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[Context]

The following texts are quoted from a set of discussion threads on the facebook page, Yap Sate Youth, initiated by Mr. Dieter Kudler. (Source)

We re-post parts of the discussions here, specifically the dialogue between Mr. Lindemanis and Mr. Clement Yow Mulalap, for their conversation helps clarifying people’s confusion about the signed ETG-Yap State  Cooperative Investment Agreement.

Source: http://www.facebook.com/groups/ouryap/permalink/516517388360114/?comment_id=517775011567685&offset=0&total_comments=20

[Discussions]

Dieter Kudler

‎(Reposted from Yap’s Development)

Siro,

As the anti-development front is very vocal, I would like to bring some pro-development, pro-ETG ideas to the table.
I worked as an architect for over 10 years in real estate development (like ETG) in Europe.
I would like to contribute a thought or two to Yap’s economic potential in regards to Tourism and other options as here discussed.
Seeing Yap’s infrastructure, internet, phone, power plant, sewer system, waste system and finally air and sea connections along with tries to establish all kinds of businesses in the past, I think it is safe to say that only Tourism makes any economic sense and will in the future be able to satisfy the populations needs.
It is most obvious that Yap State tries since many years, at least since 2005, the time I came to Yap to attract investors in various fields of business – without success.
In order to set up call centers I understand, that Yap has to invest 7 million dollars for better internet – money which I understand we do not have. In order to export any goods from a plant, which may be produced on island Yap would need cheap and reliable sea transportation – which we do not have – expensive transportation makes products expensive – only based on that no company who has to compete on the world market would choose Yap as possible location for their plant. There are lots and lots more reasons as the amount of possible workers, skill level, etc.
The way I see it, tourism is the only viable opportunity for our island.
Now people may say – true – but only in small doses – only small hotels – which brings us back to the start – what do we have to offer smaller investors?
The answer is – not much – we have no proper infrastructure to offer, no flights, etc.
Let’s see ETG on the other hand – a company with obvious know-how and money to push through with their project – a company bringing all needed infrastructure to our island and not only for their own benefit – new and more power plants, sewer systems, new airport and waste processing plants along with a daily air transportation for a reasonable price – just to name a few of the benefits ETG would bring with it. Such an opportunity comes around once in a lifetime.
It seems to me, that people do not want to see the obvious – times have changed, any attempt to attract development has failed to this point – people led on by some members of the legislature oppose development in general – a no to ETG means a general no to development – in case of ETG leaves Yap potential investors will make big detours around this island.
Legislature fighting executive over foreign investment may not lead to high amounts of trust in legal security for foreign investors – no trust, no investment!
You may want to take the time and consider my thoughts and find ways working with ETG based on existent laws and regulations and creating appropriate new ones to regulate ETG’s development instead of opposing a project that is, as I see it, crucial for the people of Yap.
Or you could go of course and ask the opposing parties for viable economic solutions – I just doubt they have any – at least I haven’t learned about any the last 7 years, have you?
To those people who obviously don’t like development and or ETG, it’s easy to be destructive and against things – it is very hard to be constructive and have solutions for the future!

Dolores Yilibuw

Kammagar o Dieter Kudler, thanks for your opinion as an international realtor who might be in a position with ETG and other foreign investors to profit from such a deal as this. I do not believe anyone here is anti-development as you commented, but most of us are concerned about the UNINTENDED CONSEQUENCES of such a massive development project like this one. Some of us have been to countries where these types of deals have gone through and we have seen with our own eyes that the indigenous people have profited the least! In truth, some politicians always profit from them big time but not the majority of the local people. Since you have been in Yap, you know how poor in cash the island is, however, i doubt that you saw starvation and homelessness in Yap. I am sorry to disappoint you but I and some folks here believe that the type of development that would benefit the locals the most may not benefit transnational foreign investors big time. We have to manage our resources better and be diligent in investing in our bio-diverse environment, eco-tourism, health, education and technology. With technology students do not have to leave Yap to attend a university if they don’t want to, though the government has to subsidize or provide access to the internet for free. Also with the internet, there are data entry and related jobs online that pays better than the wages in Yap. And, so what, if we have to spend 7 million to get our technology and telecommunications up to speed to sustain international communications jobs?! Seven million spent for the benefit of the whole island for the long haul is worth it, rather than someone else making 7 million off of our traditions and cultures. In my opinion it is better than opening up the island to foreign investors to appropriate our culture and resources for their gain and consequently put our local vendors out of businesses. So for me the pros do not outweigh the cons, because the benefits for us (or pros) are the intended consequences (i.e. jobs) but the cons are the unintended consequences (i.e. ruining our bio-diverse environment and ecosystem, our taro patch and gardens, and not being able to survive in the event that we run out of cash). No thanks, but i would rather keep my “life-insurance” (Yap) in tacked! And besides I believe that if the young folks in Yap are well educated they can get jobs anywhere in the world and do not have to live in Yap all their life if they don’t want to or if they want all the “blings” of the fast and “modern” world, and they can always go back to their Yap in the “sane and slow lane.” At least we have choices, unlike those who do not!

