President Dumbo

PRESIDENT DUMBO

BEWARE THOSE CHINESE LOANS TO PH

By: Alito L. Malinao - @inquirerdotnet

Philippine Daily Inquirer / 05:12 AM August 04, 2018

In order to finance its ambitious “Build, build, build” program, the Duterte administration would need the infusion of massive foreign loans. In the past, the Philippines depended on the World Bank, the International Monetary Fund and other Western financial institutions. Now, our main source of loans is China.

In his first visit to China in October 2016, President Duterte signed a cooperation agreement with Chinese President Xi Jinping, with Beijing pledging to provide funding for 30 projects in the Philippines worth billions of dollars.

As part of this agreement, China has earmarked P4.37 billion for the Chico River Dam Project, the groundbreaking of which was held last June 8. The project is funded by the China Exim Bank and implemented by China CAMC Engineering Co. Ltd.

Beijing has also pledged to fund two Philippine railway projects with a combined cost of $8.3 billion, and 30 smaller projects valued at $3.7 billion.

While Chinese loans appear to be attractive, they are not, in reality, that benevolent, and could be harmful to the country in the long term.

These loans are 1,100 percent more expensive than the ones from Japan. They come with an interest rate of 2 percent to 3 percent, while loans from Japan have interest rates between 0.25 percent and 0.75 percent, or 12 times cheaper than those from China.

However, Socioeconomic Planning Secretary Ernesto M. Pernia said that the Philippines cannot get all the loans it needs from Japan. “Between 2 percent and 3 percent interest rate is still much better than commercial loans,” he said.

But here’s the caveat: China has a pattern of funding infrastructure projects in poorer countries in exchange for better relations and regional access, a trend called debt-trap diplomacy.

One of the vehicles for this strategy is China’s Belt and Road Initiative, a trillion-dollar project to link 70 countries in Asia, Oceania, Africa and Europe with railway lines and shipping lanes. To fund the infrastructure projects, which are attractive to poorer and underdeveloped countries that struggle to secure traditional financing like the Philippines, China offers huge loans that have higher interest rates. In return, natural resources are used as collateral, which China can then control if a country defaults on its repayments.

China’s loans can also come with other strings. In the Philippines, Chinese-owned contractors will be required to work on the infrastructure projects, rather than supporting local companies and workers.

A cautionary example: Last year, with more than $1 billion in debt to China, Sri Lanka handed over a port to companies owned by the Chinese government.

According to the Washington-based Center for Global Development, a nonprofit research organization, nations participating in the current Belt and Road investment plan that will default in their loan repayments will eventually find themselves at the mercy of Beijing. It said eight nations are now vulnerable to above-average debt: Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan and Tajikistan.

The CGD said some countries are not waiting for China to take action against them. Pakistan and Nepal turned down Chinese infrastructure loans last year in favor of other sources of funding.

Writing for Asean Today, Oliver Ward warned that entering into a debt bondage with China for large amounts is a risky move for the Philippines at this time.

“With such severe financial leverage over the Philippines, China could use it to its advantage to strengthen its situation over claims in the South China Sea. The loan could be utilized as a valuable weapon to erode Philippine sovereignty and the conditions of the loan used as a useful negotiating weapon to further Chinese territorial interests in the region,” said Ward.

Alito L. Malinao is a former diplomatic reporter and news editor of the Manila Standard. He now teaches journalism at the Pamantasan ng Lungsod ng Maynila and is the author of the book “Journalism for Filipinos.”

Read more: http://opinion.inquirer.net/115119/beware-chinese-loans-ph#ixzz5PWX7PYPA 

CONDUCT PUBLIC HEARINGS ON CHINA LOANS

05:03 AM August 08, 2018

Why is it that our economic managers continue to keep the terms of China’s loans a secret?

Many countries have been victimized by China’s “debt trap diplomacy.” Malaysia’s Prime Minister Mahathir Mohamad canceled all their Chinese loans upon his election.

Unless our leaders have the wisdom and courage of Mahathir, we will join Sri Lanka, Mongolia, Venezuela, Kenya, and others in their journey to perdition.

