US-PH “Partnership for Growth”: Greater economic intervention

While much of the discussion about the pivot and renewed PH-US relations centers on the military aspect, there is also the equally crucial, if not even more far-reaching, economic dimension of the pivot (Photo from bulatlat.com)
While much of the discussion about the pivot and renewed PH-US relations centers on the military aspect, there is also the equally crucial, if not even more far-reaching, economic dimension of the pivot (Photo from bulatlat.com)

Despite US President Barack Obama’s absence, State Secretary John Kerry’s visit still underlines the increased bilateral engagement between the Philippines and the US. It comes at a time when US foreign policy is increasingly focused on the region under its so-called pivot to Asia Pacific. The visit, which follows a series of high-profile exchange of visits between top Filipino and American Executive and Defense officials since 2010, is controversial amid ongoing talks between Manila and Washington to increase rotational presence of American troops in the country or basing privileges and the still ongoing territorial spat with China.

While much of the discussion about the pivot and renewed PH-US relations centers on the military aspect, there is also the equally crucial, if not even more far-reaching, economic dimension of the pivot. Under the Obama and Aquino presidencies, mechanisms to facilitate further reforms in the economy that promotes US economic interests are steadily being set up through US foreign assistance programs such as the comprehensive, multi-donor Partnership for Growth (PFG) initiative. Silently, the PFG and other US efforts are setting the stage for an even more wide-ranging and systematic US intervention in the country’s internal policy making.

PH dependence on US economy

The US has been able to perpetuate Philippine dependence on the US economy. American investors remain the biggest source of net foreign direct investments (FDI) in the Philippines. From 1999 to 2012, net FDI from the US reached $4.52 billion, accounting for 19.8% of the total during the said period. Last year, US net FDI was pegged at $784.74 billion or 38.6% of the total, and 248.9% higher than the figure in 2011, at a time when investments from Japan, the European Union (EU), Asean and others have sharply declined.

Similarly, the US continues to be the number one buyer of Philippine exports and biggest supplier of its imports. Direct Philippine-US trade for the period 1999-2012 was $218.64 billion or 17.5% of the total. During the same period, the US accounted for 19.4% of Philippine exports and 15.8% of imports. Certainly, the figures are much higher when one considers that a portion of Philippine trade with Asean and East Asia actually ends up with the US.

Finally, the US also accounts for the largest source of remittances from overseas Filipinos (OFs), including overseas Filipino workers (OFWs). From 1989 to 2012, total OF remittances reached $205.71 billion, of which $108.30 billion or an overwhelming 52.6%, come from US-based migrant workers. Preliminary data for 2013 covering the months of January to July show that remittances from the US reached $5.54 billion or 43.9% of the total during the said period. Since the 1980s, OF remittances have become the largest source of foreign earnings for the Philippines and practically keeping the backward economy somehow afloat. The figures from the US are bloated a bit by the practice of remittance centers in various cities abroad to course remittances through correspondent banks that are mostly US-based. But consider also that based on the latest (2009) stock estimate of OFs, US-based OFs account for 2.88 million of the 8.58 million Filipinos abroad, or 33.6% of the total.

Through the decades, the US has spent substantial amounts to sustain and deepen its clout. Disbursements of bilateral official development assistance (ODA) from the US for the Philippines from 1999 to 2011 reached $1.12 billion, 20.9% of total disbursements during the said period and the second largest behind Japan. However, while ODA disbursements from Japan have been considerably falling since the 2008 global financial and economic crisis, bilateral US aid during the same period has steadily increased, growing by an annual 18.5% from 2009 to 2011. Under the Obama administration and its announced pivot to Asia Pacific, disbursements of bilateral US economic aid have substantially increased. From an annual average of $108.12 million and a yearly growth of 4.6% from 2001 to 2008, US bilateral economic aid to the Philippines jumped to an annual average of $152.23 million and a yearly expansion of more than 18% from 2009 to 2011.

More US intervention, neoliberal reforms

While already expanding, US assistance to the Philippines is anticipated to further increase with the introduction by the Obama administration of new initiatives that facilitate greater US intervention in the country. Requested US aid for the Philippines for fiscal year 2014 is pegged at $188 million, 17.1% higher than the base appropriation for fiscal year 2013.

One such new initiative is the Partnership for Growth (PFG), a signature inter-agency effort of Obama’s Presidential Policy Directive on Global Development, which claims to “elevate economic growth in countries committed to good governance as a core priority for US development efforts”. The PFG supposedly aligns with policy reform areas outlined by President Aquino in the Philippine Development Plan (PDP). The PFG is defined by the active participation and coordination of more than a dozen US government agencies led by the State Department, USAID and the MCC as well as multilateral donors like the World Bank, International Monetary Fund (IMF), United Nations (UN) agencies and even non-government organizations (NGOs) and private corporations.

A Statement of Principles was signed by both countries during the November 2011 Manila visit of then State Secretary Hillary Clinton. The document reflects the two governments’ supposed mutual goal to place the Philippines on a path to sustained, more inclusive economic growth, and elevate it to the ranks of high-performing emerging economies. For the US, the PFG will better position the Philippines in its objective of joining the TPP in the future.

