US embassy cable - 05MANILA5382

UNCLAS SECTION 01 OF 03 MANILA 005382 
 
SIPDIS 
 
Sensitive 
 
State for EAP/MTS and S/CT 
Dept of Energy for NNSA - Kristen Astor 
 
E.O. 12958: N/A 
TAGS: EWWT, PTER, RP 
SUBJECT:  Manila Port Readies for Nuclear Detection 
 
REF: Manila 4541 
 
Sensitive but Unclassified - Not for Internet - Protect 
Accordingly. 
 
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Summary 
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1.  (SBU) Port operators and government officials 
implementing the USDOE Megaports Initiative are eager to see 
the program operational by mid-2006.  Megaports is designed 
to place equipment at major international ports to scan all 
incoming containers for the detection of radioactive 
materials and nuclear weapons (reftel).  The implementing 
agents for the program at two ports in Manila are 
communicating well following their successful training 
conference in the U.S. last month.  They are drafting an MOA 
to divide up responsibilities and working with USDOE to 
address concerns over long-term maintenance costs, 
productivity and revenue, and protocols for container 
inspection.  While port operators appreciated the ability to 
support international security objectives, minimizing 
business liabilities and risks and ensuring procedural and 
financial accountability at both ports will improve the 
efficacy and sustainability of the program.  End Summary. 
 
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Support for Megaports 
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2.  (U) Econoffs met with local port terminal operators and 
GRP officials from the port authority and atomic energy 
commission to discuss the current status and remaining 
issues in the implementation of the Megaports Initiative in 
Manila.  The private and public sector representatives had 
all returned from a training program in Washington State in 
early October and expressed sincere enthusiasm for the US 
Energy Department initiative.  The operators said the 
training was an introduction to equipment operation and 
conceptual design, but they would be prepared to train 
others in their respective offices once the equipment is 
installed at South Harbor and the Manila International 
Container Terminal (MICT).  They understood the importance 
of scanning all container traffic coming into the port for 
radioactive materials because of the potential that the 
Philippines could be a transit point for such weapons of 
mass destruction.  They expressed interest in expanding the 
program to other Philippine ports so these materials do not 
slip into the south "through the backdoor." 
 
3.  (U) The Megaports Initiative is a program of the 
Department of Energy's National Nuclear Security 
Administration (NNSA) to detect and interdict radioactive 
materials and nuclear weapons of mass destruction at major 
international ports.  In the Philippines, the collaborative 
initiative with the GRP aims to strengthen port security and 
protect Philippine citizens from accidental or intentional 
exposure to radiation.  The USG and GRP signed a Memorandum 
of Intent to implement the program in Manila on July 19, 
2005.  NNSA will install portals to screen rolling container 
trucks and provide handheld equipment to further identify 
materials in case an alarm is tripped.  Only as a final 
resort will the contents of the container be unsealed and 
examined.  The attendees explained that nearly all of the 
alarm trips could be explained and dispensed by examining 
the description of contents in the container manifest. 
 
4.  (SBU) At an earlier meeting, port operators told 
econoffs that the Megaports Initiative was an important 
collaboration between the US and Philippines.  International 
Container Terminal Services, Inc. (ICTSI) General Manager 
Captain Andy Andrews said RP compliance would boost the 
port's international credibility.  He believed that the US 
Department of Homeland Security (DHS) is moving away from 
rating countries and toward rating terminals.  By 
demonstrating a commitment to the Megaports Initiative, he 
said, DHS may give ICTSI a high rating and allow it to fast- 
track container shipments to the US.  Andrews noted that 
ICTSI currently has a lot more export business to the US 
than its competitor Asian Terminals Inc. (ATI).  His 
counterpart at ATI, Senior Vice President for International 
Operations Mark Ripka, said he hoped to attract more US 
trade through his port and thought complying with the 
Megaports program would boost his clientele numbers. 
 
