“Economic Cooperation: Pacific Development Options towards a New Development Goal”
The recent announcement of the BRICS (Brazil, Russia, India, China, South Africa) countries capitalizing a New Development Bank, as well as the 21-country MOU committing to an Asian Infrastructure Investment Bank (AIIB), creates a much-needed alternative to the neoliberal funding/investment institutions represented by the World Bank and the Asian Development Bank. Motivated by a need to promote further integrations among both Pacific Small Island States and occupied territories, this paper seeks to provide context as to how BRICS presents new opportunities for:
• Revising a regional regulatory approach towards accounting for equity, promoting small island assets and resources;
• Integrates infrastructure while promoting new trade routes between Latin America and Asia, specifically between ASEAN-plus or the China-led RCEP and the MERCOSUR and ALBA economies;
By way of introduction, President Obama announced his Pacific Pivot during APEC, the Asia Pacific “Economic Cooperation” when it was hosted in Honolulu in 2011. New regional alignments emerged in the trade and military intersections that suggested that this was not simply a free-trade agreement, rather, an attempt to keep the investment regime solvent at a time when US deregulatory free-trade or free market policy had left US financial investments precarious after the 2008 economic recession. For investors, Asset-Backed Securities could not be leveraged against the assets that hedge funds and financial institutions claimed, hence, when the financial bubble burst, consumers discovered that many of their investments simply lacked backing.
I would argue that this system for transferring debt has been systemic to not only the U.S. but to OECD advanced economies who’ve been leveraging debt through complex financial arrangements against the commodity resources of developing countries as well.
In addressing the intersection of militarization and trade in the Asia Pacific, and specifically, focusing on competing partnerships like the Trans-Pacific Partnership Agreement being proposed among 12 Asia-Pacific countries, and the growing capitalization of the BRICS partnership, what is apparent is that across Oceania, there is an opportunity, if not an obligation, to capitalize on the logistical benefits that will come from this competition.
As I continue to describe this intersection between trade and militarization, I’m looking at it from standing on a shore on an island in the Pacific, and will approach economic cooperation as something that takes place among empires and empire building.
The targets represent a small percentage of US military bases in the US and among developing countries. The white arrows are simplified ocean currents and the red lines represent shipping traffic. Among Pacific Islands, the pink areas represent Pacific Island Countries and the yellow areas represent “occupied territories” that are seeking independence from France, New Zealand, Chile, Indonesia and the United States. Now what I really quickly want to draw your attention to is the blue line near the equator because for Asia-Latin American trade, this would seem like the most direct route, while bypassing the US.
This map is very nuanced in political, economic, indigenous, and ecological terms, and should be approached with much greater scrutiny and detail. There is an abundance of various collaborations crossing from Timor Leste to Hawaii to Rapa Nui amongst academics, activists, and practitioners, and with this broad brush stroke, this map may provide some context as to how the geopolitical map may appear as competition evolves between BRICS and US-led trade cooperations.
When speaking about trade agreements, we’re really addressing treaties, something that has a legally binding force behind it. Trade agreements establish the rules and regulations as to how we move goods and services across national boundaries, which in regard to Asia-Pacific trade is the entirety of the Pacific Ocean.
In the US, there may be federal regulations like Dodd-Frank that since the 2008 financial collapse have at least have attempted to protect its citizens from liberalizing interpretations of the free-market system, but internationally these regulations don’t exist. Free-trade agreements like the TPPA will bind smaller agreements, like PACER-Plus to adopt the rules and regulations that privilege the dominant trade mechanisms. If we include the US-EU Transatlantic Trade and Investment Partnership that the US is negotiating alongside the Trans-Pacific Partnership, we are looking at agreements that account for over half the global economy, agreements that are being negotiated in secrecy.
Fundamentally, these agreements are imposing free-market rules privileging public-private partnerships, which will pry open sovereign properties to international investment. This is occurring throughout both the US federal system, as well as in World Bank recommendations and embedded in the Country Partnership strategies. Among Pacific Island Countries, public-private partnerships were also recommended as an alternative to development in the recent, “State of Human Development in the Pacific” report, released by the UNDP Pacific Centre.