Under the PFG, the US intends to deepen its role in national policy making such as through the five-year Joint Country Action Plan (JCAP) which identified priority areas for policy reforms in the Philippines, including trade and investment liberalization, deregulation, effective enforcement of contracts with private business (such as those engaging in PPP) as well as fiscal and judicial reforms. (See Box)

box - pfg action plan

An example of how US steers internal policy making is the PFG’s centerpiece program in the Philippines, which is the $433.91-million grant from the Millennium Challenge Corp. (MCC). The MCC is a highly conditional aid and requires the Philippines to, among others, maintain so-called “economic freedom” to continue receiving the grant. For instance, one of the indicators of economic freedom, as designed by the MCC, is the Trade Policy Indicator which measures the country’s openness to international trade based on average tariff rates and non-tariff barriers (e.g. trade quotas, production subsidies, government procurement procedures, anti-dumping, local content requirements, etc.) to trade. The “Compact” or agreement between the Philippine government and MCC is that the latter may suspend or terminate the grant if the country fails to reverse its policies that are inconsistent with the Trade Policy Indicator and other indicators designed by the MCC.

Also, the MCC grant does not only facilitate further liberalization of the economy but serves as a tool as well for US intervention in counterinsurgency. Aside from the the $214.4-million Samar Road project, which targets communities in Samar that are considered strongholds of the New People’s Army (NPA), the MCC grant also includes the $120-million Kapit-Bisig Laban sa Kahirapan – Comprehensive and Integrated Delivery of Social Services (Kalahi-CIDSS). Kalahi is essentially the “social development” component of the military’s counterinsurgency campaign in Mindanao and in areas considered as stronghold of the NPA. Another project funded by the MCC grant is the $54.3-million Revenue Administration Reform Project (RARP) which aims to raise tax revenues, reduce tax evasion and revenue agent-related corruption. The rest of the grant is allocated to program administration and oversight.

“Arangkada”

Early this year, USAID and the American Chamber of Commerce (AmCham) launched the The Arangkada Philippines Project (TAPP) as part of the implementation of the PFG. Through the USAID-funded TAPP, AmCham will push for the implementation of the policy proposals contained in the comprehensive advocacy paper “Arangkada Philippines 2010: A business perspective” prepared by the Joint Foreign Chambers of Commerce in the Philippines (JFC), of which AmCham is a key member.

The JFC paper listed 471 specific recommendations that promote the interest of foreign corporations in the country through greater liberalization, deregulation, privatization and denationalization while intensifying the attack to the rights and welfare of the people.

Among others, their proposals are to: amend the Labor Code to allow subcontracting and easier termination of employees; promote IT-BPO curriculum in colleges and education reform, adopt K+12 model; lift restrictions on foreign ownership in media and advertising; promote tie-ups with foreign firms; protect PPP investors from political (i.e. regulatory) risks including TROs from courts; scrap ‘unwarranted’ taxes on foreign carriers; lift restrictions on foreign equity in power projects; privatize Agus and Pulangi dams; build more transport infrastructure through PPP; review policy disallowing “take-or-pay” and sovereign guarantees; promote PPP in the water sector; establish an export development fund to promote exports and investment; allow manufacturing industry to operate with less government interference such as price controls; liberalize importation of capital equipment; liberalize shipping industry; fully implement Mining Act; allow foreign ownership of land and retail facilities; allow relief from minimum wages; review the Foreign Investment Negative List (FINL); apply ‘creative solutions’ to the 60-40 foreign ownership restriction pending Charter change (Cha-cha); privatize or close down government-owned and controlled corporations (GOCCs) to reduce fiscal burden, among others; use advisers (amicus curiae) when Supreme Court (SC) is ruling on issues that adversely affect the investment climate; promote labor flexibilization schemes; reduce corporate income tax and raise the value-added tax (VAT) and fuel excise taxes; and expand the conditional cash transfer (CCT) and Kalahi-CIDSS programs; encourage PPP in healthcare-related services.

With assistance from the TAPP, the JCF started producing Legislation Policy Brief, which identifies broad recommendations for Congress and the Executive. Among the many proposals of the JFC is the lifting of constitutional restrictions on foreign investments, which the AmCham has long been openly advocating. Thus, while Charter change (Cha-cha) is not explicitly identified in the PFG, its implementing components such as the TAPP provides pressure on the Philippine government to liberalize the Constitution.

Meanwhile, just recently, the USAID announced a $24-million Philippine-American (Phil-Am) Fund, another component of PFG implementation in the country, intended for civil society organizations (CSOs) working on projects in the areas of entrepreneurship and promotion of new businesses, governance, fighting human trafficking, technology-driven adult literacy and biodiversity conservation.

“Powerhouse” lobby group

Complementing and reinforcing the PFG is the establishment of lobby group US-Philippine Society (USPS), a private sector initiative which claims to broaden and expand interaction and understanding between the two countries in the areas of security, trade, investments, tourism, the environment, history, education and culture. The group intends to create a new and timely mechanism to elevate the Philippines’ profile in the US by bringing its longstanding historical ties fully into the 21st century when American policy interests are increasingly focused on East Asia. It was officially launched on 7 June 2012 during President Aquino’s official visit to Washington.

Its leadership includes John D. Negroponte, a former US Ambassador to the Philippines (1993-1996), first Director of National Intelligence (2005-2007) and former Deputy State Secretary (2007-2009), as co-chairman with Filipino business tycoon Manuel V. Pangilinan. Honorary chairmen are Maurice Greenberg, former chair and CEO of insurance and financial giant American International Group (AIG), and Washington Z. Sycip, founder of the Philippines’ largest multidisciplinary professional services firm SGV & Co. Current Ambassador to the US Jose L. Cuisia, Jr. is an ex-officio Board member.

