“The Big IOU” | Photo by brent flanders via Flickr/CC BY-NC-ND 2.0
How the “I2D2” May Work
There is a way to pay off the PH foreign debts in 10- to 15 years. How? Offer the Philipines as the pilot of the I2D2 project of James D. Robinson III. We introduced innovations in the I2D2 concept. The I2D2 will receive all the payments for debt servicing from the Less-Developed Countries (LDCs) like the Philippines and issue bonds and stocks to their bilateral, multilateral, and commercial creditors.
- My position paper, “IOUgoslavia,” discusses the I2D2 concept that was eventually to the Joseph Ejercito Estrada administration on Dec. 4, 1998, in Los Angeles through the visiting First Lady. On May 28, 1999, I introduced the same proposal to visiting Philippine Trade and Industry Secretary Jose T. Pardo during the annual convention of the Federation of the Philippine American Chambers of Commerce in Anaheim. While he answered my second letter on another topic, Secretary Pardo has not replied to the I2D2 proposal. Later, he took another position at the Department of Finance.
- In all my proposals, I said that the annual interests paid by the Philippines to service its foreign debts would remain in the country and invested in new industries by the I2D2. The Philippines now spends annually more than $7.0-billion to service its foreign debts. I also said that the economic impact of more than $7.0-billion (even if it came in pesos) in fresh investment capital per year would significantly impact the Filipino people’s day-to-day lives. (In fact, for 2008, the government budgeted 624-billion pesos or $12.48-billion to service both its domestic and foreign debts.) In a five- year time frame, that would amount to more than $35-billion in capital expenditure. That would be more than enough to turn the Philippines from an economic purgatory to a financial Mecca, if not an economic Utopia.
- I further propose that the I2D2 invest only in the fields of tourism and agriculture. These investments will generate foreign exchange so that eventually, the I2D2 will have the foreign currency to pay dividends or pay off the foreign obligations. I also propose investments in new industries such as ceramic factories or quick-drying cement plants to provide materials for the infrastructures necessary for tourism and agricultural industries.
How to Implement the “I2D2” Solution — As Managed by the States’ Pension Funds
A. POLITICAL LOBBY. It is needed to get the United States’ support to approve the I2D2 solution for the external debts of the LDCs and its adoption of the Philippines as a pilot project. Filipino-, Mexican- and other minority Americans have the resources and the rapport with the American private and public leaders to wage an influential lobby.
B. A short cut to obtaining the American political leadership support is for the 4.0-million Americans of Filipino ancestry and the 36-million Mexican Americans and their political leaders to persuade President Joe Biden to issue an executive order calling for a federal initiative to evaluate the I2D2 proposal.
Conclusion: How to Prevent the Formation of “Economic Purgatories”
The recovery of Third World nations’ economies and developing countries like Mexico is a significant concern to the United States. An “IOUgoslavia” scenario is a more substantial threat to the world’s security than the crisis that was the former federation of Yugoslavia. This threat consists of the Less Developed Countries (LDCs) like the Philippines and Mexico to service their foreign debts.
The case of the Philippines is unique, as it is a former colony of the United States. It is alarming to the American people. Suppose the Philippines get Balkanized due to the Filipino government’s failure to provide the Filipino people’s basic requirements based on the staggering debt-servicing conditions. If this happens, the United States will become more involved in the Philippines than in Yugoslavia. The number of Filipino Americans is more than twice the number of Bosnian, Serbian, or Yugoslavian Americans. There is no substantial American investment in the former Yugoslavia, while there are more than $5-billion in American investments in the Philippines. There are more than 100,000 American citizens who are residents of Metro Manila alone. There are few American civilian residents in Bosnia, Croatia, or even in Serbia.
“If the I2D2 were to be funded by the pension funds of several states — organized as a consortium — and managed by the pension-funds financial whiz kids, it would create economic development and financial bonanza for all the participants. It can be the topping if the Biden Administration is described metaphorically as a fiscal pizza for billions of American allies and maintain America’s pension funds’ solvency.“
It may be cheaper for the United States to assist Filipino Americans and the well-meaning Filipinos to help turn around the Philippine economy. If the predicted Balkanization of the Philippines occurs primarily because of economic reasons, it may be costlier to America in the long run. It may force the United States to intervene in the country, costing more in American taxpayers’ money. The American military may also suffer so many casualties. While the Filipino nation is like purgatory, its economy is still afloat despite the inherent difficulties and the detrimental factors discussed in this position paper. Therefore, the United States should exercise its moral persuasion and logistical capabilities to initiate the socioeconomic, structural reforms that many Filipinos and Overseas Filipinos have been demanding. The Filipino nation’s moral fiber will condemn America’s most trusted allies in Asia to a fate worse than purgatory if they wait and let social cancer ravage further. After all, as Stanley Karnow said, the “Philippines was molded after America’s image.” The United States can do no less but help its former ward, the Philippines, achieve a Pacific version of the American Dream.
If the I2D2 were to be funded by the pension funds of several states — organized as a consortium — and managed by the pension-funds financial whiz kids, it would create economic development and financial bonanza for all the participants. It can be the topping if the Biden Administration is described metaphorically as a fiscal pizza for billions of American allies and maintain America’s pension funds’ solvency.