Corrosive capitalism jeopardizes PH

“Highly successful.” That was how former president Rodrigo Duterte characterized his visit to China just a few weeks after he got elected in 2016. His administration reported that he had obtained a total of $24 billion in pledges of loans and grants, mostly for infrastructure projects, from China’s Premier Xi Jinping during his trip.

Two years later, in November 2018 upon Xi’s state visit to the Philippines, he and Duterte signed 29 agreements covering projects under China’s Belt and Road Initiative. Xi sweetened the promises by pledging scholarships for Filipino students, aid for Marawi, and increased imports of Philippine goods.

In the end, only four of the promised projects materialized. These four projects were the Chico River Pump Irrigation Project, the New Centennial Water Source-Kaliwa Dam Project, Dito Telecommunity, and the Safe Philippines Project.

Stratbase ADR Institute took it upon itself to look closely into these projects and determine whether they truly serve the interests of the Filipino people. What we found was not entirely surprising, but it is still alarming—infuriating—nonetheless. The infirmity of these projects endangers the country’s security in so many ways.

For example, the Chico River Pump Project was deemed a sweetheart deal between the Philippines and China. It involved irregularities in the consultation, approval, and pre-selection phases. There was a lack of transparency, problems in financial terms, a waiver of sovereign immunity, and the risk of environmental degradation.

The Kaliwa Dam Project also carried with it environmental concerns. Aside from this, the loan terms, confidentiality clause, waiver of immunity, arbitration terms, and contractor choice, not to mention its sociocultural considerations, were equally problematic.

Meanwhile, the entry of China Telecom in the third telco Dito Telecommunity has sparked controversy over national security risks as it is a state-owned enterprise that will be subjected to Chinese laws requiring companies to cooperate with China’s intelligence services. The significant stake of a major Chinese company in critical infrastructure can be used to compromise the sensitive data of its users.

The same is true for the Safe Philippines Project, wherein another state-owned enterprise China International Telecommunication Construction Corp. is a major contractor for technological infrastructure and equipment, including surveillance cameras and other monitoring systems. The surveillance data collected could be accessed or used by Chinese authorities for intelligence purposes. This control could be used for espionage, cyber-attacks, or other malicious activities.

“Onerous” is a word that easily comes to mind. Among the most glaring flaws of the projects was that they clearly favored another country while sacrificing the interests of the Philippines. A government accepts loans, grants, and investments to advance the economy and provide economic security to its citizens. It was not the case here.

Economic security is seen as the ability of individuals, households, or communities to cover their essential needs sustainably and with dignity, according to the International Committee of the Red Cross. The International Labour Organization says economic security is composed of basic social security through access to basic needs infrastructure pertaining to health, education, dwelling, information, and social protection, as well as work-related security.

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Our studies on the projects revealed that there were other interests at play in the decision of Duterte to enter into these agreements—interests that were detrimental to the Filipino people. Worse, there was a brazen attempt to shove these projects down our throats even as there were other standing financing offers from other countries with less oppressive penalties in the event of default. Filipinos stood to suffer the consequences of these infirm projects—unconscionable payment terms, for instance, which would sink the Philippines deeper in debt, among other adverse effects.

These are examples of economic statecraft, and we should be wary of countries masquerading as friends or partners when they clearly exhibit conflicting interests. Saying, for instance, that China is our top trading partner would be misleading because the trade is heavily skewed toward imports.

Stratbase was recognized by the Center for International Private Enterprise for this series of studies, which were conducted in 2020 and 2021. More than the award, however, we are just grateful to contribute to the discourse on these projects, and how such decisions should be guided only by what is good for Filipinos.

Infrastructure development must be pursued to achieve constructive and developmental objectives and not corrosive to our security, the economy, and our people.