We urgently need Congress to conduct public hearings before we fall into this debt trap.

These public hearings should cover transparent cost-benefit analyses; comparative interest rates and conditions from Japan, the International Monetary Fund, the Asian Development Bank and the World Bank; collaterals pledged to back up the loans; and lessons learned from our previous experiences with Chinese loans such as ZTE and the NorthRail Express.

DIONISIO GIL JR., jun.gil@amrop.ph

Read more: http://opinion.inquirer.net/115212/conduct-public-hearing-china-loans#ixzz5Pthpysgz

MUTED, UNDERRATED DYNAMICS IN TERRITORIAL DISPUTES

Philippine Daily Inquirer / 05:12 AM May 31, 2018

Are we really in a helpless stance in relation to China?

There is more to the Philippines’ involvement in the West Philippine Sea dispute than the interplay of longstanding claims for territorial entitlements among neighboring Asia-Pacific states, and rights over marine resources in the area, of which Filipinos (perhaps including some of our leaders) are not fully aware of.

A meaningful analysis of the situation would impel one to consider the following premises:

In the eyes of the United States, the Philippines has by far the most strategic location in the Asia-Pacific region. Uncle Sam constantly looks for ways in order to gain and combine economic and maritime advantages in the region where it could build its Navy and consequently enhance its regional presence and prowess.

The area surrounding the West Philippine Sea, where the Philippines is considered to be the most “approachable” state, is as much suitable for blockade as it is for trade and economic current.

No wonder, for years, the United States continues its ties with the Philippines and constantly helps in the latter’s affairs.

Of course, if it could keep close ties with its foes, with more reason it would with its goal.

On the other hand, China’s interest over the Philippines and the West Philippine Sea is a mix of aspiration and self-preservation.

The West Philippine Sea, an area known worldwide as the South and East China seas, is surrounded and comprised of islands running from Japan through Indonesia.

This area has been regarded as a valuable route for trade and commerce. However, China’s interest doesn’t end here.

Notably, the spacing of these islands poses risks upon China’s maritime defense as this area tends to be a constrictive passage vulnerable to sea and air block off.

When the going gets tough in this area, China can be easily sealed off without lifting even a single finger.

Finally, we may also observe that the US is bothered by the fact that China is a continuously emerging state power in the Asia-Pacific region.

But then, we cannot discount the reality that, due to its superior capability to impose restrictions and/or blockade upon unfavorable states, US causes China so much insecurity.

These are the muted, if not underrated, dynamics that actually make the Philippines a powerful bargaining entity, and which our fellow Filipinos must ponder on.

We are in the position that could either make or break the aforementioned regional “superpowers.”

Our country holds the fulcrum, which can influence not only the status quo in the Pacific region, but the international state of affairs as a whole.

The Philippines’ geographic and strategic location, as well as its stance in international law vis-à-vis the US and China, makes it a key player in its own right in the Asia-Pacific region.

Currently, the Philippines may not just be China’s viable option. It could be China’s only hope.

So who’s helpless now?

TINA SIUAGAN

Read more: http://opinion.inquirer.net/113564/muted-underrated-dynamics-territorial-disputes#ixzz5PtifMOsY

THE MYTH OF WAR WITH CHINA

By: Richard Heydarian - @inquirerdotnet

Philippine Daily Inquirer / 05:05 AM August 07, 2018

In Tolstoy’s “War and Peace,” one of the characters memorably laments Russia’s humiliating defeat at the hands of Napoleon’s Grande Armée by despairingly stating, “We lost because very early on we told ourselves we had lost.”

Tolstoy’s message is clear: War is, above all, a test of wills fought in the minds of men rather than in the actual battlefield.

Two centuries since the Napoleonic wars, we are once again confronting the specter of conflict, this time in Asia’s seascape, particularly in the South China Sea, where China has been challenging America’s decades-long naval hegemony in Asia.

As I wrote in a previous book, “Asia’s New Battlefield” (Zed Books, London), if there were to be a third World War, it will most likely take place in our maritime backyard. After all, as veteran Singaporean diplomat Bilahari Kausikan has pointed out, it’s in the South China Sea where the parameters of US-China competition are most pronounced.