John Mangefel

ETG will not improve any infrastructure other than what they need for their business, that is according to the investment agreement. Lets get some facts straight.

Sapelbweyar Victor

One that I have not seen mentioned by the pro ETG is the exploitation of our people. Yes, I’ve seen and read about customs and cultures, What about the people? I don’t believe any of us wanna see a “Whore House” @ street corners. That is what I believe will come with ETG.

Bernie Grong

Who exactly is gonna be whoring if I may ask??

Dee Phynezt

aha. But isnt the Investment agreement void now John Mangefel?? Are they working on a new one?

Dee Phynezt

rigub behind ko gubin.

Dolores Yilibuw

Dee Phynezt, I hope it’s voided forever and ever, because frankly, i’ve had more than enough of it! Siro,’ ya sana aram e ngug sul’ugun nga’ ara ngug sart’ay nga’!

Dee Phynezt

haha. oh well. Some still want, so lets see how it goes.

[For focusing on discussing the Investment Agreement, some threads ar eliminated here. Please visit original page for the full discussions. http://www.facebook.com/groups/ouryap/permalink/516517388360114/?comment_id=517775011567685&offset=0&total_comments=20 ]

Eriks EJ Lindemanis

I would like to thank Dieter Kudler for his thoughts on the “proposed” plan, that may or may not be continuing. I remember people asking for why the plan would be a good thing for Yap and I believe this post gives the Pro ETG side. I am not saying that I am either pro or anti ETG because both sides have valid points. I would like to encourage those that are anti ETG to come up with some alternative options to the project. Going back to the “old” ways is not really an option ever since the introduction of foreign goods have been introduced.

John Mangefel

I would encourage you to re-read the signed agreement. According to section 4.5 ETG can create new entities but these would not be able to compete against any Yap utility. Could the current utilities, such as power and sewage, be able to withstand the strain that the plan woud put on them? The simple answer is no so improvements would have to be made. According to the first sentence in 4.5, ETG would have to build or improve current infrastructure without costs to Yap. Also read 4.6 and 4.7. Do these sections not guarantee improvements to current Yap infrastructure? Improvements to the ports, airport, medical facilities, roads, education and a trust fund…

John Mangefel

Eriks if you bother to read the agreement entirely you will see that anything which be created by ETG will be for the sole benefit of the ETG project, I believe it’s you who needs to read further. These issues have been already discussed in depth on this page before, so thank you for your suggestions but you should do the reading first, I have and I have had the benefit of learning from another person who interpreted it for those of us who weren’t quite sure what we were reading. the thread is down there somewhere on this page. Funny how some people only live in Yap for a few years and suddenly they are the real experts on Yap’s affairs….

Eriks EJ Lindemanis

John Mangefel I have never said that I am an expert at this situation and I have read this page and its comments many times as well as the agreement. I simply have given you an example of some sort of proof that the project would help Yap’s infrastructure, whereas a quote that explains ETG would have sole benefits over these infrastructure projects has not been given to me and cannot be found in the signed agreement, unless a new one after August 11 has been created/signed that I am unaware of. And as I stated I am not pro or anti ETG and yes I don’t live in Yap anymore so I don’t believe it is my place to tell people living there what is right for them, I am just telling you that infrastructure would be helped by this project according to the agreement.

Henry K.O. Norman

 Bernie Grong: Imported Chinese professionals, just like Palau already have. Do you really think that pimps and their ladies of the night can be avoided, with several thousand tourists and many more resident workers looking for “action”?

Herr Kudler: Where did you pick the number “seven million for boosting Internet”? Hooking up Yap to fiber-optics is already in the pipeline, so what exactly are you talking about? Please give references!