Aside from them, the Board of Directors of USPS is also comprised of the top executives from some of the largest American corporations, namely: Citigroup, General Electric, Procter and Gamble, JP Morgan, Chevron and Coca Cola, among others. Prominent Filipino businessmen like Jaime Augusto Zobel de Ayala, Ramon del Rosario and Enrique Razon are also members of the Board. The group’s current president is John F. Maisto, a former Political Officer of the US Embassy in Manila (1978-1982) and Director of Philippine Affairs at the State Department (1982-1986). The executive director, meanwhile, is Hank Hendrickson, a retired US Navy officer and former Foreign Service Officer at the US Embassy in Manila. On 21 January 2013, Negroponte led a so-called “powerhouse” delegation of the USPS in visiting the country, bringing with him officials of the American corporations belonging to the lobby group and held discussions with Aquino and top economic and defense officials as well as SC Chief Justice Lourdes Sereno to update on key economic and judicial reforms, including those under the PFG.

Defending PH sovereignty

The US pivot and Aquino’s subservience to US interests are creating conditions for increased US intervention in the country not only militarily but also in terms of economic policy making and governance. A new era in the more than a century old colonial and neocolonial relations between the Philippines and the US is indeed being ushered in by the Aquino and Obama regimes.

The serious implications on national sovereignty, human rights, regional peace and stability and even on the environment of greater US military presence and intervention are well-documented and widely discussed. However, there is a big challenge for advocates of national sovereignty and patrimony to deepen and widen the public discourse on US intervention and the Asia Pacific pivot to equally underscore how the US, in its desperate efforts to abate its latest economic crisis, is increasingly and systematically laying the groundwork to further steer the national economy towards serving its monopoly capitalist interests.

There is a need to draw and highlight how Philippine-US colonial and neocolonial ties and decades of neoliberal restructuring and reforms have stunted national development and destroyed industries and livelihood, perpetuating chronic poverty and the permanent economic crisis in the country.

More economic liberalization via Cha-cha is anti-people and anti-development

Nationalists and anti-liberalization advocates must expose the deception that increased liberalization through Cha-cha will create more jobs and address poverty. (Photo from sulekha.com)

First published by The Philippine Online Chronicles

On Thursday (Sep. 29), the leaders of the House of Representatives (HOR) and the Senate announced that they have agreed in principle to adopt a bicameral constituent assembly as a mode of changing the 1987 Constitution. Senate President Juan Ponce Enrile and House Speaker Feliciano Belmonte made the announcement at the conclusion of their legislative summit.

Without Aquino’s consent?

Malacañang was quick to distance itself from the latest campaign to push for Charter change (Cha-cha). Secretary Butch Abad of the Department of Budget and Management (DBM) was quoted as saying that President Benigno S. Aquino III remains firm on his position that Cha-cha is not a priority of his administration.

But the active role that Senator Franklin Drilon, a prominent member of the President’s Liberal Party, is playing in the current Cha-cha initiative could not be without the approval, or at least prior knowledge, of Aquino and the ruling party’s leadership. It was Drilon who proposed during the lawmakers’ summit that the House and the Senate use the legislative process and lawmaking procedure in amending the Constitution.

As Drilon explained, each chamber will deliberate separately on Cha-cha proposals like an ordinary bill and then “exercise constituent function through a bicameral assembly.” But unlike a regular bill, the proposed amendments will be submitted not to the President but to the people for ratification.

Contentious issue

Cha-cha has always been a contentious issue since former President Fidel Ramos first pushed for it in 1997. Various sectors had massively mobilized against past attempts to tinker with the Constitution due to persistent fears that the incumbent Chief Executive and his allies in Congress have ulterior political motives. From Ramos to Joseph Estrada, and most especially under Gloria Arroyo, Cha-cha was widely perceived as a ploy to perpetuate the incumbent to power.

For Cha-cha advocates, the perfect time to push for constitutional amendments is now when the current President enjoys high trust ratings and is widely seen as uninterested in prolonging his stay as a leader. In fact, Drilon’s proposal is unoriginal. The process of amending the Constitution through the regular process of the legislature in enacting a law was first espoused by former House Speaker Prospero Nograles.

Like Drilon, Nograles also said that only specific economic provisions of the Constitution will be amended through this process. Despite such assurance, the scheme did not prosper because of the widespread distrust in Arroyo and her allies including Nograles. Drilon and the Cha-cha proponents are hoping that this time around, the public reception will be different.

Expose the deception

The political landscape may have changed and created a favorable condition for those advocating for Cha-cha, which include not only the politicians who want to consolidate their power and preserve their political dynasties but also the big business groups in the US and Europe who have long been pushing for more liberalization of the economy.

Thus, there is a looming serious challenge for nationalists and anti-liberalization advocates to persistently expose the deception being peddled by Cha-cha advocates that increased liberalization through constitutional reforms will bring in more foreign investments and create more jobs, and thus address the country’s backwardness and worsening poverty.

At present, arguments for further economic liberalization via Cha-cha are being articulated by Rep. Loreto Ocampos (Misamis Occidental, 2nd district), who chairs the House committee on constitutional amendments. Ocampos has merely revived the very same proposals that previous Cha-cha attempts had already proposed.