Ever since the collapse of the Soviet Union in 1991, we have seen the world tip towards the demands of neoliberalism as the US began to fill investment gaps left by the Soviet Union, and we can trace the movement of US direct investment against market conditions as we move from a multi-polar to a unipolar global economy.
Free trade agreements like NAFTA– the North American Free Trade Agreement– are a special kind of privileged, deregulated free-market investment principle that the US continues to tout as the moral compass of the global economy. And it is because of this alluring seduction of democracy and transparency that the ideals of a free-market may be reminiscent of the puppy dog vows of honeymoons that quickly turn rabid. And we know these vows to be untrue because the blowback of the US-led NAFTA and CAFTA policies has been extremely disadvantageous to both labor and farmers. For US investors, the TPP will likely be a huge benefit as long as developing countries remain corralled within these binding neoliberal free trade agreements.
NAFTA was concluded in 1994– a year before the WTO was signed—and it was the first FTA after the collapse of the Soviet Union in 1991.
To quickly illustrate, before NAFTA, Mexico was a Marxist revolutionary state that went through massive agrarian land reform in the early part of the 20th century. Up through the mid 1980s, Mexico had cultivated relations with both the US and the Soviet Union as part of its overall foreign-policy strategy. Mexico was not solely dependent on the Soviet Union, like Cuba was for example, and benefited from their relations with Russia as a means to give Mexico greater independence from the United States. After the collapse of the Soviet Union, however, Mexico and most of the ex-Soviet states became failing states.
For those that had become failed states, the US and other bully economies took full advantage of their economic weight and began to assert the neoliberal infrastructure, exploiting labor and national resources through private or public-private partnerships undermining state-owned resources and enterprises.
Just to lay a very basic groundwork on what the TPP is: In 2008, the US joined the original TPP4 when it was an exploratory Asia-Pacific deal between Chile, New Zealand, Singapore and Brunei. Since joining, it has grown into a 12-member, strategic economic partnership, led by the US and is part of Obama’s overall Pacific Pivot, a “rebalance” that is shifting US economic and military focus into the region.
The TPP facilitates the trade arm and accounts for about $28 trillion dollars GDP, which is about 32% of the global economy.
Despite the ongoing instabilities of hotspots across all regions in other parts of the world, plans to transfer 60% of its military assets to the Pacific by 2020 is still very much underway.
And this 60% build-up includes base-building and integrating the militaries with those whom we are already implementing trade and security arrangements with.
In Japan’s case, the Treaty of Mutual Cooperation and Security was recently and controversially expanded to allow for the overseas exercise of Japan’s “Self-Defense Forces.”
The integration of US forces with the militaries of Japan, South Korea, the Philippines, Malaysia and Vietnam, are ramping up defenses alongside territorial claims against China in the South China Seas.
Looking at the base building in Guam, Okinawa, Jeju, the destabilization around the Senkaku/Daioyu islands, Paracel Islands or the Spratly islands, we’re really looking at the US setting up shop, trying to maintain a presence around this busy intersection. It’s almost as if the military is a franchise expanding upon its brand on every available street corner.
The nine-dash line contains the entirely of the manufacturing corridor and all these conflicts impede China’s shipping routes.
Hawaii alone has over a hundred military sites accounting for over 230,000 acres of prime real estate and Guam has nearly 50 sites and is a fraction of the size of Hawaii.
Free Trade Impositions on Customary Land
Shifting gears somewhat, Pacific Islands, being islands, had over the centuries, evolved what is generally a customary land structure that was organized around both ocean and land resources. These customary land structures were important to communities who stewarded and maintained what are essentially the resource commodities, as that provided value or equity of a people and place.
What the shift of militarization and colonization has done, and this should come to no surprise to anyone, is that it hyper-valued land costs and resources creating incredibly destructive demands upon peoples and regional biodiversity, creating conditions of poverty, environmental degradation and resource depletion. What is surprising, however, is that we continue to see this replayed over and over again, despite protests and organized demands for economic justice.
To see that the largest corporations continue to bully their way in through government ministers and backdoor trade agreements has become so common, that to participate in the simple task of food preparation within the community has become privilege.
