Claiming false credit

You know something is terribly wrong with the Philippine economy when Malacañang and the Bangko Sentral ng Pilipinas (BSP) boast of our being "international creditors" for the first time, and attribute this to "sound fundamentals and management" of the economy.

They try to conjure the illusion that the country is now awash with so much cash that it can afford to contribute a billion dollars to an international fund managed by the International Monetary Fund (IMF) to succor European countries in financial distress.

And, as if that were not enough good news, they add that Filipinos need not worry about losing so much money; in fact we stand to gain more from interest, since the contribution is a loan.

What the government is not telling us is that the Philippines has been classified as an “IMF creditor” by virtue of a narrow technical definition that an IMF member has a “creditor position” if its holdings in the Fund can be used to provide financial assistance to other members.

But this is vastly different from jumping to the conclusion that the Philippines has actually become a “creditor nation”.

Determining whether one is a “net creditor” entails comparing the country’s lending with its borrowing.  Foreign exchange reserves, no matter how high, are not the measure for this.  If positive reserves were the criterion, then the Philippines could claim to have achieved the status of a “creditor nation” since the time of the Marcos martial law years when our external debt was growing by leaps and bounds.

Nothing has changed even with the label “IMF creditor” attached to the Philippines. We remain a heavily indebted nation (US$61.7 billion as of end 2011); highly dependent on foreign sources of financing primarily to shore up the budget deficit averaging some P300 billion a year.  Debt service payments grew by US$ 100 million to US$7.3 billion last year.

It must be clarified at this point that the Gross International Reserves (GIR) held by the BSP is in the form of IMF deposits, other foreign currency deposits elsewhere, gold, Special Drawing Rights (SDR), US Treasury bills and the like.  It is from the deposit of the Philippines/BSP with the IMF (also called “IMF reserve position”) that the US$1 billion has been made available for loan to EU countries in deep financial crisis.

While it is true that these transactions earn interest and the funds can still be technically counted as part of the Philippines' international reserves, a point can be raised about how much the country is losing in terms of lower interest on the IMF loan as compared to other placements with potentially higher yields.

Progressive party list representatives, trade union and peasant leaders - all opponents of government’s prioritization of debt servicing over social services - as well as two Senators and several opinion writers have asked how the BSP (and the Aquino government for that matter) could have the effrontery to “lend” money to the international lender-of-last-resort that is the IMF when the country remains a perennial heavy borrower itself.

These critics ask pointedly whether the money - P43 billion - could be better spent on health, housing, and education for impoverished and barely surviving Filipino families; for land reform and support for an agricultural sector in continuing decline; for job generation as well as infusing life into an anemic economy battered by heightened domestic and global economic crises. In other words, for the government to come to the aid of the majority of the Philippine population rather than contribute to an IMF bail-out fund for heavily indebted countries in the Euro zone.

Again, what the government is not telling us is that the Gross International Reserves (GIR) from which the loan came, and which the BSP boasts to have reached a record high of USD 76.534B, consists of foreign assets that cannot be used in the same way as the National Government fund.

That is, the GIR may not be allocated for regular government programs and projects in order for it to serve three functions: for intervention in the foreign exchange market, for creditworthiness, and for emergencies.  A country’s GIR indicates its ability to repay foreign debt and to defend its currency from speculative attack.  It is used as a yardstick to set the country’s credit ratings.

So why is the Aquino government foisting the false impression on the public that the BSP has so much money in its vaults that could be made available to the government to uplift the people’s dire socio-economic conditions?

Unfortunately, we can only come up with the conclusion that government needs to justify the BSP’s accession that the country contribute to the IMF bail-out fund by (1) claiming that the economy is so robust and well-managed that the Philippines can now boast of being in a position to lend to other countries and (2) arguing that the loan is a worthwhile humanitarian investment and demonstrates the Philippines’ sense of responsibility to the international community.

Moreover, the announcement of BSP Governor Tetangco raises even more questions:
1.  Does the BSP have a free rein on handling/managing the entire GIR?  What check-and-balance is in place to ascertain that the GIR is being managed properly?  Who decides, for example, and how, on the investments and loans being entered into by the BSP from the GIR?  Does this not, after all, belong to the Filipino people as much as the national funds which only Congress can decide to apportion?

