn other vacated bases to good use; and fears that Richard G o r d o n will turn Subic Bay into a family business. Richard G o r d o n is the grandson of a former US Marine who opened the first dancehall in Olongapo patronised by the US Marines [36]. Following in both his mother's and father's footsteps, G o r d o n had been a long-time mayor of Olongapo (except for 2 years in the mid-1980s when the Aquino government replaced him with an officer-in-charge). 3° Rival politicians complained that being both chairman of the Subic Bay Metropolitan Authority and mayor of Olongapo contravened the Constitution. The Supreme Court upheld their claim and Richard G o r d o n was forced to resign as mayor. Subsequently, his wife was elected mayor. 31 As noted, Richard G o r d o n was an ardent supporter of the US presence and predicted an economic crisis after their withdrawal. When

341

US Western Pacific geostrategy: P J Rimmer 3°Richard Gordon's father was Mayor of Olongapo from 1964 until his assassination in 1967. His mother served as mayor from 1968 to 1972. 31Rep. Katherine (Kate) Gordon's Zambales seat in Congress was won by James Gordon, Richard's brother. Olongapo's vice-mayor is Cynthia Esteban Cajudo, Katherine's cousin, and Richard's nephew, John Carlo Gordon de los Reyes, and cousin, Resurrection Gregorio Cruz are councillors. Family ties are the norm rather than the exception in Filipino politics. 32Subic Bay Metropolitan Authority has the power to raise funds from local and international sources to finance projects. Not surprisingly, it has been subject to Congressional claims that the bids for navigational aids and improvement to the passenger air terminal were overpriced. 33Bidders to operate Subic Bay Container Terminal have to be able to: (a) operate container terminals in two different ports; (b) handle a total of at least 250000 TEU; and (c) provide container services to at least five lines. Seven bidders prequalified but Asian Terminals Inc., P and O Australia Port Pty Ltd, Taiwan's Evergreen Marine Corp. (through Peony Investments SA), and International Transport Services Inc. (a US-based unit of K-Line, Japanese shipping firm) were eliminated. Hutchison Port Holdings, International Container Terminal Services (ICTS) and Royal Port Services submitted bids and business plans. All three were approved by the technical committee. A joint venture of Hamburg Port Consulting and the local Delgado family, Royal Port Services then claimed ICTS violated anti-port monopoly laws. This complaint was shelved by the Subic Bay Management Authority (SBMA), which opened the envelopes containing royalty bids to SBMA for every container handled after 25000 TEU. ICTS offered the highest bid of US$58.80 per TEU; Hutchison US$20.80; and Royal US$15.09. The declaration of the winner was deferred because of the Royal protest. Then the SMBA upheld the Royal protest and awarded the contract to Hutchison. This led to the ICTS protest and the involvement of the Philippine Congress and the media. Clearly, the prequalification terms should have recognised the antimonopoly laws and voided the ICTS bid before opening the envelopes. A reevaluation of the bids by the SBMA [46] reaffirmed its decision as Hutchison promised to invest US$120 million in the port. However, as the President was not informed of the outcome before it was announced he refused to endorse the decision [43]. About US$200m is required for berth compaction, cranes, handling equipment, laydown area, parking and reefer points [35].