It’s in these strategic waters where, according to Harvard’s Graham Allison, we face a dangerous “Thucydides Trap,” as the modern Athens (China) challenges the hegemony of modern Sparta (America). Without a question, there are legitimate reasons for concern.

But should we really fear war in the near future? President Duterte thinks so. He has repeatedly claimed that if smaller claimant states such as the Philippines were to assert their rights, China would resort to armed conflict.

A more careful analysis of China’s foreign policy, however, reveals that the Asian powerhouse is the last country to wish for war. First of all, any armed confrontation would severely disrupt China’s export-oriented economy, since the country depends on the South China Sea for a vast majority of its trade as well as energy imports.

Yes, we may sleepwalk into conflict, as in World War I, but no one is interested in disrupting decades of continued economic growth. This is especially the case for developing China, where continued prosperity is the sole source of legitimacy for an unelected regime.

Second, any war in the South China Sea, especially against a weaker and helpless adversary like the Philippines, would irrevocably damage China’s regional standing, sowing panic among other smaller states and forcing them to start hedging their bets by fully aligning with America. This would not only represent a soft-power disaster for China, but would also immediately tilt the regional balance of power in America’s favor.

Third, any war in the South China Sea would be used as a pretext by America, Japan, India, Australia and major European powers to step up their military presence in the area. This would immediately end China’s current position of dominance and test the mettle of China’s People’s Liberation Army (PLA), which hasn’t fought a single war since the end of the Cold War.

As Sun Tzu, China’s legendary strategic thinker, counseled in “The Art of War”: “The supreme art of war is to subdue the enemy without fighting.” This is precisely why Beijing’s strategy is to intimidate smaller claimant states such as the Philippines through psychological warfare.

The beauty of Marites Vitug’s newly released book “Rock Solid” is that it’s a timely reminder that the Philippines’ arbitration award victory at The Hague is our best bargaining chip in the ongoing battle of wills in the South China Sea. Meticulously researched and written in accessible journalistic lexicon, her work eloquently punctures the false binary narrative that the only options for our country are graceful accommodation or war.

China knows that defying international law carries its own strategic costs, and that’s why it has used a combination of intimidation and economic incentives to lure the Philippines. The aim of China’s statecraft is to compel its smaller neighbors to internalize defeat and embrace strategic acquiescence as the only way forward.

We shouldn’t fall for this trick. Rule of law is the best and only way to manage and resolve the disputes, short of accepting Chinese maritime hegemony. There can’t be peace without justice.

jrheydarian@gmail.com

Read more: http://opinion.inquirer.net/115176/myth-war-china#ixzz5PtjN0ZtO

TO RECLAIM WEST PH SEA, LOOK TO 3RD FRENCH REPUBLIC

By: Hermenegildo C. Cruz - @inquirerdotnet

05:05 AM February 20, 2018

“Wishful thinking” was how Sen. Grace Poe labeled presidential spokesperson Harry Roque’s statement that the Philippines will benefit from China’s construction of artificial islands in the West Philippine Sea, and that we will someday take over these islands.

Many have criticized President Duterte’s foreign policy, without indicating what it should be. The issue must be addressed based on the fundamental tenet that in the conduct of diplomacy, a small power has limited options and a superpower has many options. If the Philippines were a superpower, it could in the current dispute send an ultimatum to China to dismantle its artificial islands, as then US President John F. Kennedy told Soviet Premier Nikita Khrushchev in 1962 when the latter installed nuclear missiles in Cuba. Or we can blow up the artificial islands with smart bombs, sink China’s supply ships, etc.

Given our limited options, our diplomacy should be patterned after that of the Third French Republic. An outcome of the Franco-Prussian War of 1870 was France’s loss of Alsace-Lorraine to the Germans. By 1870, Germany had become the dominant power in Europe, the main reason being there were then 60 million Germans against 40 million Frenchmen. France viewed Germany’s possession of Alsace-Lorraine as a continuing threat to France. Thus, French diplomacy was based on one constant: Germany was France’s permanent enemy.

