World Notes THE PHILIPPINES

It took nearly seven months of sometimes acrimonious negotiations, but last week the U.S. and the Philippines signed a two-year compensation agreement covering the use of Subic Bay Naval Station and Clark Air Base, America's biggest overseas bases. Unhappy with the annual $181 million the U.S. had been paying, Manila initially demanded $2.3 billion in yearly compensation. The U.S. countered with a first offer of $360 million but later added to the package. After signing the pact in Washington last week, Foreign Secretary Raul Manglapus maintained that the U.S. had come close to meeting Manila's minimum demands in a "creative" three-part package that consists of $481 million a year in cash and direct assistance, as well as $355 million in "soft" loans and financial guarantees. The beauty part, according to Manglapus, is a complex arrangement that may amount to as much as $900 million a year in debt relief for the Philippines, which owes foreign creditors $29 billion. Nevertheless, critics in the Philippines charged that the government of President Corazon Aquino had settled too cheaply.