While there is an abundance of food, land, water and resource equity, there is no good reason for the Pacific to not be more self-determining in terms of trade. The simple fact is that there is no equitable policy in place to promote genuine security, genuine health and biodiversity within the various trade sectors.
Hawaii is a perfect example of this imbalance. According to a 2012 strategy by Hawaii’s Department of Business Economic Development & Tourism, 85-90% of food is imported. Despite there being some self-sufficiency in fruits and vegetables, there has been a huge decline in egg, dairy and livestock over the last generation which amounts to not only food insecurity but massive job loss in both local production, as well as in the manufacturing and export of cash crops like pineapple, sugar and coffee, of which only coffee is thriving.
One of the conditions of NAFTA is that there are regulations in place against subsidizing farmers and fishing families, and “buy local” labeling, making it unfeasible to compete with food imports.
As of September 2014, Hawaii has a new anti-homeless sit-lie law that makes it a misdemeanor punishable by up to 30 days in jail and a $1000 fine to sit or lie on sidewalks in Waikiki. Hawaii has what is called “kanawai mamalahoe”, the historic “law of the splintered paddle, which King Kamehameha decreed and is still in the books to this day.
The law reads, “Let every elderly person, woman and child lie by the roadside in safety.”
In the meantime, there is so much base building going on in Hawaii as a result of this Pacific Pivot, that two things are happening: there are more armed servicemen transferring to Hawaii and the mega rich are buying and privatizing huge swaths of property displacing the local citizenry. Per capita, Hawaii now has the largest homeless population in the United States and it is impacting Native Hawaiians and other pacific peoples most. What should be apparent to the world is that if US economic policy fails its own citizenry, whom does it really benefit?
The Office of the US Trade Representative promotes the TPP as accounting for 40% of global trade with much of it accounting for US-China trade.
Another question we might ask is: if China accounts for such a sizable chunk of our trade, why is the TPP aligning itself as a containment strategy and an obstuctionist policy that has more in common with the Cold War economic cooperation agenda than simply a trade policy?
The combined BRICS economy is about 30 trillion in US GDP, according to 2013 World Bank, Purchasing Power Parity data. That’s about 1.5 trillion dollars more than the combined GDP of the Trans Pacific Partnership.
I should note that when the US announced joining the TPP in 2008, the US was far ahead of BRICS. China’s exclusion, at that time, had more to do with alienating China in an attempt to bully open free-market reforms away from the government control over state-owned investments and state-owned enterprises. 
The US administration argues that state-owned investments are unfair and both Congress and the US trade negotiators are demanding action against State-owned Enterprises across all partner TPP countries.
But who are they unfair to? Here in the US, the investment regime and large corporations continue to avoid paying their fair share of taxes and now the government is turning to public-private partnerships to fund public utilities and services. Earlier this month, the Department of Transportation held a public hearing reviewing public private partnerships. This places the burden on tax payers to pay not only taxes, but also to pay for corporations to maintain our roads and public transportation services.
At least state-owned investments keep government services solvent and the US should be the last country in the world to criticize state-ownership.
The importance of BRICS—and this all just happened this past summer on the sidelines of the World Cup in Fortaleza, Brazil—and what happened was that BRICS released the Fortaleza Declaration, ,<<insert more>>. BRICS officially established the New Development Bank and the Contingent Reserve Arrangement as an alternative to the World Bank and the IMF, respectively.
Shifting gears, we may not often think about shipping choke points, so what I want to highlight are primary passages in the Asia Pacific. There is the Strait of Malacca between Indonesia and Malaysia. COMLOG WESTPAC in Singapore is the gateway and stands for Commander Logistics, and it’s also where the Navy’s Region Center is housed. Although not technically a base, it is the US command outpost of the region.
On the other side of the Pacific is the Panama Canal, which was a US territory until 1979, when it was handed back to Panama under joint US-Panama control and now it’s under full Panama control but with a sizable US military presence remaining.
Much of this traffic from Hawaii is not only commercial, but also military to-and-from San Diego.
This past summer RIMPAC held their 22-nation war game in Hawaii despite protests against the damaging of not only indigenous properties, but also ecological impacts of ocean systems.