2. Was the loan voluntary or mandatory? While the BSP statement implies that the loan was voluntary and undertaken as a contribution to the IMF's efforts "to address the current financial crisis" and "help other countries saddled with financial problems", it is not farfetched that the loan is in fact obligatory or, at the least, is being given under pressure, considering that the Philippine economy continues to be quite dependent on the good graces of international financial institutions such as the IMF and World Bank.

3. Finally, will the IMF fund to which the Filipino people have been made to contribute USD 1B, really be used for the benefit of the people of the distressed countries in the Euro zone?  Or will it again, like the trillions of stimulus funds, be used to bail out big banks and monopoly conglomerates that caused the financial crisis in the first place, or to pressure governments in distressed countries to follow IMF-dictated policies that will only benefit such big banks and conglomerates?  Has not the IMF and WB been the main instruments, in the first place, in carrying out the neoliberal policies that have brought about the global financial and economic crisis?

All said, a closer and more critical look must be taken not only into the management of the country's financial resources, but also into the so-called economic “fundamentals" -- the neoliberal framework on which the policies and decisions by the BSP and economic managers are anchored.

For the grandiose claims that the country is finally free from foreign impositions and restrictions after having exited from the IMF Post-Program Monitoring Arrangement (when the BSP prepaid all Philippine outstanding debts from the IMF in 2006) are now matched by stupendous claims that we are, at long last, a “creditor nation”. #

Published in Business World
29-30 June 2012

New pup, same collar

President Benigno Aquino III came to power in June 2010 with "special relations" -- the Philippines serving as a neocolony of the US -- already entrenched 64 years after the "grant" of independence. Before him, every administration had tried to outdo its predecessors in maintaining this unequal and unjust relationship to ensure the continuing support of the US.

Mr. Aquino is no exception.

As with every Filipino politician aspiring to be top gun, Mr. Aquino has had to prove to the country’s former colonizer that his regime can sustain, cultivate and enhance these "special relations" given the recurrent economic and political crises that have hit the country marked by growing awareness of and resistance to imperialist-dictated policies and programs by restive sections of the population.

Advantage
Mr. Aquino comes at an auspicious time for stabilizing this relationship what with the former Chief Executive, Mrs. Gloria Arroyo, proving to be no longer effective having reached the nadir of credibility and respect among the vast majority of the people. For after all, an odious head of government is a useless head of a client regime. Someone who is perceived as unsullied, sincere and enjoys wide popularity (more by historical fluke rather than political track record), is a more useful and valued one.

This is the main advantage of Mr. Aquino -- his ability to tap into the people’s revulsion against corrupt government officials utilizing populist rhetoric while drawing on the mystique of his iconic parents in order to justify the continuation and worsening of anti-people, pro-imperialist policies and programs.

How long he can keep this up is altogether another matter.

New packaging
Mr. Aquino’s centerpiece program for bringing about economic development, the public-private partnership (PPP), is presented as a unique approach that his administration is purportedly in an unprecedented position to implement because of his apparently popular, albeit shallow, anti-corruption drive.

In truth, the PPP is the same old privatization thrust of the late ‘80s and early ‘90s pushed by the international financial institutions -- International Monetary Fund (IMF), World Bank (WB) and Asian Development Bank (ADB) -- as well as multinational corporations and their domestic partners, that has been discredited and rejected by the mass of consumers worldwide.

This whitewashed version of the privatization policy (forming, along with liberalization and deregulation, the triumvirate of neoliberal globalization policies) has resulted in higher costing, inaccessible and even poorer quality infrastructure and services because the public interest is undercut by unbridled profit-taking of foreign and local big business interests with full backing of government.

People's burden
Mr. Aquino argues simplistically that through the PPPs the country will have the vital infrastructure it needs for transport, power, water, sanitation and sewerage, irrigation, education, health, and housing without having to spend the billions of pesos such projects require and even bring in earnings for the government.

What this means in actuality is that the public, through exorbitant user fees and tariffs, pays for the following:

• outstanding debts of government entities that are to be privatized (such as National Power Corp. and Metropolitan Waterworks and Sewerage System);

• assured profits of the multinational corporations and their local partners in PPP contracts regardless of changed circumstances or questionable charges (Metro Rail Transit/Light Rail Transit and North Luzon Expressway/South Luzon Expressway); and

• more debts that government will incur to insure corporate profits, should the "regulatory risk guarantee" offered by Mr. Aquino push through.

