‘Privatizing’ of U.S. Bases in Philippines Being Studied : Military: Turning work over to contractors might save money. But would it be feasible for the Pentagon?

Anyone out there want to buy a U.S. military base? One of the largest in the world, strategically located along shipping lanes in the Pacific?

In the money-starved climate of Washington these days, that idea may not be quite as far-fetched as it sounds. With encouragement from the government of Philippine President Corazon Aquino, Congress and the Bush Administration have been quietly studying the possibility of “privatizing” some features of the American bases in the Philippines--that is, transforming them into profit-oriented commercial operations.

Although preliminary ideas have included privatizing the bases’ vast warehouse system and even turning Clark Air Base into an international airport, the possibility mentioned most often and most seriously involves privatizing the ship-repair facilities of the huge American naval base at Subic Bay. The private firm might then have the U.S. Navy as its only or largest customer.

Rep. Stephen J. Solarz (D-N.Y.), chairman of the House Foreign Affairs subcommittee on Asia, has been one of the leading proponents of privatization. Last week, Solarz called in top Defense and State Department officials, including Adm. Huntington Hardisty, commander in chief of the U.S. Pacific Command, for a closed-door hearing on the subject.

The goal of turning the bases into private operations would be to overcome, or accommodate, the nationalist forces in the Philippines opposed to a continued American military presence there. In this scenario, the U.S. Navy or Air Force might close the bases and hand over U.S. facilities to a private corporation, such as a partnership between Philippine and American business interests.

“Solarz got interested in the idea last August, when he visited the Philippines and it became clear that the Philippine Senate might actually be prepared to pull the plug on the American bases,” explained one congressional staff member. “You could end up with a contract where some American company, like Bechtel, ends up doing what the American government does now.”

Whether such an idea proves to be feasible, the current talk of privatization demonstrates the lengths to which officials in Washington and Manila are prepared to go to find some new formula, or gimmick, that will settle the future of the American military bases in the Philippines.

The current leases on the bases, which include the mammoth installations of Subic Bay Naval Base and Clark Air Base--run out next year. U.S. and Philippine officials will begin talks next month on the future of the American bases.

To Americans such as Solarz, the idea of privatization is appealing because it amounts to something new the United States could offer to the Philippines that would not cost more money.

“The resources the United States has to offer are very limited,” says one Asian diplomat in Washington. “Given that, the question is, if the U.S. can’t give money, what else can it offer? In that context, privatization has come up as an alternative.”

A study by the RAND Corp., the Santa Monica think tank, suggested last December the possibility of selling Subic Bay’s ship-repair facilities to the Philippine government or private individuals “in the event that the Republic of the Philippines appears adamant in reducing the U.S. presence.”

“Through privatization, the United States could continue to benefit from the trained work force that has been built up in the Philippines,” the study concluded.

However, the RAND report added that “unfortunately, many of the features that make Subic Bay such a valuable base . . . would probably not survive.” One obvious loss would be the strategic military advantage of having thousands of military personnel stationed on the bases.

However, Philippine officials are interested in the idea because it might provide a method for phasing out the American bases while preserving many of the jobs and other economic benefits now provided to Filipino workers and to the communities nearby.

One historical precedent Philippine officials have in mind is that of Singapore.

When the British government removed its forces from Singapore three decades ago, the naval bases were converted into private shipyards, which proved profitable and are still operating today. The Aquino government has sent officials to Singapore to study how the British bases were coverted to commercial use.

According to Emmanuel N. Pelaez, the Philippine ambassador to the United States, some American businessmen have already begun talking to the Philippine Embassy in Washington about the possibility of turning Subic Bay into private ship-repair facilities. Pelaez said, however, that the businessmen are being discouraged when they approach the U.S. Navy with their ideas.

One of these American firms is Metro Machinery Corp., a private ship-repair company in Norfolk, Va. Richard Goldbach, the company’s president, confirmed that he “expressed an interest in their privatizing their ship-repair facilities. I don’t think I want to comment beyond that.”

So far, at least, U.S. military planners apparently have been much less enthusiastic about the idea than either Solarz or the Aquino government.

Although Defense and State Department officials appeared at the closed congressional hearing last week, one source who was present said they tended to focus testimony primarily on the many practical difficulties that would be involved in privatizing the bases.

“What would happen if the private company (running ship-repair operations) wanted to do work on other ships?” asked this source. “The Navy would have a stroke. . . . What do you do about code-sensitive areas (on Navy ships)? How do you preserve the surge capabilities the Navy would need in a time of crisis?”

The biggest problem is more fundamental: While ship-repair and some other operations carried out by the Navy at Subic Bay might conceivably be carried out by a private company, other American military activities in the Philippines simply could not be duplicated in the private sector.

For example, one of the most valuable of all the U.S. installations in the Philippines is the Crow Valley training range adjacent to Clark Air Base. At Crow Valley, jet pilots and crews from the United States and from American allies such as Japan and South Korea practice combat-training missions.

Experts say the Crow Valley training facilities are virtually irreplaceable. The recent report by RAND suggested that even if the United States were to leave its Philippine bases, it might want to provide support for the Philippine armed forces to continue operating Crow Valley “under the condition that the United States has continued use of the training range.”

One congressional staff member acknowledged that after last week’s closed-door hearing, “There were very real questions as to whether commercial arrangements (for the Philippine bases) are feasible.”