Although innocent passage through territorial seas and canals is a right of nations, there are a wide range of international laws and new treaty obligations pertaining to fisheries, wildlife, customs, immigration, environmental protection, marine safety, etc. that are enforced by regional or national coastal agencies and could be used to involve the U.S. Department of Defense, not to mention the transport of illegal substances and weapons, which would directly involve the military.
As the self-appointed global maritime police force, the US, through its military and port operations gives special privileges to its trade partners while moderating the movement of goods across borders from their trade competitors. I call this containment policy a “container-ment” policy, because legally, even though militaries cannot detain cargo ships that have no contraband, it can slow the supply chain considerably if so willed.
This canal will bypass the US controlled Panama Canal and bring real trade opportunities to both Latin America and Asia—and hopefully to Pacific Island Countries as well.
Also, Russia has jumped on board with plans to construct outposts on either side of the canal.
In terms of energy, resources, agriculture, manufacturing, and shipping, the Russia-China partnership has tremendous potential for redefining 21st century trade. Germany and France understand that, but it is the US investment regime that seems to be most entrenched in the denial that the rules of trade and investment may be changing.
So if I can draw your attention back to the data, what I placed there was the 2012, IMF’s percentage debt to GDP. You’ll notice, the US debt is 106% of its GDP, which is huge—but as a percentage, not as large as Japan’s debt, which in 2012 was 237%. China and Russia’s debt is 22 and 10 percent, respectively. So you may be asking what’s up with the debt?
Developed economies are privileged in that they’ve been borrowing– or acquiring debt– by leveraging debt on the equity of developing countries, whereas, developing countries have mostly been able to leverage their debt only on their own equity.
The success of neoliberalism was predicated on the global economy being unipolar, run by the US/Wall St. investment regime. Hence that is why I consider that it was the collapse of the Soviet Union that gave rise to neoliberalism, and why BRICS plays an important role, by creating new opportunities for developing countries to create an alternative development/aid structure that is not based on privatization and vulture capitalism.
Much will be revealed next month during the APEC summit that is being held in Beijing. The TPP, ASEAN-plus and the RCEP are all looking to advance their FTAAP, Free Trade Area of the Asia Pacific. Any FTAAP has to include China and Russia as they are now the dominant economic base in the region.
Unless there is a massive flare up, we will likely see greater integration towards BRICS, because we’re talking about a fraternity of countries who’ve all been thoroughly screwed by the colonial and post-colonial investment regime.
Here is ASEAN, the Association of South East Asian Countries. You might notice that only Singapore has a debt that exceeds their GDP. Singapore and Brunei are the only advanced economies among the ASEAN member economies.
In purple, you see the Pacific Alliance, which are all TPP countries, except Colombia who already has a trade agreement with the US. The Pacific Alliance is the purple wall separating China from their BRICS counterpart, Brazil.
The countries in bright green are part of ALBA, the Bolivarian Alliance which includes Cuba and Bolivia and many of the small Caribbean countries.
In darker green, the Mercosur, or Southern Common Market group, includes most of the other South American countries that are neither part of the TPP, nor have US military bases on them.
Nicaragua is part of both ALBA and CAFTA, the US led Central American Free Trade Agreement. This was nothing more than a bully agreement between one very dominant country and six very poor and hungry developing countries.
Depending on your point of view, the opportunity or threat that the Nicaragua Canal and BRICS poses is that it could break up CAFTA, drawing El Salvador, Honduras, Guatemala along with Nicaragua away from US dominance into the BRICS alignment. The downside is that there is a looming military presence in this hemisphere that will do everything in its power to prevent that from happening.
Traveling along the eastbound equatorial currents is a beeline to Nicaragua’s maritime exclusive economic zone into the Caribbean where it can more readily access its BRICS counterpart Brazil as well as the Mercosur and ALBA groupings.
This gives unprecedented access for BRICS to not only begin to open trade with Latin America on one side of the Pacific, but also gives Latin America new access to the Asian economies on the other side of the Pacific.