Mr. Lindemanis: You should read my “Agreement Analysis” document (available here: http://goo.gl/kASPR). Regarding section 4.5, it actually reads “ETG agrees to improve or build Infrastructure […] for the Project’s sole use as well as to operate them for its own gain.” The words “For the Project’s sole use” and “for its own gain” should provide a clue as to how much the ETG plans to help Yap… And no, sections 4.6 and 4.7 do not “guarantee” anything, as made really clear by Mr. Clement Yow Mulalap in earlier posted threads.

John Mangefel

 Dieter Kudler and Eriks EJ Lindemanis, Please read here ———-> http://www.facebook.com/groups/ouryap/permalink/493031180708735/

Clement Yow Mulalap

Siro.

I would like to insert a few comments in this discussion in response to assertions by Mr. Lindemanis. Before doing so, I want to thank Mr. Kudler for starting this thread and sharing his observations with this group. I always appreciate constructive, reasonable dialogue. Please allow me to contribute to such a dialogue.

(Warning: My following contribution is quite lengthy. I discuss some very important issues, so I feel the need to discuss them at some length, but I apologize anyway for not being briefer and more concise.)

Clement Yow Mulalap

 Mr. Lindemanis, as John Mangefel and Mr. Norman have already noted in this thread, this group discussed a while back the so-called “guarantees” for infrastructure development and social welfare improvements supposedly made by ETG in the signed Investment Agreement between ETG and the State of Yap. John Mangefel has already posted the link to the primary thread that discussed those “guarantees,” so I hope you have had a chance to read the thread and catch up on the group’s discussion. At this point, I want to directly quote some of the points I made in that thread so I can address some of the points you raise, Mr. Lindemanis, as well as to consolidate those points in this thread for ease of perusal by this group’s members. I also want to add a few more comments to my previous points, because those previous points do not directly address some of the “guarantee[s]” you bring up in this thread, Mr. Lindemanis. I will restrict my comments to legal issues, particularly those legal issues contained in the signed Investment Agreement.

Mr. Lindemanis, you dispute the assertion that ETG’s development of Yap’s general physical infrastructure will be for ETG’s sole benefit. Please permit me to quote directly from one of my previous comments on this matter:

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As far as I can tell, the signed Investment Agreement does not contain any provisions that obligate ETG to repair, maintain, or improve Yap’s water supply systems, waste treatment systems, and/or rain collecting systems, as well as establish any of those systems anew. Indeed, the only mention of any of those systems is in the definitions section of the signed Agreement, which states:

“’Infrastructure,’ means the basic physical structures and facilities (such as road, water, electricity, sewage system, collection of waste and hospital) necessary to support and sustain development of the Project and/or the economic wellbeing [sic] and livelihood of the people, residents, and government of the State of Yap.”

However, as you can tell, that definition of “infrastructure” does not obligate ETG to make any improvements to any of those structures/facilities listed. Now, you might be under the impression that the signed Agreement imposes a general obligation on ETG to improve Yap’s infrastructure. The only place where you might draw that conclusion is Section 4.5 of the Signed Agreement. However, Section 4.5 of the signed Agreement states that “ETG agrees to improve or build Infrastructure (without costs to the State of Yap) for the Project’s sole use as well as to operate them for its own gain.” In other words, any improvement to infrastructure in Yap will be for ETG’s sole use and gain, and not formally for the benefit of Yap. ETG is not under any general obligation under the signed Agreement to help Yap out with infrastructure development/improvement, whether before, during, or after ETG’s Project development activities in Yap.

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In my opinion, Mr. Lindemanis, ETG is not under a general legal obligation under the signed Investment Agreement to create/improve Yap’s general physical infrastructure for the benefit of anyone other than ETG and its proposed Project in Yap. The language in the Sections of the signed Investment Agreement that I quote above seems to be quite clear on the matter.

Clement Yow Mulalap

Mr. Lindemanis, you also state that the signed Investment Agreement “guarantee[s] . . . [i]mprovements to . . . education” in Yap and mandates the establishment of a “trust fund” in Yap. Please permit me to quote directly from one of my previous comments on this matter:

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The signed Agreement does not contain any mention of the word “scholarship,” let alone any obligation on ETG to replenish Yap’s scholarship funds. The signed Agreement also does not contain any mention of the word “school,” let alone any obligation on ETG to repair/improve Yap’s schools or build a new school or schools in Yap. The only provisions in the signed Agreement dealing with Yap’s education system are Section 4.7(3) and Section 4.7(4). Please allow me to quote and discuss those sections.