These are: (1) Removing the 60 – 40% equity limitations; (2) Removing exclusive control and management by Filipinos in companies with foreign equity; (3) Expanding the role of foreign investors in exploration, development, and utilization of natural resources; (4) Allowing foreign ownership of industrial lands; (5) Liberalizing media by allowing foreign investments; (6) Liberalizing the practice of profession by allowing foreigners to practice their profession in accordance with the principle of reciprocity; (7) Liberalizing investments in educational institutions by allowing foreign investment in tertiary education; and (8) Extending the 25 + 25 land lease agreement.

According to Ocampos, amending the economic provisions of the Constitution has two main objectives: (1) To open up the economy to attract foreign direct investments and (2) To make the economic policies more flexible to meet the ever changing dynamics of domestic and foreign economic environment.

Oblivious to lessons of global crisis

Such arguments are oblivious to the lessons of the raging global financial and economic crisis and to the lessons of the past three decades of intense liberalization of the economy. The global crisis and the country’s experience under neoliberal globalization have affirmed the need to develop a self-reliant economy instead of depending too much on external drivers of growth including unbridled foreign investment. Since the financial meltdown in 2008, foreign direct investment (FDI) has been declining by almost 16% a year, contributing to the significant slowdown in the expansion of the gross domestic product (GDP).

Despite the supposed constitutional restrictions on foreign capital, actual policies especially since the globalization frenzy of the 1990s have created an environment very favorable to the influx of FDI in the domestic economy. But the economy has not only failed to develop but became even worse, with poverty and joblessness today at their most intense.

Policy makers must disabuse themselves of the notion that more FDI means less poverty and more development. FDI and foreign investors have no altruistic, humanitarian goals to help the poor and whatever development gain is merely secondary to profits generated by their investment. As such, unregulated FDI can be merciless, draining host economies of their resources and destroying local industries and productive forces like what the country has been undergoing for decades.

Destruction of jobs, assault on labor

It is true that FDI may generate some employment. However, if left unrestricted, it could have a negative impact on net job creation in the long run as local businesses and industries are forced to either close shop because of undue foreign competition or reduce their workforce in order to survive. Even when new openings in the economy are made available to foreign investors through Cha-cha, it still does not guarantee that they will start to redirect their capital here from our neighbors in the region.

What determines foreign investor appetite is still the cheapness of labor power and docility of the workforce. Thus, we should not be surprised when constitutional provisions (although violated repeatedly) that provide social protection to Filipino workers will be dismantled as well once the Constitution is opened up for revisions to complement the increased liberalization of the economy. Consequently, Cha-cha will further legitimize and promote the already rampant contractualization and other forms of labor flexibilization as well as further depression of wages such as in export processing zones (EPZs) where there is a very high concentration of FDI. Under these circumstances, FDI negates the prospects of sustainable, secure, and quality job creation in the country.

Total surrender of sovereignty, patrimony

The existing constitutional restrictions on certain economic activities – despite the overall weakness of the Constitution and repeated violations by the powers-that-be of its protectionist provisions – must not be given up and instead be used to safeguard whatever little is left of the country’s sovereignty and patrimony, which have been seriously undermined by past neoliberal policies.

A case in point is public utility like the provision of water supply and sanitation, distribution of electricity, mass transportation and communication. The 60 – 40 restriction were put in place precisely because of the recognition that these sectors play a key role not only in ensuring that the people live decently but also in promoting national development and building industrialization.

In fact, such crucial role should have made all public utilities in the country controlled and owned by the state but because of privatization, ownership and control have been transferred to profit-seeking private corporations with disastrous results for the people. This situation is surely to aggravate when foreign companies are allowed to fully own public utilities in the country.

Whenever their profits are threatened, private foreign companies will readily compromise the national interest and general welfare to protect its commercial viability. One example is French company Suez, which used to control Maynilad Water Services Inc., a private water concessionaire that the Arroyo administration still bailed out in 2004 after a long dispute arising from a rate hike petition.

Intensified plunder of natural resources

Meanwhile, the proposal to allow foreign ownership of lands, lengthen the duration of land lease deals, and expand the role of foreign investors in exploration, development, and utilization of natural resources in the country will further legitimize and heighten the exploitation and plunder by foreign corporations of the country’s rich resources.

While actual experience shows that the Constitution has not effectively restricted full foreign control over the country’s strategic natural resources like minerals (through the Philippine Mining Act of 1995) and petroleum (through Oil Exploration and Development Act of 1972), dismantling the stated restriction makes the current situation much worse. The country has no shortage of experience showing how the Philippines and the people have been disadvantaged such as the case of the Malampaya natural gas project, which is under the control of global oil giants Shell and Chevron. More importantly, in a situation where a great majority of Filipino farmers are landless, allowing foreigners to own lands in the country is blatantly unjust and immoral.

Undermining self-reliant, independent economy

Globalization and its objective of creating more opportunities for First World capital to maximize the exploitation and plunder of the economies of poor countries are incompatible with the thrust towards building a self-reliant and independent national economy. While international economic relations are important to national development, it can only play an effective and beneficial role if indispensable pre-requisites are met to achieve a truly healthy foreign trade and investment relation, including first and foremost the establishment of a vibrant domestic economy that could stand on its own.

Historically, no country has achieved industrialization without ensuring the protection of its domestic economic sectors and reserving specific economic activities to its own people, which not only continues but in the light of the global crisis has even gained momentum.