France as the weaker power played the traditional balance-of-power game by forming alliances with other countries, mainly the Triple Entente with Great Britain and Russia, to offset German power. France regained Alsace-Lorraine after World War I, ceded it back to Germany early in World War II, and then regained it permanently after that war. It took 74 years — from 1871 to 1945 — before France achieved its goal of regaining Alsace-Lorraine. Even more important, the French foreign policy that was centered on Germany as its permanent enemy survived the turbulent politics of the Third Republic. Whichever administration held office in France, whether left or right, maintained the same foreign policy.

Our diplomacy on the West Philippine Sea is deeply flawed. We have aligned ourselves with China. In the event of war, China’s victory will make its possession of these islands irreversible. Necessarily, we must be against China and on the winning side to reclaim these islands. Even if we end up on the losing side, the worst scenario is we will be in the same predicament we are in now, with China in possession of the artificial islands.

The Duterte administration is ignoring the threat posed to our national security by the presence of Chinese military bases close to our shores. In addition, instead of forming alliances with other countries that share our interests on the West Philippine Sea, we have divested ourselves of allies and taken on China one on one. In a confrontation between a lion and a rabbit, it’s predictable who will get the lion’s share. As expected, we have been the victim of China’s endless bullying. And it has gone on to build artificial islands, eventually militarizing them.

To emphasize the perverse thinking of our current officials, in any war only the members of the winning coalition get benefits. Never in history has it been shown that the partner in a losing coalition benefits. Thus, siding with China, as the Duterte administration has been doing, forecloses the possibility that we will regain control of the West Philippine Sea. It must be noted that there are other aspirants with claims overlapping our own in the area. If Vietnam opposes China in a shooting war and ends up on the winning side, Vietnam will be able to claim all those areas in the West Philippine Sea that overlap our claim. We will be left out in the cold

Hopefully, the Duterte administration will adopt a winning foreign policy that we can pass on to succeeding generations until we reclaim the West Philippine Sea.

Hermenegildo C. Cruz holds a degree in international development jointly conferred by Tufts and Harvard Universities. A retired ambassador, he was posted to Canada, the United States and the Soviet Union, and was able to observe “the complexity of running a federal system of government.”

Read more: http://opinion.inquirer.net/111154/reclaim-west-ph-sea-look-3rd-french-republic#ixzz5Ptk9UdgG

DUMBO DEFEATIST DIPLOMACY: 

https://oddsandendsgonzalinhodacosta.blogspot.com/2018/05/dumbo-defeatist-diplomacy.html

“The government that lacks transparency evades accountability and in all probability has something to hide.”

 “He who builds the future without regard for the past is like one who looks into the mirror and promptly forgets what he sees.”

 “He who does not take a stand sits on his rights.”

Link: https://poetryofgonzalinhodacosta.blogspot.com/2018/07/politics.html

DUTERTE, TRAITOR

Duterte is benefiting from kowtowing to Communist China. He uses Communist China as a hedge against the political and economic pressure exerted by the West and the UN, especially in the international effort to exact accountability for his instigating the mass murder of “drug war” suspects. Duterte uses the might of Communist China against his own people.

Communist China is claiming our exclusive economic zone as its own territory and using its police and military force to exclude us from using our own maritime resources. Communist China is denying us our maritime rights and transgressing them. We have effectively lost Philippine territory under Duterte.

Duterte plays the accomplice to Communist China's invasion of Philippine territory because he wants to get Communist China loans. He benefits from the loans in three major ways:

- He gets his gigantic cut from the proceeds.

- He inflates economic growth figures, creating fake prosperity, digging a gargantuan Communist China debt trap designed to extract major territorial concessions from the Philippines.

- He keeps at bay the West and the UN by turning down the political and economic pressure they exert on him whenever they grant conditional financial aid and loans, the conditions involving adherence to international norms of human rights, rule of law, and liberal democracy.

Duterte’s agenda, which is to destroy democratic institutions, establish a dictatorship, and enrich himself and his cronies through massive corruption, will have catastrophic economic effects in the Philippines. Bad governance is already showing the signs in massive hidden debt to Communist China, weakening foreign investment, a diminishing peso, ballooning inflation, and degraded economic growth.