Also just to quickly add. Just before the Nicaragua Canal agreement was signed, the International Court of Justice expanded Nicaragua’s maritime boundaries, which was truncated when Nicaragua was under US occupation. This took territory away from Colombia’s expanded boundary, and resulted in a lot of military posturing by Colombia.
Earlier this year, Obama announced the Pacific Remote Islands Marine National Monument. Those are the bright green areas.
This would add about 2 million square kilometers of Pacific Ocean territory to the United States, using the EEZs of US occupied shoals and atolls and territories to place into a reserve that would be managed by the DOD and the Department of the Interior. As a marine reserve—not to be confused with “preserve” which has a heck of a lot more regulations attached—the US intends to manage the area, its fisheries and biodiversity. You can only imagine what peoples in the Pacific think about this. As a US environmental reserve, this can also impose limitations to the right of passage of freight, further militarizing and carving up the Pacific, further away from Pacific Islanders who’ve been the traditional stewards of the region.
Throughout Oceania, the US has been asserting its influence in the Pacific Island Forum and at this time, there are a few States, like Fiji and Vanuatu that seems to be moving towards closer relations with BRICS. Generally speaking, Pacific Islands have been so embedded as donor clients, that I think that maybe it is difficult for leaders to envision an alternative.
And so to conclude, the context of trade and militarization is a very dangerous game evolving in real time. It’s dangerous because with the stacking of these regional commitments, schemes and ambitions that are housed in the legalities of trade and cooperation agreements, it’s going to be inevitable for empires to not trespass through these newly constructed boundaries. So, unless there can be greater cooperation among all the stakeholders, large and small, all that could be construed as reasonable in international law and normative convention will be sucked into a black hole of globalization.
This is the mindset of the too-big-to-fail investment regime. There is an entire international legal system that props up these institutions, in World Bank dispute settlement bodies, and these tribunals have the authority and audacity to impose harsh punishing sanctions against those who refuse to comply. If these investment and financial institutions are indeed too-big-to-fail, then what choice is there other than to submit to the bleakness of a nuclear option.
This deep, pathological greed that this system perpetuates, can only understand the economic and military dominance and hegemony that has come to define the 21st century. So if we are to avert away from the black hole of globalization, what is needed are not only protests and actions of political goodwill, but also a strong regulatory authority that can properly moderate the economic, ecological, and resource accounting of not only our borders and EEZs, but the way in which we all account for our equity as well.
 A version of this paper, “The intersection between trade and militarization is a very busy intersection,” was presented at the “Peace Justice Studies” conference at the Joan B. Kroc School of Peace Studies, University of California San Diego (October 18th 2014); and at the “Nuclear University and U.S. Power in the Pacific” conference, University of California at Berkeley (October 23rd 2014).
This paper grew out of a variety of meetings that took place in Honolulu, Hawaii (2011); Berkeley, California (2013); Fiji (2014); and Madang, Papua New Guinea (2014). Several Civil Society Organizations like the Pacific Council of Churches (PCC), the Pacific Network on Globalization (PANG), Bismarck Ramu Group (BRG), Moana Nui Action Alliance (MNAA), and the International Forum on Globalization (IFG) participated in various side-sessions, discussing trade and militarization and how best to confront it from an Oceania-wide coalition.
 ASEAN is the ten-member Association of South-East Asian Nations, which include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. The RCEP includes ASEAN as well as Australia, China, India, Japan, Korea and New Zealand. In Latin America, MERCOSUR (Southern Common Market Group) includes Argentina, Brazil, Paraguay, Uruguay and Venezuela; and ALBA (the Bolivarian Alliance) includes Antigua/Barbados, Bolivia, Cuba, Domenica, Ecuador, Nicaragua, Saint Lucia and St. Vincent/Grenadines.
 In October 2011, Foreign Policy Magazine published an op-ed by Hillary Clinton, outlining the role the U.S. should play in the Asia-Pacific (http://www.foreignpolicy.com/articles/2011/10/11/americas_pacific_century). The following month, at the APEC meeting in Honolulu, Obama announced the shift of military and economic resources towards the Asia-Pacific. The “Pacific Pivot” or the “Asia-Pacific Rebalance” sought to combine the economic and military resources to “provide a balance to China’s rising influence.” Congressional Research Service. “Pivot to the Pacific? The Obama administration’s “Rebalancing” Towards Asia.” March 28, 2012.