A gross untruth

By itself, FDI is not bad and can actually contribute to overall economic development and industrialization. But it can only play a positive role in the economy if FDI attraction is designed in a manner that answers specific requirements or needs of the domestic economy. Unfortunately, this has not been the case in the Philippines. The economy itself is being designed to meet the needs of foreign capital such as the country’s experience with the privatization of public utilities and infrastructure development and liberalization of agriculture, mining, retail trade, etc. in the past three decades.

Finally, the structural flaws inherent in the current social system dominated by elite and foreign interests are the ones behind the country’s perpetual backwardness and worsening economic problems that have long been emasculating our economic development and impoverishing our people. That these problems will be corrected once Cha-cha is implemented is a gross untruth and only intends to mislead the people in addressing the roots of our deteriorating backwardness and poverty. #

Walang wang-wang: Noynoy’s economic vision

Why is Noynoy's "walang wang-wang" not enough? (Photo from http://www.benignoaquino.info)

“Walang lamangan, walang padrino at walang pagnanakaw. Walang wang-wang, walang counterflow, walang tong”.

Abused with impunity by an arrogant Arroyo administration for more than nine years, many were predictably thrilled by this strong statement from the new President. But beyond the walang wang-wang rhetoric, did President Benigno “Noynoy” Aquino III offer anything fresh in substance, like his vision of long-term economic development, in his much hyped inaugural speech?

Deodorizing neoliberalism

In his inauguration packaged by the mainstream media as a day of hope and new beginning, Aquino reaffirmed that the guiding principle of his presidency is good governance and anti-corruption.

“Sigaw natin noong kampanya: “Kung walang corrupt, walang mahirap.” Hindi lamang ito pang slogan o pang poster — ito ang mga prinsipyong tinatayuan at nagsisilbing batayan ng ating administrasyon.

 Ang ating pangunahing tungkulin ay ang magsikap na maiangat ang bansa mula sa kahirapan, sa pamamagitan ng pagpapairal ng katapatan at mabuting pamamalakad sa pamahalaan.”

The “corruption causes poverty” discourse is an idea not original to Aquino. It was a principle long developed and promoted by the International Monetary Fund, the World Bank and neoliberal apologists to deodorize the follies of their structural adjustment programs (SAPs).

“Corruption is the greatest obstacle to reduce poverty”, the World Bank declares in its anti-corruption webpage. It also says that its “focus on governance and anti-corruption follows from its mandate to reduce poverty – a capable and accountable state creates opportunities for poor people, provides better services, and improves development outcomes”.

Why is this point important? Because the World Bank and apologists of neoliberalism designed and advertised the discourse to justify the flawed economic policies they have been promoting in the last 30 years. According to this discourse, underdeveloped countries remain poor not because of liberalization, privatization, deregulation, automatic debt servicing, reduced public spending on social services, regressive taxation, wage freeze, etc. These policies work but a corrupt bureaucracy and other governance issues undermine them.

This is the same message of Aquino’s “kung walang corrupt, walang mahirap”: Arroyo’s neoliberal economic policies are okay, but they don’t benefit the people because of corruption and bad governance.

But there is a wealth of literature that has accumulated over the years showing how neoliberal policies and structural reforms aggravated the underdevelopment of Third World countries and the impoverishment of their people (for instance, click here). The worsening hunger and poverty in the rural areas, for example, have been clearly traced to the liberalization of agricultural trade which has built on the imbalanced and exploitative trade relations among countries since the colonial times and lack of genuine agrarian reform.

In cases like the Philippines where seven out of 10 farmers are landless, the onslaught of imported, tariff-free, and highly subsidized agricultural goods have meant even more vicious poverty and hunger in the vast countryside. The late President Cory Aquino, doubtless the stronger symbol of an upright government official than her son, accelerated trade liberalization including in agriculture upon the dictates of the IMF-World Bank. Combined with her promotion of the stock distribution option (SDO) under the bogus Comprehensive Agrarian Reform Program (CARP) to protect her family’s Hacienda Luisita, Cory’s neoliberal policies mercilessly pushed Filipino farmers and farmworkers into unspeakable deprivation.

The miserable plight of farmers due to these structural defects is exacerbated by corrupt agriculture officials like Arroyo’s undersecretary Joc-joc Bolante of the P728-million fertilizer fund scam. Thus, a holistic approach to rural poverty should include junking the SDO and CARP in favor of genuine agrarian reform, protecting domestic agriculture from undue competition from imports, and jailing people like Bolante. Aquino is simply offering the last which is not surprising for a President who comes from one of the biggest landowning clans in the country.

Continuing Arroyo’s economic policies

Surely, Aquino earlier questioned the significance of the recent 7.3 percent growth in gross domestic product (GDP) but he never raised the issue to a debate on macroeconomic policies. Did he challenge the wisdom of Arroyo’s economic policies in his inaugural address? No. Not even the unpopular proposal of Arroyo’s Finance officials to further hike the 12 percent value added tax (VAT). His bold declaration on “no new taxes”, made during the campaign’s early part, was no longer reiterated. In relation to the looming fiscal crisis, he only said:

“Palalakasin natin ang koleksyon at pupuksain natin ang korapsyon sa Kawanihan ng Rentas Internas at Bureau of Customs para mapondohan natin ang ating mga hinahangad para sa lahat…”

Without question, Aquino will simply maintain the neoliberal economic policies and programs that have been imposed by the IMF-World Bank, many of which were first implemented during the first Aquino (1986) administration. For one, key people in Noynoy’s economic team are former officials of previous administrations, including Arroyo’s, and played important roles in implementing IMF-World Bank-dictated neoliberal structural reforms in the last three decades.

