17may21 – Disclose all terms of China loans/aid
POSTSCRIPT / May 21, 2017 / Sunday
WITH ITS rejection of new grants from the European Union to protest its alleged interference in domestic Philippine affairs, the administration must now open to scrutiny the comparative terms of loans/aid from other sources, including China.
President Rodrigo Duterte turned his back on the EU – the Philippines’ largest export market — after receiving over $1 billion in pledges of official development aid from China. The rejection affects, among other items, some $278 million in aid for Muslim Mindanao and the peace process.
For transparency and fairness, the administration must disclose the interest rates and conditionalities of loans and aid from China, whose generosity appears to have emboldened President Rodrigo Duterte to drop EU as a development partner.
When he assailed foreign meddling and “strings attached” to the EU deals, he was widely understood as referring to the European bloc’s expression of concern over extrajudicial killings that have stained Mr. Duterte’s war on illegal drugs.
A need has arisen to assure both followers and critics of President Duterte that while Filipinos are being pulled away from long-time friends, they are not being led into a Chinese debt trap.
Payment for the loans from China (and other lenders) will not come from the pocket of President Duterte but from the paycheck of Filipino taxpayers/workers, whose minimum daily wage is a meager P491 in the national capital and less in the provinces. He should listen to them.
Paying government borrowings, plus interest and some trade-offs, will not be completed within the term of President Duterte, but inherited by succeeding administrations. The debt situation may even tighten with penalties and increased rates if timely repayment proves to be unwieldy.
The other side of the “Build! Build! Build!” infrastructure coin flipped by the Duterte regime is “Pay! Pay! Pay!”. The so-called “golden age of infrastructure” may be tantalizing, but should not blind economic managers.
We are not saying that the government should not borrow to build infrastructure – in fact it should — but the terms that will hock the future of Filipinos must be discussed openly and honestly.
Some of us want to know, for instance, if the big borrowings from China (plus those from other lenders) will push up the public debt-to-GDP (gross domestic product) ratio that has hovered safely in the 40 range for the past decade.
We should learn lessons from the predicament of a few other countries induced by China to secure large loans and later found themselves in what looks like debt bondage.
• Lopez: EU deal mutually beneficial
IT WAS quieting to hear Trade Secretary Ramon M. Lopez explain the benefits of the EU arrangements, while expressing the hope that their discontinuance will not affect the current Generalized Scheme of Preferences that the Philippines enjoys.
He told media: “They’re commercial transactions that can mutually benefit both sides. EU should continue to engage the country. GSP provides better market access to our exporters, but allows cheaper Philippine products for EU consumers or cheaper inputs for their manufacturers. EU investors in the country that export back to EU also benefit from the GSP. It’s a mutually beneficial arrangement.”
In this global village that is increasingly getting smaller, it makes sense making friends and not antagonizing anyone. If we can maintain cordial, beneficial relations with the EU, the United States, the United Nations, and the rest of the civilized world, why quarrel with them?
In the community of nations, which we have joined in good faith, there are basic rules to advance the common good covered by covenants. The days of the hermit kingdom are over.
Other nations that remind us of the rules, such as those on human rights, should not be assailed as meddlers. When we signed the covenants with them, we agreed in advance to abide by the common rules and be reminded when we do not.
Our President should understand that entering into treaties, and even executive agreements, can have the effect of a diminution of our sovereignty.
If we resent what we think is undue interference in our seeming policy of summarily killing some suspects in drug cases (okay, only if they resist arrest), we can express our displeasure in a manner befitting a member of polite society.
As for the “strings attached” to loans, grants, aid and commercial contracts, we are wont to ask if Chinese deals don’t have their own strings. If there have, we better tell the people early, instead of their discovering the entanglements too late.
• Bare terms of China agreements
MALACAÑANG may want to publish a list of the government and private agreements sealed in China, especially the terms and conditions. Without this, it is pointless for President Duterte to boast of having clinched a grand bargain.
Many of us are anxious to know, under agreements entered into by President Duterte and China President Xi Jinping, if:
>The Philippines gets interest rates lower than it could have gotten elsewhere over x-number of years, and the best terms in case of default or renegotiation.
>The Philippines is not forced to accept whatever idle industrial capacity that China’s state companies may offload to overpriced infrastructure projects.
>The Philippines is not amenable to accepting below-market prices for its exports to China, including mineral ore and fruits.
>The finders’ fees or commissions, usually 2-7 percent, will not go to any individual or group, but credited to the Philippine government to reduce repayments.
>The massive Philippine borrowing will not push up to beyond 50 or 55 its debt-to-GDP ratio.
>The Philippines has not waived its sovereign rights and other rights and entitlements over maritime features in its Exclusive Economic Zone, nor agreed to conduct joint exploration or exploitation of EEZ resources.
>President Duterte did not pledge never to bring up (except at the “right time”) the 2016 award of the Permanent Court of Arbitration at The Hague on the Philippine submissions against China on South China Sea issues.
(First published in The Philippine STAR of May 21, 2017)
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