Beware of Greeks (China) Bearing Gifts

BEWARE OF GREEKS (CHINA) BEARING GIFTS

THE CHINA BACKLASH

By: Brahma Chellaney - @inquirerdotnet

Philippine Daily Inquirer / 05:00 AM November 03, 2018

Hong Kong—On a recent official visit to China, Malaysian Prime Minister Mahathir Mohamad criticized his host country’s use of major infrastructure projects—and difficult-to-repay loans—to assert its influence over smaller countries. While Mahathir’s warnings in Beijing against “a new version of colonialism” stood out for their boldness, they reflect a broader pushback against China’s mercantilist trade, investment, and lending practices.

Since 2013, under the umbrella of its “Belt and Road Initiative (BRI),” China has been funding and implementing large infrastructure projects in countries around the world, in order to help align their interests with its own, gain a political foothold in strategic locations, and export its industrial surpluses. By keeping bidding on BRI projects closed and opaque, China often massively inflates their value, leaving countries struggling to repay their debts.

Once countries become ensnared in China’s debt traps, they can end up being forced into even worse deals to compensate their creditor for lack of repayment. Most notably, last December, Sri Lanka was compelled to transfer the Chinese-built strategic port of Hambantota to China on a 99-year, colonial-style lease, because it could no longer afford its debt payments.

Sri Lanka’s experience was a wake-up call for other countries with outsize debts to China. Fearing they, too, could lose strategic assets, they are now attempting to scrap, scale back, or renegotiate their deals. Mahathir, who previously cleared the way for Chinese investment in Malaysia, ended his trip to Beijing by canceling Chinese projects worth almost $23 billion.

Countries as diverse as Bangladesh, Hungary and Tanzania have also canceled or scaled back BRI projects. Myanmar, hoping to secure needed infrastructure without becoming caught up in a Chinese debt trap, has used the threat of cancellation to negotiate a reduction in the cost of its planned Kyaukpyu port from $7.3 billion to $1.3 billion.

Even China’s closest partners are now wary of the BRI. In Pakistan, which has long worked with China to contain India and is the largest recipient of BRI financing, the new military-backed government has sought to review or renegotiate projects in response to a worsening debt crisis. In Cambodia, another leading recipient of Chinese loans, fears of effectively becoming a Chinese colony are on the rise.

The backlash against China can be seen elsewhere, too. The recent annual Pacific Islands Forum meeting was one of the most contentious in its history. Chinese policies in the region, together with the Chinese delegation leader’s behavior at the event itself, drove the president of Nauru—the world’s smallest republic, with just 11,000 inhabitants—to condemn China’s “arrogant” presence in the South Pacific. China cannot, he declared, “dictate things to us.”

When it comes to trade, US President Donald Trump’s escalating trade war with China is grabbing headlines, but Trump is far from alone in criticizing China. With policies ranging from export subsidies and nontariff barriers to intellectual-property piracy and tilting the domestic market in favor of Chinese companies, China represents, in the words of Harvard’s Graham Allison, the “most protectionist, mercantilist and predatory major economy in the world.”

As the largest merchandise exporter in the world, China is many countries’ biggest trading partner. Beijing has leveraged this role by employing trade to punish those that refuse to toe its line, including by imposing import bans on specific products, halting strategic exports (such as rare-earth minerals), cutting off tourism from China, and encouraging domestic consumer boycotts or protests against foreign businesses.

The fact is that China has grown strong and rich by flouting international trade rules. But now its chickens are coming home to roost, with a growing number of countries imposing antidumping or punitive duties on Chinese goods. And as countries worry about China bending them to its will by luring them into debt traps, it is no longer smooth sailing for the BRI.

Beyond Trump’s tariffs, the European Union has filed a complaint with the World Trade Organization (WTO) about China’s practices of forcing technology transfer as a condition of market access. China’s export subsidies and other trade-distorting practices are set to encounter greater international resistance. Under WTO rules, countries may impose tariffs on subsidized goods from overseas that harm domestic industries.