His Finance Secretary, Cesar Purisima, for instance, was Arroyo’s Finance chief who led the campaign to raise the VAT in 2005 (RA 9337). Purisima was the Chairman and managing partner of accounting giant SGV & Co. whose clients include over 65 percent of the biggest 1,000 local and foreign corporations in the country. They are also among the known biggest tax evaders such as Lucio Tan. Purisima even worked for lower taxes for Tan’s companies and his other former clients when the corporate income tax was reduced from 35 to 30 percent under RA 9337.

More importantly, by refusing to recognize the impact of neoliberal policies on the country’s fiscal operation and resource generation and management, there is no way that a sustainable, pro-people response can be made to address the country’s perennial fiscal woes.

Meanwhile, Aquino’s National Economic and Development Authority (NEDA) Director General, Cayetano Paderanga Jr., was the NEDA chief who watched over the implementation of neoliberal structural reforms during the Cory administration. He was also a Board member of the Bangko Sentral ng Pilipinas (BSP) from 1993 to 1999 when the country undertook aggressive financial liberalization and consequently suffered the costs of the 1997 Asian financial crisis. He was the executive director for the Philippines at the Asian Development Bank (ADB) from 2001 to 2003, during which the ADB successfully pushed for its long-time advocacy of power sector privatization and deregulation (i.e. legislation of the Electric Power Industry Reform Act or Epira).

Aquino retained Arroyo’s Foreign Affairs Secretary, Alberto Romulo, and promoted her Trade undersecretary Gregorio Domingo, who both played important roles in the negotiation and ratification of the one-side free trade deal, Japan-Philippines Economic Partnership Agreement (Jpepa). Romulo also served as Finance chief of Arroyo.

Band aid solutions to structural crisis

In his inaugural speech, Aquino did not outline a long-term economic vision that he wants to pursue as President, one that intends to correct the wrong policies and programs of the past three decades. What he shared were band aid responses to the raging jobs crisis and worsening poverty and hunger that were taken from Arroyo’s programs. On job generation, for instance, he said:

“Bubuhayin natin ang programang “emergency employment” ng dating pangulong Corazon Aquino sa pagtatayo ng mga bagong imprastraktura na ito. Ito ay magbibigay ng trabaho sa mga local na komunidad at makakatulong sa pagpapalago ng kanila at ng ating ekonomiya”.

To do this, Aquino just have to continue what Arroyo has already started out as the Comprehensive Livelihood and Emergency Employment Program (CLEEP). It was supposedly designed to pump prime the economy during the height of the global financial and economic crisis through spending on infrastructure among others. There was no mention about strengthening the domestic economy or implementing genuine agrarian reform as long-term solutions to joblessness and poverty.

In his speech before the Makati Business Club (MBC) last January when he first outlined his economic vision and platform, Aquino said:

“The ideas to improve tax administration and to control smuggling have been there for some time and some programs have been initiated in the past. One of these successful programs was the RATE or Run After Tax Evaders. In fact, some of the people at the Department of Finance and the BIR who have tried to implement reforms before are with us now.”

RATE is among the USAID-funded programs under the $20.7-million Millennium Challenge Account (MCA) – Philippine Threshold Program (PTP) that started in 2006 which aims to curb corruption, tax evasion, and smuggling.

To address poverty and hunger, Aquino instructed his (and also Arroyo’s) Social Welfare Secretary Dinky Soliman of the “If we hold on together” and P1.47 Peace Bond scam infamy to continue the conditional cash transfer program of the Arroyo administration.

Dubbed Pantawid Pamilyang Pilipino Program (4Ps) and promoted by the IMF and World Bank, Arroyo used the program to justify the continued collection of the VAT amid the oil and food price crises in 2008. Late last year, the World Bank approved a $405-million loan to bankroll the continued implementation of conditional cash transfer and other DSWD projects. In exchange for what? The IMF-World Bank are as usual behind the renewed push for another round of VAT rate hike and other taxes to address the fiscal deficit.

Cha-cha and more neoliberal restructuring

During the campaign, Aquino asked Filipinos to take the righteous path (“daang matuwid”) with him. But his stand on the controversial Charter change (Cha-cha) is another unmistakable indicator that in the next years the Philippines will thread the same crooked path of neoliberal restructuring. When asked for his reaction on (Congresswoman) Arroyo’s filing of House Resolution No. 8 which proposes Cha-cha, Aquino was no longer combative.

“It should be proved that the gains are better than the risks. Secondly, if she’s pushing for it has to go through the legislative mill”, Aquino said.

Among the top priorities of Aquino is Cha-cha, which he said shall be studied by a commission in his first 100 days to review possible changes to economic provisions particularly the restrictions on foreign ownership of strategic industries and agricultural lands. Aquino and his economic team know that the next wave of neoliberal restructuring could only push through if Cha-cha is implemented.

And the external pressure – from the US and European Union (EU) – to amend the Constitution is growing. The EU has recently concluded a Partnership Cooperation Agreement (PCA) with the Philippines and is now moving towards the next phase of negotiations for a formal trade and investment deal. The US, meanwhile, appears interested again to restart stalled talks for its own bilateral economic deal with the Philippines, even sending its highest foreign trade official Trade Representative Ron Kirk to head the US delegation in Aquino’s inauguration. These deals could only bring maximum benefits to the Americans and Europeans with Cha-cha.