Section 4.7(3) of the signed Agreement states that “ETG agrees to contribute funds to aid in the development of public education in the State of Yap. The specifics of such contribution shall be determined by good faith and timely negotiations between both Parties.” First, the provision does not obligate ETG to contribute funds specifically to replenish Yap’s scholarship funds and/or to repair/maintain/improve/construct schools in Yap. Second, the provision does not even set an amount that ETG is obligated to contribute, and it does not establish a standard or goal for education development toward which ETG’s funds will go. Indeed, the provision leaves the determination of crucial details about ETG’s assistance of public education to “good faith and timely negotiations” in the future. To be perfectly honest, I think ETG can argue that its recent provision of school supplies to Yapese elementary school students satisfies ETG’s obligation under this provision, assuming that ETG used funds to pay for those supplies, and assuming that the provision of those supplies was made possible by some sort of discussion between ETG and the State of Yap (as represented by the Executive Branch of the Yap State Government, of which the Yap State Department of Education is a part).

Section 4.7(4) of the signed Agreement states that “ETG shall establish and maintain a Trust Fund (the ‘Fund’) for the benefit of the people of Yap and to support the education, health, and well-being of the people of Yap . . . . The monetary amount of the Fund shall be determined at a later date by way of good faith negotiations between the State and ETG.” However, again, the signed Agreement does not explicitly state that ETG must contribute funds toward the replenishing of Yap’s scholarships and/or the repair/maintenance/improvement/construction of schools in Yap. Furthermore, the signed Agreement does not establish any sort of monetary amount that ETG is obligated to contribute to the Trust Fund, let alone how much ETG should contribute to education in Yap. Such details are left for “good faith negotiations” in the future.

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In my opinion, Mr. Lindemanis, the signed Agreement imposes very weak obligations on ETG regarding the improvement of education in Yap. The signed Agreement sets no monetary amounts, no specific achievement targets, and no overall reform plan toward which ETG’s education funds may be used in Yap. The signed Agreement leaves such details—which, in my opinion, are quite crucial details—to future “good faith and timely negotiations” in the future. This is also how the signed Agreement treats the creation of a trust fund by ETG for Yap. The signed Agreement does not provide benchmarks, figures, plans, or any other bit of crucial specific information that can allow us to judge whether ETG’s trust fund proposal will have any significant impact on Yap’s “education, health and wellbeing.” The signed Agreement’s provisions on the trust fund are disappointingly weak and devoid of much real substance, choosing instead to defer discussions of those specifics to a later date. Critically, the matter of the specific monetary amount of the fund is left to be “determined at a later date by way of good faith negotiations.”

Clement Yow Mulalap

Mr. Lindemanis, the signed Agreement’s use of the language of “good faith” as a promise for future action is also quite troubling, in my legal opinion. I previously discussed the concept of “good faith” and its usage in the signed Agreement. Please let me quote from that previous discussion:

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Finally, a comment on the phrase “good faith negotiations.” Although the two Sections I quote above [regarding ETG’s education funding and the creation of a trust fund] seem to impose at least some sort of obligation—however vague and minimal—on ETG to “contribute funds” for Yap’s education development, such contributions are subject to “good faith” negotiations in the future. What this means, in a legal sense, is that if ETG feels like the State of Yap is playing hardball and/or being unfair and unreasonable in its demands in future negotiations over those contributions, then ETG can cry foul, insist that the State is acting in bad faith, and refuse to honor its obligations to contribute those funds. The State of Yap will not be able to compel ETG to return to the negotiating table (let alone agree to contribute any of the aforementioned funds). “Good faith” is a very subjective legal term of art, and ETG can raise enough of a fuss during future negotiations to justify its refusal not to furnish any of the funds. Of course, the State of Yap (as represented by the Executive Branch of the Yap State Government) can refrain from playing hardball and simply capitulate to ETG’s proposals, and if those proposals are minimal, then that is what the State will end up accepting.

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Mr. Lindemanis, the signed Agreement’s use of “good faith negotiations” is, in my opinion, an unfortunate attempt to avoid including important specificity in the signed Agreement. In my opinion, that leaves wide open the possibility that any related obligations on ETG contained in the signed Agreement will be watered-down–if not avoided–if “good faith negotiations” fail.

