19apr23-Duterte is under the gun in Xi talks

POSTSCRIPT / April 23, 2019 / Tuesday

Duterte is under the gun in Xi talks

By FEDERICO D. PASCUAL JR.

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PRESIDENT Duterte will be under pressure to bring home concessions when he journeys to Beijing in a few days to clarify contentious maritime issues and the terms of supposedly “easy” Chinese loans to finance his ambitious infrastructure program.

Aside from attending a forum on the Belt and Road Initiative linking Europe, Asia, the Middle East, Latin America and Africa, the President wants to sit down with China’s paramount leader Xi Jinping to resolve bilateral questions that have cropped up.

In that hurried huddle, Duterte the politician should be able to sense if the inscrutable Xi is indeed his friend.

The agenda is quite crowded both for Xi and Duterte, who is under the gun to shake off his perceived pro-China bias threatening to ruin the chances of his senatorial candidates in the May 13 midterm election.

Duterte’s failure to act early on reports of Chinese harassment of Filipino fishermen and of its buildup of artificial islands in the Philippines’ exclusive economic zone has whipped up displeasure in Manila that is fast becoming a political issue.

Duterte must address the indignation over his belated protesting of China’s swarming of Pag-asa island in Palawan, the harassing of Filipinos fishing in the Panatag (Scarborough) shoal off Zambales, and the hiring of thousands of Chinese workers in local projects.

Duterte is hard-pressed to attempt a review of the terms of the P4.37-billion Chico River irrigation project in Cagayan Valley that has been denounced as onerous and unconstitutional. With the contract already signed, is a renegotiation not too late?

Among the contract provisions questioned are the waiving of sovereign immunity, a resort to arbitration that is loaded in favor of Beijing, and the mortgaging of patrimonial assets whose eventual loss in case of default is a debt trap similar to that experienced by other borrowers of China.

The details of other big-ticket deals have not been disclosed despite laws requiring transparency, but the Chico River contract is presumed to be a template or model for other loan agreements.

With Duterte having approved the questioned contracts, can he still renegotiate? Assuming amendments are accepted, the time to be spent in plugging the loopholes could delay the projects.

 Duterte’s timeline shorter than Xi’s

TIME is not on the side of Manila, even assuming that Duterte succeeds in coming home with an agreement with Xi to reopen the loan deals, plus a Chinese pledge to give up built-up features in the West Philippine Sea (an unlikely concession, we think).

The above assumption is unlikely to happen, but considering that Duterte, the David facing a Goliath, claims he has made the right move pivoting left to Beijing, we give him the benefit of the doubt.

Duterte has only three years to revise the contracts, finalize the paperwork (assuming there are no legal challenges in court) before the release of funds, the buying of right-of-way, groundbreaking, mobilization, et cetera, and he could show something concrete for his effort.

By the time a China-financed project goes into operation under a renegotiated contract, Duterte may be out of office — assuming he is telling the truth that he will not stay a minute longer after his term ends in 2022.

China has a longer sweep of time. Its timeframe is both expansive and extensive.

Compared to Duterte’s having three more years, Xi enjoys an open-ended presidency since his term limit was lifted last year. Aside from being president, the 65-year-old leader is also the general secretary of the Communist Party of China and chairman of the Central Military Commission.

To approximate the vast power that Xi wields, Duterte will have to quash opposition, consolidate, plot and maneuver to achieve what he earlier described as a revolutionary government, which is extra-constitutional.

But Duterte has only around two weeks to fix his basic problems with China before the defining May election, which is also a referendum on his presidency.

He has only that limited time and space to install whatever system he and his cohorts have been plotting to build – be it an improved status quo, federal, parliamentary, revolutionary, or whatever.

Will the budding strongman be able to do the preliminary steps – including sweeping the May election legally and fairly — in two weeks, even with Communist China’s aid and cooperation?

 Advice offered by Malaysia’s Mahathir

TALKING of Chinese debt traps dressed up as easy development loans, Forbes contributing writer Panos Mourdoukoutas said Saturday that Malaysia, a neighbor, is “already caught in China’s web and there is no escape from it.”

“The best it can do is to bring Beijing to the negotiating table, and try to get better deals for projects under way,” he said. Duterte may just attempt to do that.

Weeks ago, Malaysia’s Prime Minister Mahathir Mohamad visited Duterte and gave him the unsolicited advice to be careful about loans from China, warning of possible debt traps. Duterte, 74, politely said he would consider the advice of the 93-year-old leader.

As example, Mahathir cancelled high-profile China-financed projects in Malaysia initiated by his predecessor. Days later, however, reports out of Kuala Lumpur had it that Mahathir was renegotiating the deals to cut costs.

Mourdoukoutas said in Forbes: “The trouble is that Mahathir’s revolt against China didn’t last long. And now the best it could accomplish is to bring Beijing back to the negotiating table to cut the cost of the investment projects assigned to Chinese contractors.

“Last week, China agreed to cut the cost of East Coast Rail Link project by one-third. This week, the two countries have agreed to revive the Bandar Malaysia project with the original contractors — a joint-venture between Malaysian firm Iskandar Waterfront Holdings and China Railway Engineering Corp (CREC) – with some modifications. Like the construction of 10,000 affordable housing units, and the use of local sources.”

 

(First published in the Philippine STAR of April 23, 2019. Follow the author on Twitter as @FDPascual.

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