Now, Chinese President Xi Jinping finds himself not only defending the BRI, his signature foreign-policy initiative, but also confronting domestic criticism, however muted, for flaunting China’s global ambitions and thereby inviting a US-led international backlash. Xi has discarded one of former Chinese strongman Deng Xiaoping’s most famous dicta: “Hide your strength, bide your time.” Instead, Xi has chosen to pursue an unabashedly aggressive strategy that has many asking whether China is emerging as a new kind of imperialist power.

International trade has afforded China enormous benefits, enabling the country to become the world’s second-largest economy, while lifting hundreds of millions of people out of poverty. The country cannot afford to lose those benefits to an international backlash against its unfair trade and investment practices.

China’s reliance on large trade surpluses and foreign-exchange reserves to fund the expansion of its global footprint makes it all the more vulnerable to the current pushback. In fact, even if China shifts its strategy and adheres to international rules, its trade surplus and foreign-currency reserves will be affected. In short, whichever path it chooses, China’s free ride could be coming to an end. - Project Syndicate

Brahma Chellaney, professor of strategic studies at the New Delhi-based Center for Policy Research and fellow at the Robert Bosch Academy in Berlin, is the author of nine books, including “Asian Juggernaut,” “Water: Asia’s New Battleground,” and “Water, Peace, and War: Confronting the Global Water Crisis.”

WHY TIED AID IS A DISASTER

By: Eduardo C. Tadem - @inquirerdotnet

Philippine Daily Inquirer / 05:26 AM November 25, 2018

Sen. Ralph Recto has warned against “tied loans” from countries like China where foreigners take over the jobs of Filipinos. He proposes that foreign loan agreements should carry a “hire local policy” instead of privileging “preferences by the funder.”

The issue is crucial, given that many overseas workers are returning home and a recent Social Weather Stations survey shows that 10 million Filipinos are jobless.

…The Organization for Economic Cooperation and Development (OECD), an intergovernmental group of 36 advanced economies, defines tied aid as loans or grants which are offered “on the condition that it be used to procure goods or services from the provider of the aid.” The OECD’s Development Assistance Committee (DAC) has been advocating for the untying of aid since 2001.

The OECD DAC says that “tied aid can increase the costs of a development project by as much as 15 to 30 percent,” thus preventing “recipient countries from receiving good value for money for services, goods, or works” while unfairly setting “legal and regulatory barriers to open competition for aid-funded procurement.”

The DAC argues that “untying aid, on the other hand, increases aid effectiveness by reducing and avoiding unnecessary transaction costs, gives the recipient the freedom to procure goods and services” and therefore “improves the ability of recipient countries to set their own course.” The DAC reports that the “proportion of ODA… that was untied increased from 41 percent in 1999-2001 to 79 percent in 2018.” It also claimed that, “in terms of individual country performance, most (OECD) members have now untied almost all of their ODA.”

The civil-society-led European Network on Debt and Development (Eurodad), however, disputes the OECD DAC findings on the current global status of tied aid. In a September 2018 Report, the group notes that while donor governments in 2015 spent “an estimated US$55 billion — or 44 percent of ODA — on the procurement of goods and services,” this failed to benefit local economies, as tied aid “puts the commercial priorities of firms based in rich countries before development impact” in recipient countries.

Eurodad calculates that, at the minimum, “the immediate cost of tying — that is, the cost of being unable to shop around for the best price — was between $1.95 billion and $5.43 billion in 2016.” The group reports that, “in 2016, some $25 billion of ODA was reported as formally tied” — almost 20 percent of the total. But this picture is incomplete, since “ODA that is reported as untied can still be tied ‘informally’ through procedural restrictions that give companies from the donor country an unfair advantage.”

ODA contract awards show that, due to the informal tying of aid, “more than half of all reported contracts in 2016 were awarded back to firms in the donor country.” The most notorious are the United States (95 percent), Australia (93 percent) and United Kingdom (90 percent). In the poorest countries, “only 13 percent flowed back to local companies.” On top of this, OECD DAC chair Charlotte Petri Gornitza admits that backtracking on untying aid has taken place from the 2013 high of 89.5 percent.