Clement Yow Mulalap

Mr. Lindemanis, you also assert in this thread that the signed Agreement “guarantee[s]” that ETG will improve Yap’s roads. Please permit me to quote directly from one of my previous comments on this matter:

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If, by improvements to Yap’s road system, [one] refer[s] to Section 4.5 of the signed Investment Agreement, then please let me quote that section:

“ETG recognizes that construction of the Project will inevitably place an inordinate strain on Yap’s current infrastructure, specifically the use of large and/or multiple vehicles necessary to complete the Project’s construction phase will strain Yap’s roads beyond their current capacity. Therefore, ETG promises to work closely with the State to continuously monitor the damage to publicly accessible roadways caused by ETG’s vehicles, to fund repair and maintenance of those public access roadways which are subject to the inevitable damage produced by ETG’s construction, and to do all of this in a timely, reasonable manner. ETG further promises to continue to work closely with the State to maintain and improve those roads experiencing increased strain due to higher than usual traffic going and coming from ETG’s facilities.”

In other words, ETG will not repair Yap’s road system until and unless ETG’s vehicles and construction activities (as well as “higher than usual traffic coming and going from ETG’s facilities”) damage Yap’s roads. ETG will not improve Yap’s road system before ETG begins its development activities in Yap, let alone do so “in order to start their business [in Yap].” If ETG manages to avoid “strain[ing] Yap’s roads beyond their current capacity”–which is a phrase that is not defined in the Agreement–then ETG will have no obligation whatsoever to repair Yap’s roads.

Finally, although the signed Agreement does obligate ETG to “continue to work closely with the State to . . . improve those roads experiencing increased strain due to higher than usual traffic going and coming from ETG’s facilities,” it is important to note that that language does not obligate ETG to take the lead on carrying out the improvements on the impacted roads. ETG can simply “work closely with the State” without having to actually foot the costs and/or furnish the manpower to carry out those road improvements. The State may have to take on those costly responsibilities, as long as ETG “work[s] closely with the State” (perhaps by providing construction advice, templates/blueprints, etc.). Furthermore, this provision on “improv[ing]” roads is subject to the determination that those roads “experienc[e] increased strain due to higher than usual traffic going and coming from ETG’s facilities.” The signed Agreement does not define what constitutes “usual traffic.” ETG can argue that the standard to use for “usual traffic” is that of traffic generated by a typical large-scale construction project in China, in which case, the elevated traffic caused by ETG’s activities in Yap will actually not be “higher than usual traffic” based on ETG’s standard, even if it is definitely “higher than usual traffic” for Yap. This is an important term that is left undefined, and that ETG can use to avoid any obligation to improve Yap’s roads.
. . .
[I]t is important to remember that ETG is not obligated to do any sort of work on Yap’s roads until and unless ETG’s activities damage/strain Yap’s roads, and even then, ETG’s obligations are limited to those roads impacted by ETG’s activities. As I state above, there are ways for ETG to get around its obligations even in that eventuality (especially if ETG claims that its road traffic is not “higher than usual”), and even if ETG ends up having to work on Yap’s roads, its work will be limited to those roads that ETG and the State of Yap determine to have been impacted by ETG’s activities–a determination whose process and/or standards for evaluation are not defined in the signed Agreement. ETG will not have to do any work whatsoever on other roads in Yap . . . . I think there is a perception in the Yapese public that ETG is obligated to perform repair/maintenance/improvement work on all of Yap’s roads, but that is not the case, at least under the signed Agreement.

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I hope it is clear, Mr. Lindemanis, that the signed Agreement does not actually impose obligations on ETG to improve Yap’s roads, at least to the extent and in the manner that ETG and its supporters have claimed (whether explicitly or implicitly).

Clement Yow Mulalap

Mr. Lindemanis, you also assert that Section 4.5 of the signed Agreement somehow imposes an obligation on ETG to improve Yap’s current utilities, including power and sewage. I addressed above the question of whether ETG has an obligation under the signed Agreement to improve Yap’s “sewage system,” so please permit me to address the part of your assertion regarding ETG’s improvement to Yap’s power system by quoting directly from one of my previous comments on this matter:

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The only provision in the signed Investment Agreement that even hints at ETG’s involvement with Yap’s electricity/power grid is Section 4.5 of the Agreement. According to that section:

“ETG acknowledges that nothing in this section shall allow it to create or maintain any structure or entity which would compete with any existing utilities provider, where such competition is prohibited by law.”

