Relations between the United States and the Philippines are under strain. The two governments are at loggerheads over how much compensation Washington should provide for its two gigantic military installations in the Philippines - Subic Bay Naval Base and Clark Air Field.
Philippine negotiators say the US pays only a ``pitiful fraction'' of the compensation provided other states, such as Egypt and Israel, which don't even host US bases and which lack the ``special relationship'' created by almost 50 years of US colonial rule.
US officials say Washington is offering a big boost in aid but can't meet the Philippines' current demand. Thus Washington is looking seriously at the possibilities of relocating the bases.
The bases dominated last Friday's meeting between Secretary of State George Shultz and Philippine Foreign Affairs Secretary Raul Manglapus. They are reportedly the focus of Undersecretary of State Michael Armacost's visit to Manila this week.
Much goodwill exists in Washington for Philippine President Cory Aquino and for supporting democracy in the former US colony. Yet the tough line of Mr. Manglapus, negotiator for the Philippines, combined with nationalistic rhetoric by Filipino politicians, has generated ill feelings inside the Reagan administration and on Capitol Hill.
On the Philippine side, Manglapus argues that the US has been able to use the bases at bargain rates since they were established in the early 1900s. Only now is the Philippines seeking equitable compensation, he says.
Two weeks ago, the foreign secretary brought a complicated debt-relief plan to Washington, which he says could bridge the gap between the two sides' positions. Washington is studying it, but US officials and congressional sources are less optimistic than Manglapus is.
Meanwhile, the bickering over the bases has slowed work on a multibillion-dollar, multilateral aid program for the Philippines which the US has been trying to organize in recent months. The goal is to provide up to $10 billion in aid from the US, Japan, and others over five years.
``We can't go ahead with the aid plan until this base question is solved,'' says a sympathetic congressional aide. ``There is no formal linkage. It's just a political reality.''
The Aquino government is badly in need of long-term international aid to correct the Philippines' serious social and economic problems. A recent World Bank report documents the increasing poverty in the Philippines. Other reports point to growing inroads made by communist guerrillas in that country.
The ultimate fate of the US bases is not at stake in this round of talks. A satisfactory solution in this round, however, would serve as a ``jump start'' for later talks on the renewal of the overall base agreement that expires in 1991, US officials say. But right now, one adds, the Filipinos ``are asking for the moon, the sky, and the sun.''
Manila is demanding $1.2 billion a year in military, economic, and other assistance. Washington is offering to boost its yearly aid contributions from the current pledge of $180 million a year to almost $500 million.
Congressional and administration sources say budget restraints prevent giving more.
``We've put together a generous package,'' a key official says. ``We'd like to give more. ... But there is a great gulf in our positions. The question is whether we can find a way to paint a pretty picture.''
In the interim, Washington is now looking at alternative for the bases. Indeed new US studies reportedly find the cost of relocating the facilities elsewhere in the Pacific may be significantly below earlier estimates, which ranged into the tens of billions of dollars.
The US bases contribute an estimated 13 percent of the Philippines' GNP. Some experts say it would take more than $10 billion in new investment to make up for lost income if the bases were removed.
The Filipinos say their debt-swap proposal would multiply the effect of US aid money. Basically, they suggest that Washington guarantee a partial refinancing of the Philippines' $29 billion debt. The proposal reportedly suggests that $150 million to $200 million in US aid used this way could save the Philippines up to $500 million a year in debt repayment.
The proposal defused some of the anger on Capital Hill, sources there say. Legislators said it should be given a sympathetic review. But at least one key congressmen told Manglapus that no new money could be added to that already offered, even if the debt-relief plan proves feasible.
During his visit, however, Manglapus offended officials working on the negotiations with a strongly nationalistic speech delivered at the State Department. He criticized several senior US officials - including one who has been the driving force behind the proposed multilateral aid plan - for not seeing him when he was exiled in the US and opposing former President Ferdinand Marcos.