 The Financial Crisis Inquiry Commission. “Financial Crisis Inquiry Report.” U.S. Government Printing Office, Washington, DC. 2011. P.44. “Securitization was not just a boon for commercial banks; it was also a lucrative new line of business for the Wall Street investment banks, with which the commercial banks worked to create the new securities.”
 Buttiglione, Luigi, Lane, Reichlin and Reinhart. “Deleveraging? What Deleveraging?” ICMB International Center for Monetary and Banking Studies. Geneva, Switzerland. 2014. P. 95. Angel Ubide argued that, “Emerging market economies have been able to borrow a lot of money because the Asset-Backed Securities market is not functioning well at the moment. Emerging market economies are filling a $1-2 trillion gap in the bond market that was left by the collapse of the ABS market.”
Additionally, in a Press Release by S&P Dow Jones, “S&P Dow Jones Indices Introduces Dow Jones Commodity Index; Index Based on Straightforward Design, Equal Weighted Approach.” July 1, 2014. “In speaking with market participants, it became apparent that there is a clear need for a commodity index that is highly liquid, avoids large sector weights, is transparent in its methodology, and in independently governed… The DJCI includes 23 of the commodities included in the broad, world production weighted S&P Goldman Sachs Commodity Index, but it weights each of the three major sectors—Energy, Metals, Agriculture and Livestock—equally.
Arguably, the high percentage debt-to-GDP that the advance economies (US/EU/Japan) have been challenged with since the 2008 financial crisis, has allowed the emerging BRICS economies to leverage private debt in major sectors (Energy, Metals, Agriculture and Livestock), through State-owned Enterprises, and through more equitable investment rules.
 U.S. Department of Defense. “Base Structure Report, Fiscal Year 2013 Baseline: A summary of the DOD’s Real Property Inventory.”
 Currents and Tides- Marine Bio. http://marinebio.org/oceans/currents-tides/ (accessed Oct 20, 2014)
 During the 2013 Moana Nui conference in Berkeley, CA, academics, activists and practitioners from East Timor Action Network to Rapa Nui did indeed come together to share common experiences around militarization, trade, indigeneity, resources, self-determination and globalization in general. http://mnaa-ca.org/moana-nui-2013/ (accessed October 20, 2014).
 United Nations Development Programme, Pacific Centre. “The State of Human Development in the Pacific: A Report on Vulnerability and Exclusion in a time of Rapid Change.” 2014. P 124
“Further, in order to effectively deliver on social protection policies as part of wider national development strategies Pacific politicians and business leaders should aim to develop ways to ensure that schools, hospitals and social welfare systems can be supported by government budgets underpinned by sustainable levels of economic growth. This could lead both to the development of ‘public-private partnerships’ for the provision of services and/or where possible to the privatisation of services that could better be delivered by the private sector, or in a joint venture.”
 GDP by Purchasing Power Parity (PPP) International Monetary Fund 2013.
 • Treaties, Free Trade Agreements and Trade and Investment Framework Agreements. Build-up includes base-building and integrating the militaries with those whom we are already implementing trade and security arrangements with via FTAs or TIFAs. In the Pacific: TPP-member FTAs:, US-Singapore FTA, US-Australia FTA, US-Chile FTA, US-Peru FTA ; Not TPP-member FTAs: Korea-US FTA, US-Panama FTA, US-Colombia FTA: TIFAs: US-Philippines, US-Vietnam, US-New Zealand, US-Malaysia; and the US-Japan Treaty of Mutual Cooperation and Security
 Cabinet Resolution under Prime Minister Shinzo Abe, that changed the government’s long-standing position that Article 9 of Japan’s Constitution prohibited the country from engaging in collective self-defense (military action in support of an ally that has come under enemy attack).”
 Earlier, I mentioned that the TPP accounts for 32% of global trade, which is derived from the measurement of national GDP, (PPP). The USTR accounts for goods required to pass through US ports.
 “US-China State of the Economy” conference University of Southern California. 2010.