In other words, the only explicit obligation that ETG has with regard to Yap’s power grid is that ETG cannot establish a power station or any sort of electric utilities provider that competes with an existing utilities provider (such as YSPSC). ETG has no explicit obligation to improve Yap’s power grid/electricity distribution.

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Mr. Lindemanis, if I understand your assertion correctly, you argue that although ETG will not be allowed to compete with existing Yap State utilities systems, ETG will have no choice but to improve current systems because the current systems have no way of handling the strains that ETG’s proposed Project will place on them. However, Mr. Lindemanis, in my opinion, this is a tortured way of trying to impose an obligation on ETG that is not actually spelled out in the signed Agreement. It seems to me that you are drawing assumptions from the text of the signed Agreement, assumptions that would not be necessary to draw (assuming that they are even correct) if the text simply stated, in unequivocal language, that ETG is obligated to improve Yap’s utilities systems for Yap’s benefit. The signed Agreement contains no such language, and so there is no actual legal obligation on ETG to perform all those actions. ETG can refuse to upgrade existing utilities systems and simply strain those systems with its Project activities, and ETG will not violate the signed Agreement by doing so. ETG can also create alternate utilities systems for the sole benefit of ETG and its Project activities, and as long as ETG does not charge Yapese consumers to use those systems, then ETG may arguably not be in violation of Section 4.5 of the signed Agreement. The bottom line is, Mr. Lindemanis, the signed Agreement does not directly impose the sort of specific legal obligation on ETG that you are trying to impose by implication. There was nothing preventing ETG and the State of Yap from putting such direct obligations in the signed Agreement, so from a legal standpoint, it is impermissible to assume such obligations by implication.

Clement Yow Mulalap

Mr. Lindemanis, you also assert that the signed Agreement “guarantee[s]” that ETG will improve Yap’s “ports, airport, [and] medical facilities.” I did not address those points directly in the aforementioned thread, so please allow me to address them for the first time in this group.

Regarding the ports—specifically, Yap’s airport and seaport facilities—the relevant language in the signed Agreement is found in Section 4.6, which states as follows:

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Both Parties agree that, based on the progress of Project and operating condition, ETG will upgrade the airport and seaport facilities. Upon the occurrence of such event, ETG and the State will negotiate specific matters and enter into separate agreements for construction, upgrades, and improvement of airport and seaport facilities, maintenance of such facilities subject to relevant Law. The standards of the designs, construction, maintenance, and operation of such facilities shall be in accordance with any State, FSM National, or US Federal requirements (if required by the Law).

Subject to applicable law, ETG shall have the right to use portions or sections of the airport facilities, which it improves or develop, and which shall be necessary for its commercial activities such as retail stores, restaurants, and coffee shops.

Unless the parties agree to otherwise and, to the extent not inconsistent with law, ETG, its subsidiaries, ancillary businesses, and/or Other Project Participants shall not be considered to own or possess any improvement or permanent fixtures which are the results of the activities referenced in this section being carried out pursuant to this section and/or any further agreement between the Parties.

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First of all, Mr. Lindemanis, the language in Section 4.6 is a bit confusing and convoluted, at least to me. The first sentence of Section 4.6 states that “ETG will upgrade the airport and seaport facilities.” However, in the second sentence of Section 4.6, the language says that “ETG and the State will . . . enter into separate agreements for construction, upgrades, and improvement of airport and seaport facilities,” but such agreements will only be entered into “[u]pon the occurrence of such event.” I confess to being very baffled by the construction of these two sentences. What is the “event” that the second sentence of Section 4.6 refers to as being the trigger for the striking of construction agreements and the commencement of work on Yap’s airport and seaport facilities? The only “event” cited in the first sentence of Section 4.6 is the “upgrade [of] the airport and seaport facilities,” but that makes little sense. How can the commencement of the upgrade work on Yap’s airport and seaport facilities be dependent on the prior commencement of the upgrade work on Yap’s airport and seaport facilities? This seems to be a tautological statement.

This is not a mere language annoyance. If there is no clear indication in the signed Agreement about what, exactly, needs to happen first before upgrade work can begin on Yap’s airport and seaport facilities, then ETG can legally argue that no such work can be done, because there is no legal clarity as to what needs to happen prior to that work, at least according to the signed Agreement. Thus, there may be no upgrade work at all, or at least not after some extensive litigation.