The political risks are high especially with the unconcealed agenda of Arroyo to be again at the helm of political power by shifting the form of government to a parliamentary system via Cha-cha. To counter this, Aquino’s allies at the House may push Cha-cha exclusively for economic reforms first (and other reforms like nuclear ban, foreign bases, etc but not the form of government) to accommodate foreign interests, especially the US. Political reforms can come later when Arroyo has already been “neutralized” through conviction or a compromise deal. Or Aquino’s allies can push for economic and political reforms from the outset but will ensure that Arroyo will not benefit politically.

At any rate, it is certain that Cha-cha will be pursued by Aquino and this would complete the surrender of whatever is left in the country’s sovereignty and patrimony.

And this is supposedly our new hope and beginning?

Arroyo running: “Gloria Forever” scheme now in the open

Photo from Reuters

Mrs. Gloria Macapagal-Arroyo today confirmed what the public knew all along, that she is not giving up power next year and will seek a congressional seat in Pampanga’s second district. Their game plan is to use Congress only as a route toward clinching the position of Prime Minister in a parliamentary form of government that shall be created through Charter change (Cha-cha).

If this sinister scheme will push through as planned, it will indeed be “Gloria Forever” as repeatedly warned in the past by critics and political observers. This move by Arroyo and her political operators is a travesty of democracy in the highest order. Nothing in existing laws of course prevents Mrs. Arroyo from running as congresswoman. But for many people including even legal experts, the issue is no longer simply about what the law allows but what decency and delicadeza dictate – which today Mrs. Arroyo has again made clear are virtues beyond her comprehension.

Mrs. Arroyo will not give up power and will do everything she can, at all costs, to use government in order to avoid accountability for the very long list of crimes she has committed against the Filipino people since 2001. Her administration has earned the notoriety as the most vicious, most brutal regime in terms of repressing the people’s basic human rights and has done this even without formally declaring Martial Law like Ferdinand Marcos. Almost 1,110 people have already been killed by her terrorist regime aside from almost 200 people who have been abducted by suspected military, paramilitary and police elements and remain missing to this day.

This climate of impunity emboldened her allied warlord clans like the Ampatuans to massacre people as they please, knowing that they can get away with it because their patron is the biggest warlord at the helm of Malacañang.

Her regime challenges the Marcos dictatorship not only in terms of human rights violations but also in terms of massive corruption. The Philippines has consistently ranked among the most corrupt countries in the world. Mrs. Arroyo’s personal declared wealth has jumped by 164% since becoming president in 2001 (from P66.75 million to P177.18 million) and certainly this is just the very small tip of a very large iceberg. By the way, the number of poor families during the same period increased by 2.3 million or an additional 11.5 million poor people as Arroyo, her family, her cronies and allies enrich themselves.

That Mrs. Arroyo declared her intention to run at a time when the public is deeply outraged by the Ampatuan massacre and her lack of swift action against a favored warlord is only but a fitting move for a regime so absolutely detested, so totally isolated from the people.

Sige lang at gatungan pa ninyo ang galit ng taumbayan. May araw din kayo.

EU and DFA deceiving the public on European lobby for Cha-cha

The Head of the European Commission (EC) in the Philippines, Mr. Alistair Macdonald, and the Department of Foreign Affairs (DFA) are deceiving the public by claiming that there is no “request” from the European Union (EU) for the Philippine government to modify the 1987 Constitution, specifically to lift the constitutional ban on 100% foreign ownership of land and foreign practice of certain professions in the country.

Such document exists and is actually available online. Click this link and browse the page and look for the link “Philippines” to access the document in PDF format.

This document, which the EU has attempted but failed to keep secret, forms part of the negotiation process for the General Agreement on Trade in Services (GATS) of the World Trade Organization (WTO). The objective is to achieve further economic liberalization through a “request and offer process”, i.e. a country will submit a list of sectors it wants liberalized, identify the legal barriers to  foreign investment, and request that such barriers be eliminated. The party to which the request is made will then have to make an offer (which sectors the country is willing to eliminate the barriers identified by the EU). The EU made a request to a total of 109 WTO members, including the Philippines.

Reading this document, one would not find the phrase or term “Cha-cha” or an explicit request to modify the Constitution. Instead, the document simply enumerates the identified liberalization barriers and then proposes that such barriers be eliminated. For instance, on page 3 of this document, we will find these entries:

  • Participation of foreign investors is limited for certain expressly reserved activities reserved by law to Philippine citizens (MA). EC request: Eliminate this requirement of citizenship…
  • Acquisitions of land (MA) require 60% local capital. Foreign investors may lease only private owned land. EC request: eliminate

Limits on foreign investors on certain economic activities and land ownership are implemented because the 1987 Constitution mandates the government to do so, obviously to protect the national interest. By requesting that these prohibitions be “eliminated”, the EU is in effect lobbying for Cha-cha to accommodate their “requests” under the GATS.

External pressure from the rich countries to implement Cha-cha for more economic liberalization has already been raised in the past. In fact, it is the Americans, and not the Europeans, who are more vocal and explicit in their demand for Cha-cha to allow unbridled foreign investments in the Philippines. While the EU veils its Cha-cha lobby under the negotiation process of the WTO-GATS, US-based corporations bluntly state in their official papers the need for Cha-cha.