Strategies to open up procurement to firms in recipient countries such as “advertising contracts in the local media, setting manageable contract sizes and undertaking procurement in local languages… are often ignored” by donor agencies. Furthermore, “recent changes to the ODA reporting rules on donor support to the private sector risk creating new loopholes that would allow informal tying to proliferate more than ever.”

My own research on ODA to the Philippines confirms the negative impact of tied aid. In the case of Japanese loans, “prices of tied goods were over 20 percent higher than the lowest available international prices and reduced aid value by an average of 10-15 percent,” as I wrote in “Development Down the Drain: The Crisis of Official Development Assistance to the Philippines” (a chapter in the 2010 book “Finance or Penance for the Poor,” edited by Filomeno Sta. Ana III). Further: “Japan earned from 75 cents to 95 cents for every dollar of aid it gives in the form of goods and services purchased by the recipient country.” Informal tying also results from “the hiring of consultants from the donor-country or standards in the acquisition of equipment and other project requirements.”

It is correct to point out the potential harm that tied aid creates in relation to the hiring of labor from the donor country. But the effect of tied aid (loans and grants) is much more disastrous in its overall and lasting impact on recipient economies. As Eurodad pointed out, “the far greater cost” lies in “missed opportunities to catalyze local economic, social and environmental development over the long term.”

* * *

Eduardo C. Tadem, PhD, is convenor of the Program on Alternative Development, University of the Philippines Center for Integrative and Development Studies; retired professor of Asian Studies, UP Diliman; and past president of the Freedom from Debt Coalition (2014-2018).

Read more: https://opinion.inquirer.net/117702/why-tied-aid-is-a-disaster#ixzz5Z908ulWJ

THE ROT AT THE CORE IS DUTERTISMO

By: John Nery - @jnery_newsstand

Philippine Daily Inquirer / 05:07 AM November 27, 2018

…the degrading state visit of the new emperor, Xi Jinping of China. Longstanding Philippine protocols were not followed; President Duterte conducted himself as his visitor’s inferior; a raft of documents were signed, some with potential constitutional issues, but were not released to the public. The insult to national dignity was deepened when a timely GMA documentary by Jun Veneracion showed Chinese coast guard harassment in the waters off Panatag (Scarborough) Shoal.

Read more: https://opinion.inquirer.net/117746/the-rot-at-the-core-is-dutertismo#ixzz5Zu2C8ozk

Oh, yeah, before anyone dismisses these protocol concerns as “maliit na bagay lang iyan”: The Chinese are sticklers for protocol.

The Unlawyer, @unlawyer

WHY FILIPINOS DISTRUST CHINA

By: Solita Collas-Monsod - @inquirerdotnet

Philippine Daily Inquirer / 05:18 AM November 24, 2018

… So does it boil down to: We don’t trust China because we don’t trust Chinese and Chinese-Filipinos? On the face of it, no. …We don’t trust them because we see that they are taking away what is ours (including what has been ruled to be ours by an international court). Because they treat our fishermen like dirt.

HOW SINCERE IS CHINA ON COC?

By: Alito L. Malinao - @inquirerdotnet
Philippine Daily Inquirer / 05:16 AM November 22, 2018

…Some analysts have expressed serious doubts that Beijing would allow the COC [Code of Conduct] to interfere with its expansionist designs on the disputed territory, or would respect its legality.

China is a signatory to the United Nations Convention on the Law of the Sea, yet it has rejected the ruling issued in July 2016 by the Permanent Court of Arbitration in The Hague that nullified the so-called “nine-dash line” that Beijing invokes to claim virtually the entire South China Sea. The arbitral ruling recognized the Philippines’ sovereignty over its occupied islands.

The tribunal also said China had violated its obligation to refrain from aggravating the dispute while the settlement process is ongoing.