Also, Mr. Lindemanis, assuming that the upgrade work actually commences, there is no guarantee in the signed Agreement that such work will be expansive, world-class, exceptional, or in any way grand enough to justify the State of Yap’s granting of permission to ETG to proceed with its large-scale proposed Project in Yap. The language in Section 4.6 of the signed Agreement simply calls for “construction, upgrades, and improvement[s],” but the language does not set specific targets, specific benchmarks, specific standards to use during the work, and so forth. The language is disappointingly devoid of important specificity. Instead, the signed Agreement leaves the determination of those specifics for future “separate agreements.” Once again, the signed Agreement does not give guidance to the State of Yap and the Yapese people regarding what, exactly, ETG promises to do in return for the State allowing ETG’s proposed Project to proceed. ETG can decide to perhaps refurbish the visitor’s lounge in the Yap airport and maybe upgrade a few cranes in Yap’s seaport, and ETG will not be legally required by the signed Agreement to do more than that. Any “upgrade,” no matter how minimal, is still an “upgrade,” at least according to the vague language of the signed Agreement.

Clement Yow Mulalap

Mr. Lindemanis, you also assert that the signed Agreement “guarantee[s]” that ETG will improve Yap’s medical facilities. The relevant language in the signed Agreement is Section 4.7(1), which states as follows:

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ETG agrees to improve local current medical condition of medical facilities through contributions of medical equipment, supplies, specialist personnel, and through the construction of a new Hospital. A new hospital shall be built by ETG with the level and scale of the hospital to be determined by good faith negotiation by the Parties. However, in the interests of public health, this hospital must be of a sufficient size and sophistication to meet the reasonably anticipated treatment needs of the maximum number of tourists ETG anticipates its collective tourist industry shall attract when operating at peak capacity combined with the pre-Development indigenous population of Yap. Expansion of this contemplated hospital and its available facilities must correspond with any expansion of the Project which will lead to an expansion of the number of possible tourists ETG’s project may attract when operating at peak capacity.

This section and its provisions are specifically designed to assure that the State and its medical care facilities do not become overwhelmed at any time due to the influx of tourists. Neither ETG (including its subsidiaries, Affiliates, and/or Other Project Participants) nor the State may create and operate a health care facility which unreasonably denies access and/or treatment to any person located within the borders of the State of Yap. This section shall not deny a private entity from creating a health care facility which operates on a for-profit basis. Nor shall it, in any way, restrict or impair the authority of the Governor of the State of Yap to act, pursuant to the laws of the State of Yap, during a State of Emergency.

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Mr. Lindemanis, I do think that the above-quoted Section contains perhaps the strongest language in the signed Agreement in terms of imposing actual legal obligations on ETG to improve Yap’s physical infrastructure and social programs. However, as with other Sections of the signed Agreement that I have discussed, I must point out the disappointing generalities in this Section. The Section does not state specific benchmarks, quantities, targets, etc., for ETG’s contribution of “medical equipment, supplies, [and] specialist personnel.” As long as ETG provides a bit of medical equipment/supplies and furnishes the assistance (however temporary) of one “specialist personnel,” ETG can argue that ETG has met its obligations under this Section of the signed Agreement. As for the construction of a new hospital in Yap, the Parties to the signed Agreement once again leave important details (in this case, the “level and scale of the hospital”) to future “good faith negotiations by the Parties.” As I stated above, those “good faith negotiations” can very well break down on rather flimsy bases, and if they do, then the hospital will not be constructed. The language in the rest of the Section talking about pinning the “size and sophistication” of the new hospital to projections of tourist arrivals and their “anticipated treatment needs” will not have any legally binding effect if the “good faith negotiations” break down in the first place and the hospital is not constructed at all.

Clement Yow Mulalap

Mr. Lindemanis, on a more general note, if by “improve” and “improvements” you mean ANY sort of improvement, however minor, then you have a point, given the minimal obligations (if any) that the signed Agreement imposes on ETG regarding infrastructure and social program improvement in Yap. However, in light of the massive scale of ETG’s proposed Project in Yap—a scale that has been recently endorsed, at least implicitly, by ETG in a recent Facebook post (see my comments about that endorsement here: http://www.facebook.com/groups/404462399564440/permalink/506687616008584/?comment_id=508298109180868&offset=0&total_comments=25)—I think it’s important to weigh the pros and cons, i.e., determine whether the significant benefits to ETG from its proposed Project in Yap are commensurate with the seemingly meager benefits to Yap’s infrastructure and social programs according to the signed Agreement. How do the scales tip?