The American Chamber of Commerce of the Philippines Inc. (AmCham), for instance, candidly said in its advocacy paper “The roadmap to more foreign investment” that when the 1987 Constitution is amended, restrictions on foreign investment and land ownership should be removed. In its 2006 Investment Climate Improvement Project (ICIP) advocacy plan, AmCham vows to seek “removal from the Constitution of all restrictions on foreign investment and professions” to “further liberalize the foreign investment regime to bring needed capital, skills, and technology into the country.”

AmCham’s ICIP, which aims to initiate investment climate reforms in the Philippines, is being funded with an undisclosed amount by the US government.

Meanwhile, the office of the US Trade Representative (USTR), an agency of the US government in charge of directly negotiating trade agreements with foreign governments , as well as resolve disputes, and participate in global trade policy organizations, has identified several provisions of the 1987 Constitution that it considered as “trade barriers.”

These papers are all publicly available, just Google them.

Over and above the narrow, self-serving political agenda of the Arroyo administration, there has always been intense and persistent pressure from the rich and powerful countries to implement Cha-cha and liberalize the economy. While the Philippine economy has already achieved a relatively advanced level of liberalization, such opening is still not enough to meet the insatiable need of powerful countries like the US for markets and profit-making opportunities. And as Arroyo herself has declared, the next phase of liberalization in the Philippines will be in the form of Cha-cha. Arroyo and her clique have been riding on this imperialist agenda to implement their own political agenda to stay in power.

Thus, if Cha-cha is implemented, we will end up with the illegitimate Arroyo government and at the same time surrender to the US and EU whatever is left of our lands, our jobs, our industries and our economic sovereignty.

The people must defeat this evil scheme.

Cha-cha and the economy

The Makati rally yesterday (June 10) drew in an estimated 10,000 to 13,000 people to protest what former President Cory Aquino described as “a shameless abuse of power” by the Arroyo administration. Organizers warned that the protest would surely escalate in the coming weeks, especially if congressmen force to convene the constituent assembly (con-ass) for Charter change (Cha-cha)

Expectedly, the beleaguered Arroyo administration is now using all sorts of arguments why people should not join the protests against Cha-cha. One major argument is the economy, which it has always used to discourage public demonstration of outrage against the regime’s barefaced abuse of power.

When massive protests broke out set off by the Hello Garci electoral fraud and later by the NBN-ZTE corruption scandal, the tune was that protests would only offset the gains made by the economy.

The country could not afford a political crisis, much less another EDSA. “Ramdam na ang kaunlaran at sayang naman ang umuunlad na ekonomya” was the recurring theme of Malacañang’s defense against calls for the ouster of Mrs. Arroyo. The propaganda line was that the economy has achieved a certain level of stability under Mrs. Arroyo’s leadership. Removing her from office, or instigating moves to get rid of her, would put such economic stability at risk.

But as I have pointed out in a previous article, the deceit of economic growth and industrialization that Malacañang peddles has been further exposed by the latest official figures on the state of economy. According to the National Statistical Coordination Board (NSCB), the country is “teetering into recession”. The massive displacements of Filipino workers here and abroad due to the global crunch could not be concealed as well by false claims of economic stability.

Thus, amid threats of intensified anti-Arroyo protests caused by the renewed push for Cha-cha, the administration’s economic managers have adjusted their tune. From stability and “First World status”, what is supposedly at risk now is the “resiliency” of the economy amid the raging global recession.

On the eve of the Makati rally against Cha-cha, the Bangko Sentral ng Pilipinas (BSP) issued this warning: the disruptive impact of political events could affect the county’s economic policies and therefore the performance of the economy. Markets have become “edgy” over the past few days because of the looming showdown between the Arroyo administration and its critics and opponents, BSP Governor Armando Tetangco cautioned. Investors in the stock market are cashing in on gains to secure their money, causing the stock market index to drop by 29.47 points.

National Economic and Development Authority (NEDA) Secretary Ralph Recto, meanwhile, appealed to the public last week not to further aggravate the weak economy. With the gross domestic product (GDP) growing by only 0.4% in the first quarter, Recto warned that there is an “economic cost to political instability and political uncertainty”.

Malacañang’s chief economist added that “In this challenging time of the global economic crisis, let us not add more shocks to our resilience. Let us remain focused in our efforts to navigate the economy through this time of global hardship.”

Running out of materials to spin and promote the country’s supposed economic growth, government is now using the precarious situation of the domestic economy to help prevent from further intensifying the public outrage triggered by the railroading last week of House Resolution (HR) 1109 to convene Congress, with members of the Senate and House of Representatives voting as one, into a con-ass

But instead of dampening the people’s outrage, such statements would only further stoke public indignation. The worsening economic uncertainties the country faces are not the people’s fault, in the same manner that HR 1109 that will push for Cha-cha and perpetuate Arroyo to power is not the people’s wishes. What is definite is that the blatant push for Cha-cha to serve Arroyo’s narrow political interests at a time when the hyped economic growth is unraveling spells huge political consequences for the despised Arroyo administration.

Indeed, it’s not the legitimate protests that will aggravate the country’s economic woes. Job scarcity, forced labor migration, poverty, destruction of local industries, and vulnerabilities to the global recession are all deteriorating due to wrong economic policies of the Arroyo administration.

It’s the worsening economic condition of the Filipino people that will feed the worsening political crisis. It is the raging economic crisis, amid the shameless abuse of authority by the Arroyo administration, that would compel the people to thwart the scheme of this regime to prolong its stay in power through Cha-cha.