President Duterte has since relegated the ruling to the back burner, saying that, since it cannot be enforced anyway, the Philippines might as well work to expand its economic ties with China.

Chinese President Xi Jinping has repeatedly said the South China Sea has been Chinese territory since “ancient times,” and that China’s territorial sovereignty and interests in the region would not be influenced under any circumstances by the arbitral ruling. Xi has also said that China would go to war against any country that would seize “even an inch of our territory.”

If Beijing has adamantly refused to recognize the legally binding ruling by an international body, how much more if the ruling is purely regional and consensus-based like the COC?

Thus, Asean members, especially the four claimant countries, should, for now, forget about getting a fair deal from its rich and powerful neighbor through a Code of Conduct.

* * *

Alito L. Malinao is the former news editor of the Manila Standard. He is on leave as journalism professor at the Pamantasan ng Lungsod ng Maynila and is the author of the book “Journalism for Filipinos.”

Read more: https://opinion.inquirer.net/117633/how-sincere-is-china-on-coc#ixzz5ZQYKFAk7

COMMENTARY: FALLING FOR CHINA’S TRICK IN THE COC FRAMEWORK NEGOTIATIONS

Renato Cruz De Castro (philstar.com) - August 17, 2018 - 11:17am

China uses both direct and the indirect approaches in pursuing its strategic goal of maritime expansion in the South China Sea.

The direct approach involves the build-up of a blue-water navy, the creation of artificial islands, and the militarization of these islands by deploying bombers and missiles on the land features.

In applying the indirect approach, China uses subtle psychological ploys to make the 10-member states of the Association of Southeast Asian Nations accept its maritime expansion as legitimate and natural, and in doing so, isolate these small powers from their allies and security partners like the United States, Japan and Australia.

[On] many occasions, China would emphasize to ASEAN the urgency of advancing mutually beneficial peace and development in the South China Sea while at the same time criticize unnamed outside forces making frequent shows of force, creating the most destabilizing factor for peace and stability in the region.

This is an obvious reference to the US, which has conducted freedom of navigations (FONs) patrols to challenge Chinese island constructions and deter China’s maritime expansion.

EX-OMBUDSMAN MORALES: ‘PH CANNOT SURVIVE TREASON FROM WITHIN’

Lian Buan @lianbuan

Published 2:21 PM, November 24, 2018

Updated 9:26 PM, November 26, 2018

MANILA, Philippines – After being out of the public eye for nearly 4 months since retiring as Ombudsman, Conchita Carpio Morales made her voice heard again on Saturday, November 24, and it was loud and clear.

Delivering the introductory speech at the Akademiang Filipino’s forum on protecting Philippine sovereign rights in the West Philippine Sea, Morales said the Philippines “cannot survive treason from within.”

Quoting Marcus Tullius Cicero, Morales said: “A nation can survive its fools, and even the ambitious. But it cannot survive treason from within."

Morales added, continuing the quote: “An enemy at the gates is less formidable...but the traitor moves among those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself.”

…“The ensuing period of years is the litmus test of how this nation is going to assert the gains it has painstakingly fought for in The Hague,” she said, referring to the Philippines' historic victory over China in the West Philippine Sea dispute.

Asked after the forum if she was referring to the administration of President Rodrigo Duterte which has set aside the Hague ruling to gain loans and grants from the Asian giant, Morales cheekily said: “Don’t intrigue me. As I said, it is self-explanatory.”

Morales made the statement days after the Philippines signed with China a Memorandum of Understanding on oil and gas exploration in the West Philippine Sea.

The deal has been compared with the Philippines' Joint Marine Seismic Undertaking with China and Vietnam under the Arroyo administration which expired in 2008. At the time, critics called then President Gloria Macapagal Arroyo's decision to allow the JMSU an "act of treason."

The forum also featured Acting Chief Justice Antonio Carpio, who once again slammed China for its continued insistence that it had a valid territorial claim over the West Philippine Sea, part of the South China Sea. China is claiming ownership of the entire South China Sea.