Clement Yow Mulalap

Mr. Lindemanis, I hope that my comments here help to clarify what, exactly, the signed Agreement contains and whether the signed Agreement actually “guarantee[s]” that ETG will perform the sort of social and infrastructure-related improvements that you, ETG, and ETG’s supporters insist may or will flow from ETG’s proposed Project in Yap. The various lofty promises made by ETG and ETG’s supporters on Facebook (as well as, I’m sure, outside of Facebook) are just that—promises that are not rooted in strict legal obligations found in any legally binding document/agreement. Unfortunately, at this point, the signed Agreement allows ETG’s proposed Project to proceed even though the State of Yap has not wrangled ETG to provide the sort of specific guarantees—and to memorialize those specific guarantees in writing—for infrastructure and social program improvements that are, in my opinion, not present in the signed Agreement. The sole legally binding document that contains even an inkling of the sort of obligations that ETG insists that it has toward Yap is the signed Agreement, but that Agreement is unfortunately lacking in important specifics and cannot justify the sort of promises made by ETG and its supporters. The proverbial horse has fled the proverbial burning barn, and ETG can now proceed with its proposed Project without being legally obligated to reward the State of Yap handsomely for the State’s permission.

(Of course, if the signed Agreement is voided, then that imbalance is null. Sadly, ETG continues to operate in Yap as if the signed Agreement has not been voided by Governor Anefal’s October 1, 2012 letter to ETG via Chairman Deng Hong, and so the imbalance seems to persist.)

Mr. Lindemanis, I am not picking on you, and I apologize if my comments give you and others that impression. Your comments have been made by others on and off Facebook, and your comments are actually quite restrained and thoughtful and considered compared to those made by others in support of ETG’s proposed Project. I just want to use this opportunity to hopefully inject some legal clarity into this discussion and highlight what is truly at stake, at least legally speaking. I deeply appreciate your contribution to this important discussion, Mr. Lindemanis, and I trust that you feel the same way about my contributions. I want to emphasize, as I try to do in all my law-related posts in this group, that the legal analyses I provide are my own, and I most certainly welcome contrary opinions from others (including from you and/or your lawyers, Mr. Gang Yang).

Kam’magar, ma siro.

Sapelbweyar Victor

Thank you Mr. Mulalap. I only hope that those who are for ETG read what you posted.

John Mangefel

Eriks EJ Lindemanis, let me qout what you posted, “Going back to the “old” ways is not really an option ever since the introduction of foreign goods have been introduced.” this opinion sounds like an expert on yapese affairs to me.

Jesse Riyul

Mr. Mulalap, a quick question, are you a licensed lawyer in FSM? Kam’magar.

Clement Yow Mulalap

Jesse Riyul,

Hello.

I am a member of the Yap State Bar. I do not have a business license to charge people for my legal services in Yap (such as through a law firm or some other law-related business), but that is because I am currently working for the FSM in New York as the legal advisor for the FSM’s Permanent Mission to the United Nations, and I see no need to pay for a business license that I cannot use to charge people in Yap for my legal services while I am in New York working for the FSM.

In case folks are wondering, I want to note that I am required to have a business license only if I charge people for my legal services (i.e., if I run a business). My expressions here of my legal opinions are offered free of charge, and in any case, I am merely participating in public discussions rather than providing formal, commercial legal services to anyone. As I have repeatedly stated in these discussions, the legal opinions I express are my own. I offer them in the hope that they will be of some benefit to the group’s many discussions.

If you have a private legal matter that you wish for us to discuss, Jesse Riyul, I will be happy to do so in private.

Kam’magar.

Source: http://www.facebook.com/groups/ouryap/permalink/516517388360114/?comment_id=517775011567685&offset=0&total_comments=20

Recommended Link: http://www.facebook.com/groups/ouryap/permalink/493031180708735/

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2 thoughts on “On Investment Agreement: Infrastructure Development and Social Welfare Improvements

  1. Pingback: On | For Yap State Citizens

  2. Pingback: Dialogue Concerning the Current Situation | For Yap State Citizens

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