342

this did not eventuate, he sought assistance from both the World Bank and the Asian Development Bank to draw up development plans. In 1995, the World Bank approved a US$40-million loan to improve infrastructure and administrative and environmental management in the Freeport and Special Economic Zone. In 1996, the Asian Development Bank is evaluating and examining opportunities in areas adjacent to the Subic Freeport and Special Economic Z o n e - - a follow up to an earlier study undertaken in 1993. An astute politician, Richard G o r d o n saw Subic Bay as a springboard for a possible future attempt on the presidency in 1998. He mobilised 10000 volunteers under the slogan "Protect, Preserve and Prosper" to keep away looters and maintain the base's assets including mowing lawns, clearing away garbage and painting facilities. Those who looked after Subic were promised the first choice of jobs. Rather than following the World Bank's plans, Hall [36] claims Richard G o r d o n has used volunteer labour to transform the former base into an entertainment district with casinos and nightclubs. "The result is lucrative income without the inconvenience of heavy capitalization or worker payrolls" [36] (p. 116). Richard Gordon's plans for expanding the area of Subic Freeport have met resistance from regional politicians. 32 The Bases Development Authority wishes to develop Morong into a separate economic zone and the former Philippine Refugee Processing Centre into the Bataan Technology Park. This may explain why Richard G o r d o n has been active in opposing a new petrochemical complex in Morong, claiming it will pollute Subic Bay's waters and damage the area's forests. Paradoxically, reports of toxic waste left behind by the military in Subic Bay, however, have been left uninvestigated [38]. Richard Gordon's presidential ambitions and the undeclared aspiration of Fidel Ramos to secure an extra term (at present forbidden by law) may have triggered opposition to the Subic Bay Metropolitan Authority's decision to award the operation of the Subic Bay Container Terminal to the Hong Kong-based Hutchison Port Holdings Ltd and the Guoco Group. 33 This Authority's privatisation decision was challenged by International Container Terminal Services (ITCS) Inc., a Philippines-based company that has a 25-year contract to manage Manila International Container Terminal [38]. 34 Led by Richard Gordon, the Subic authorities have tried to justify the decision by claiming that giving the contract to ICTS would have violated anti-monopoly directives from the Department of Transportation and President Ramos. The matter attracted the attention of the special anti-graft unit and was sent to President Ramos for arbitration. Subsequently, the President has ordered the Subic Bay Container Terminal to be put out for retender. Further doubts, therefore, have been cast about the unpredictability of doing business in the Philippines as a number of privatisation projects have been stalled by bureaucratic reviews and litigation. Insulation from indecisive national policies would be a plus [39]. Some political conundrums remain. What would happen to Subic Bay if Richard G o r d o n successfully ran for President in 1998? Would he take his talented staff with him? If he was unsuccessful, would his successful opponent relieve him of the Chairmanship of the Subic Bay Metropolitan Authority? How would Subic Bay fare without Richard Gordon's leadership? When could Subic Bay be considered self-

US Western Pacific geostrategy. P J Rimmer

sustaining? Political risks involving the future of Subic Bay still cannot be disregarded [40]. Subic Bay has the potential to be a showplace of what the Philippines could be like [41]. It offers Filipinos the last opportunity to make something of their inherited colonial infrastructure.

Envoi

34International Container Services Inc., is a joint venture between the Razon family, which ran the Manila container port under Marcos, and the publicly-held Anscor, the holding company of the Soriano family, owners of San Miquel, the food and beverage conglomerate.

Much emphasis has been focused on economic and political factors involved in the transformation of Subic Bay from naval cityport to freeport city. The social dimension remains largely unaddressed. What has happened to Olongapo's sex-workers and expatriate bar-owners since the US Navy left in 1992? Reportedly, sex workers have declined from their peak of 16000 to about 500 [42]. Volunteers supported by overseas Christian organisations run a woman's group called Buklod ("Banding Together") to train women who have left the sex industry in how to work as seamstresses or how to run small businesses (e.g. general goods stores) with a government loan. Recurrent concern is still expressed about the plight of Filipino-Ameri-Asian children supported by American charities. Olongapo City has been "sanitised" by the Mayor, Katherine Gordon, and most of its bars and clubs have gone up-market as karaoke parlours to cater for Filipino tourists and foreign investors. Clearly, this anecdotal evidence is slender but has to suffice until deeper analyses of everyday life and life histories of people in Subic Bay are undertaken.

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States Naval Institute, Annapolis, 1992. Wing, C., The United States and the Pacific. In The Sun Never Sets: Confronting the Network of Foreign US Military Bases, eds J. Gerson and B. Birchard, Southend Press, Boston, MA, 1991, pp. 123-148. Davidson, P. B., Vietnam at War: The History: 1946-1975. Presidio Press, Novato, 1988. Anderson, G. R., Subic Bay: from Magellan to Mt Pinatubo: History of the US Naval Station. Subic Bay, Lazer, Dagupan City, 1991. Stoltzfus, B. and Sturdevant, S., From Samar to the Seventh Fleet: women's experiences of sexual labor in Olongapo. In Critical Decade: Prospects for Democracy in the Philippines in the 1990s, eds D. Flamiano and D. Goetzen. Philippines Resource Center, Berkeley, 1990, pp. 137-142. Berry, W. E. Jr, US Bases in the Philippines: The Evolution of the Special Relationship. Westview Press, Boulder, CO, 1989. Johnson, D. W., Bear Tracks in Indochina: An Analysis of Soviet Presence in Vietnam. Air University Press, Maxwell Airforce Base, AL, 1990. Arkin, W. M. and Fieldhouse, R. W., Nuclear Battlefields: Global Links in

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