“The Philippines has an Exclusive Economic Zone (EEZ) of about 376,350 square kilometers in the South China Sea that is free from any Chinese claim. If China is there, it’s there as a squatter,” said Carpio.

The forum was held after the government finally publicized the MOU with China on a possible oil exploration in the West Philippine Sea.

While Carpio said the MOU is “safe” for now, the Philippines should proceed with caution to ensure that it would not cede any part of its territory to China in the final agreement.

Morales, for her part, said, “The people need to assert transparency, demand integrity and exact accountability from the powers-that-be who must adhere to the rule of law, even international law, including the Law of the Sea.” – Rappler.com

Link: https://www.rappler.com/nation/217443-conchita-carpio-morales-philippines-cannot-survive-treason-from-within

OUR INALIENABLE RIGHT TO KNOW

By: Joel Ruiz Butuyan - @inquirerdotnet

Philippine Daily Inquirer / 05:46 AM November 26, 2018

The refusal of the Duterte administration to immediately show the 29 agreements it signed with China is downright appalling. It goes against the very nature of representative government, and a blatant betrayal of the fundamental principle that public office is a public trust.

A full, detailed, and immediate accounting is necessary of what our government committed to China in behalf of the Filipino people.

Even if the government eventually relents and shows the agreements, it’s still outrageous that our leaders have the audacity to think that they can keep the people in the dark on agreements they have entered into with a foreign country, especially one that is most distrusted by our people. In the most recent Social Weather Stations survey, 85 percent of Filipinos rejected the Philippine government’s inaction against Chinese aggression in the South China Sea, including in areas that belong to the Philippines.

As of this writing, Foreign Secretary Teodoro Locsin Jr. has only read in a television interview bits and pieces of one agreement, the Memorandum of Understanding on Cooperation on Oil and Gas Development.

Given our territorial conflict with China, and the many controversies that China has been accused of in its business dealings with numerous countries, the obligation of the Philippine government even goes beyond promptly showing the signed agreements.

Before the signing of the agreements, the drafts should have been disclosed and subjected to public debate. The recognition by our government of “[t]he right of the people to information on matters of public concern,” as clearly written in our Constitution, is of paramount importance given the circumstances of the foreign country involved.

Locsin offered the justification that the consent of China is needed for the Philippine government to disclose the full contents of at least one agreement, because it supposedly contains a confidentiality clause which requires our government to obtain China’s approval before any disclosure is made.

Any “confidentiality clause” in a commercial agreement entered into by our government with a foreign government is totally ridiculous and absolutely unconstitutional.

Where did the Duterte administration obtain the power to surrender to a foreign country the Filipino people’s constitutional right to know what their own government has committed in their own behalf?

Our government’s obligation to disclose agreements it enters into, most especially with foreign countries, is an inalienable right that cannot be contractually bargained away by the President, his Cabinet secretaries, and even by Congress.

Without the fulfillment of this disclosure responsibility by the executive branch, the bedrocks of our system of government are compromised.

First, the people’s rights of free expression, to petition the government and to hold rallies, all for the purpose of influencing the actions of their government, will be worthless if the executive branch withholds information and documents.

Second, the oversight powers of Congress—its conduct of legislative investigations and its delivery of consent or disapproval to certain kinds of international agreements—will be rendered toothless if the executive branch does not disclose the full text of the agreements.

Third, the certiorari powers of the Supreme Court to declare that the executive branch has either abused or exceeded its powers in entering into an agreement with a foreign country will be rendered useless, if the executive branch does not even show the agreements.

Our government’s refusal to show to its people the agreements it committed to China gives compelling credence to two accusations: that we are under a de facto dictatorship because the Duterte administration can do anything it wants regardless of what the Constitution says, and that we have become an outpost of a foreign country with leaders who act like provincial chieftains kowtowing to the sovereignty of China.

Comments to fleamarketofideas@gmail.com

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.

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Beware of Greeks (China) Bearing Gifts

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