Japan, United States and Australia will be taking part.
Presenter: Geraldine Coutts
Speaker: Maureen Maratita, publisher, Guam Business Magazine and the Marianas Business Journal
MARATITA: We have Cope North, which is actually an army exercise coming up February 4 through 15. And as you know that underlines the importance of the military to us here in Guam. In fact the military is one of the two pillars of our economy, the other being tourism.
COUTTS: And do we know much of the detail of the exercises?
MARATITA: We have a few details, we know that there will be approximately one-thousand participants from the US and the Japan contingent is about 450 folks, and we actually have 300 from the Royal Australian Airforce, it's an air exercise. We'll actually not see all of the US personnel in Guam, some of them will be in Saipan and Tinian in the northern Mariana Islands. But the Japanese and Australians will actually stay outside the bases in town. So right there there's some economic benefit to us.
COUTTS: And the military has always been important economically to Guam and the region, that's correct isn't it?
MARATITA: Yes it is for a number of reasons actually. The easiest perhaps to monitor is what we call Section 30 money, as part of the Organic Act of Guam the taxes of US military personnel, and in fact the federal civilian personnel too, go to the government of Guam's general fund. And that's about somewhere between 47 and 53-thousand a year, which to put it into perspective is about ten per cent of our government of Guam's general fund. So that's a significant amount of money that comes directly into our economy.
COUTTS: It is a huge amount of money and it's ongoing, but how sizeable is the military contingent on Guam?
MARATITA: It's about 12 per cent of the population, then if you include uniformed personnel dependents, civilian employees and some other federal employees, then it's about 19-thousand personnel. Now our population is about 160-thousand.
COUTTS: So family also adding to that?
MARATITA: Yes that would be the dependents I referred to, and while some of the personnel would of course live on the two bases that we have here; the navy and the airforce base. A number of them are able to live out in town and so that means a boost for our real estate industry, at least we hope so, and then goods and services that they would use.
COUTTS: And the present day value of the military economically, I mean taxes and the monies to Guam, the port visits, civilians jobs etc?
MARATITA: All of that, the port visits, what we use as a figure is between 200 to 300 a day per an armed forces member who's off the ship, maybe staying in a hotel, certainly buying some goods, entertainment. And then of course when the ships are here they would re-stock in Guam, we have the ability to do that.
COUTTS: My fingers have worn out trying to count this up, how much would this come out at?
MARATITA: It would be several hundreds of thousands in terms of the re-stocking, and of course we always hope for something from the US national defence authorisation act annually. As you know the US budget is somewhat constrained ...
COUTTS: And this is for military construction?
MARATITA: Yes it would be and that's going to be in fiscal 2013 just over 100-million for Guam.
MARATITA: Some of it will lead up to what we call the Guam buildup, which is an influx of personnel that we expect in a few years time.
COUTTS: Now the other eocnomic opportunities; we've mentioned some of them for the businesses and the community, the base support real estate, goods and services, ports upgrade etc., but there's also been a question mark that it doesn't bring as much money into the community as generally forecast, because for instance of the PXs, so the families of the military actually trade not a lot in the local communities?
MARATITA: Well that's true and that's always a sensitive point with our business community here because things like beverages, alcoholic and otherwise, go directly to the military and the US military does subsidise the prices. So compared to goods that come into the island for the civilian population, they would not pay shipping, so there is that element. To its credit the US military does work a little bit with the local vendors, so we hope that that will continue. But yes, no one would be happier than the Guam community if we could supply the bases directly from our own business community.
COUTTS: And what about real estate also, because generally when it comes to government-to-government deals and real estate it's basically brought up under pressure and not the highest prices?
MARATITA: Well the military does give its personnel an allowance which varies depending on their status. At present I think it would be fair to say that the accommodation on base has in recent years been upgraded, so it's designed to be attractive for military personnel. But where possible I think the military does allow them to live outside and be part of the community, and typically of course they would make good tenants .
COUTTS: Now the Guam buildup, we haven't heard much about it in recent times, I understand it's been downsized. But is it going to continue the buildup from Okinawa to Guam?
MARATITA: Yes there is a new strategy and again that's been part of the US's mainland problems because the cost of it was deemed to be in the billions. So instead of eight-thousand US marines coming to us from Okinawa, the figure has dropped to between about four-and-a-half-thousand to five-thousand. And recently we have just had renewed environmental impact studies because of that revised footprint. But also the nature of how those marines will come to us has changed. We expect a high continent of the five-thousand to be rotating on that, a training base in the Marianas, both Guam and the Northern Marianas, but about 16-hundred of them will in fact be what the Admiral here calls permanent parts, and they will come with about 13-hundred family members. So we do expect this to be ongoing. And what that will mean I guess to the rest of the Pacific is a bonus. In fact in Australia you'll now have under President Obama's new strategy some US forces of your own to benefit from. And of course there will be ongoing training in the Philippines.
COUTTS: Well the Australian contingent is already in Darwin in Australia?
MARATITA: Ok and they'll be training exercises such as Cope North will I think this is the second year that we've had Australian personnel as part of it. And what is news I think is that we have some Korean participants who are observing part of the air exercises. This is typical of the large-scale exercises that we see annually. We have now begun to have exercises that involve the US marines out of Japan both in Guam and the Northern Marianas. In fact gosh the first time in decades that the marines have been back in Tinian since the Second World War. So I think we're starting to see a pattern and as we get closer to the buildup I think it will become clear exactly what the US intends for what they're calling it divert airfield, which will be another base in either Saipan or Tinian. And in fact what the environmental impact study is designed to examine.
COUTTS: Saipan or Tinian, that's new information to us. How confident are you or how reliable is your source that that might happen?
MARATITA: Well the US is looking at it itself, it's had some exercises. Obviously the folks in Tinian hope it will be there, that's as you know a very small island and that would be of huge economic benefit to them, and a boost in general to the economy in the Northern Mariana Islands. While ours has been flat, the economy there has been depressed. And I think in general in the Marianas people are very positive when it comes to the US military in all sorts of ways. So it's not viewed as anything but a positive for the economy.
COUTTS: Now Maureen we haven't got much time left but I'm just wondering the US has always had a presence in the Pacific, but it seems that it's really stepping its presence up in the Pacific. Would fear of China stepping up its presence in the Pacific have much to do with it?
MARATITA: I am sure that it does. I mean the US has moved its emphasis and this is no secret from Europe to the Pacific, and we do have these sensitive hotspots; China, Korea practically on our doorstep. Guam is a stable place for the US to maintain a presence.