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Small Waves in the Way? 
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5.  (SBU) Philippine Port Authority (PPA) Manager Alex T. 
Cruz told Econoff the various departments and offices 
involved in Megaports implementation were communicating well 
and had already begun to draft a Memorandum of Agreement 
(MOA) to delineate each party's role in implementation. 
Although several issues needed to be resolved, Cruz said the 
MOA would be discussed and signed well before the equipment 
was in place.  He said the PPA would adjust staffing 
requirements and assign employees to the Central Alarm 
Station (CAS) once the MOA is finalized. 
 
6.  (SBU) One of the lingering concerns for the team was the 
maintenance of the equipment (reftel).  Special Police Major 
for the Bureau of Customs (BOC) Nicomedes Enad said it was 
unclear who would bear the responsibility and the cost of 
maintenance.  Terminal operators recognized that spare parts 
were not readily available in the Philippines and they 
expected to run out of the initial allotment fairly quickly. 
Ripka and Andrews assumed that they could recover 
maintenance costs through PPA-mandated fees, but Cruz said 
his organization had not committed to this arrangement yet. 
Other operators remarked that the equipment may last only 5 
years and expressed concern about replacing the equipment 
and continuing the program. 
 
7.  (SBU) Both Cruz and Enad wanted USG assurances about the 
operational impact of the initiative.  The GRP reps did not 
want to adjust container-handling fees as yet because they 
were unsure how to calculate productivity, the anticipated 
percentage of false alarms, or the length of time needed 
each day to handle screening problems.  Terminal operators 
felt that these issues could dramatically affect planning 
and profitability and requested GRP openness to possible 
policy change once the program is running. 
 
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Operational Efficiency Main Priority 
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8.  (SBU) While the training team agreed that terminal 
operators must scan all container traffic, there may be 
disincentives to compliance, particularly for ATI, whose 
physical layout does not lend itself to conveniently located 
portals.  ATI's Project Officer for International Operations 
Alejandro dela Cruz said ATI often handles transshipments 
where containers are offloaded from one boat and reloaded 
elsewhere on the same pier.  He speculated that it might 
slow business if trucks must carry the containers through 
the portals before loading them onto the second boat.  Ripka 
also complained of limited space for traffic flow to hold 
trucks should a secondary inspection become necessary.  He 
added that delayed ships could clog the ports and agitate 
customers who depend on timely arrivals and departures. 
 
9.  (SBU) Both port operators agreed that the initiative 
would be financially feasible only if both operators imposed 
similar conditions and fees.  Ripka declared that not only 
must API remain competitive with ICTSI but also with ports 
in neighboring countries.  The Megaports program might 
impose bottlenecks in Manila while neighboring Asian 
countries did not require the scanning.  Andrews expressed 
that charging fees is another opportunity for corruption and 
argued for transparency and oversight. 
 
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Not Alarmed by Alarms 
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10.  (U) The team is still discussing who would incur the 
costs of a container examination, but believed that most 
alarms could be resolved with a quick and unobtrusive 
secondary inspection.  According to Philippine Nuclear 
Research Institute's (PNRI) Nuclear Safeguards Head Julietta 
(Jay) E. Seguis, a container that sounded an initial alarm 
could undergo a secondary inspection with handheld equipment 
to identify the radioactive substance in minutes without the 
container being opened.  Only cases involving a suspicious 
material would warrant a tertiary inspection by PNRI reps. 
Ripka stated that if the container held potentially 
dangerous nuclear materials, he did not want to open it at 
the congested port. 
 
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Comment 
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11.  (SBU) USDOE will cover maintenance costs for three 
years, during which time the GRP would prepare itself to 
assume full responsibility.  In an effort to promote 
sustainability, the GRP is considering a screening tariff to 
cover anticipated costs.  Tariffs and decisions to inspect 
boxes are not only security issues but also potential 
avenues for corruption.  Both port operators are looking to 
the Philippine Port Authority and Customs for 
standardization and transparency.  The team hoped that 
concurrent monitoring would enhance accountability. 
Megaports discussions are also underway with neighboring 
Singapore, Indonesia, Malaysia, and Thailand, and promoting 
Manila as a regional Megaports leader may help bolster pride 
and stimulate maintained interest in the program.  The US 
Megaports team plans to return to Manila in January 2006 to 
conduct an engineering survey of the port, and hopes to have 
the equipment installed and ready for testing before July. 
 
Jones