The granting of regulatory risk guarantees, an innovation and vital development to the way privatization projects were handled in the past, would have government paying the private sector the total cost of the infrastructure project in case problems arise, including public clamor to regulate.

Favoring business
In short, the Aquino administration washes its hands of government’s responsibility to use its revenues to ensure universal access to basic social needs and services especially for those who can ill afford them.

Worse, it takes on as its primary role, providing the best environment for foreign monopoly capitalists and local comprador(trading/banking) capitalists to rake in profits from this deregulated and privatized government function.

On the other hand, the Aquino administration is faced with the following objective constraints: the global economic crisis continues to impact adversely on the Philippine economy with less foreign direct investment, slowing down of overseas Filipino worker remittances, declining exports, etc. amidst widespread poverty, misery and hunger arising from joblessness and low wages coupled with the incessant spiralling of prices.

Illusion
For decades, government has conjured the illusion of "sound economic fundamentals" but even its own figures show heavy indebtedness and vulnerability to impositions of foreign monopoly capital through the IMF, WB, ADB and World Trade Organization that aggravate the Philippine economic crisis.

Like his predecessors, Mr. Aquino conceals the fact that the so-called "sound economic fundamentals" are what constitute precisely the neocolonial relationship imposed by US imperialism that has prevented the Philippine economy from industrializing and achieving economic self-reliance and independence from foreign capital.

To do this, he uses the corruption bogey as a smokescreen‚ "Kung walang corrupt, walang mahirap" -- as though corruption, not the foreign control of our economy and exploitation of our people, is the root of poverty.

But no amount of propaganda and deception can obscure increasingly intolerable living conditions that push more and more people to protest and revolt.

Over the decades, where deception no longer works, the US-backed governments have responded not with reforms but with an iron hand.

It is thus no surprise that even before the elections, Mr. Aquino had outlined his own "peace and security program", Oplan Bayanihan, with peace negotiations dovetailed to it.

Less surprising even, is that Oplan Bayanihan turns out to be nothing more than the US Counter-Insurgency Manual applied on the Philippine situation.

In support of US pivot
With respect to foreign policy, Mr. Aquino has committed in word and deed, full cooperation with the announced US policy to reposition its military forces to the Asia Pacific for power projection and necessary intervention in regional flash points such as the Korean peninsula, the Taiwan straits, the South China Sea, etc.

Secret negotiations are ongoing on how the US can increase its de-facto permanent deployment and stationing of troops and war materiel on Philippine territory, its covert and overt activities such as intelligence gathering, military "training" exercises, combat support operations, humanitarian missions, etc. and its heightened intrusions into the ongoing counterinsurgency campaigns against the Communist Party of the Philippines-New People’s Army-National Democratic Front and the Moro Islamic Liberation Front.

Mr. Aquino has deliberately fanned the territorial dispute with China over parts of the Spratley islands and shoals in order to justify and encourage greater US military presence and intervention in the South China Sea.

Seal of good housekeeping
He perpetuates the big lie that an alliance with the US guarantees Philippine security and sovereignty when in fact:

• it is US presence, military activities and intervention in Philippine affairs that violates national sovereignty; and

• US military presence in and use of Philippine territory has been the magnet for foreign aggression, e.g. the Japanese invasion and occupation in World War II.

It is not surprising that the photo op that each Philippine president strives to have at some time (better even if several times) during his term of office is the one with whoever is the current US president.

To this kind of Filipino leaders, such a meeting constitutes one of the most sought after, since it constitutes the proverbial political "seal of good housekeeping" that a neocolonizer gives its chief puppet.

Mr. Aquino continues this ignoble tradition and the deceptive propaganda that goes along with it.

Published in Business World
22-23 June 2012

Article location : http://www.bworldonline.com/content.php?section=Opinion&title=New pup, same collar&id=53892

The big lie: special relations

It seems ironical that the much-heralded meeting between Philippine President Aquino and US President Obama would take place just a few days before the Philippines marks Independence Day.  Here is the president of a poor and backward but supposedly independent country seeking and getting the requisite political pat-on-the-back from the president of the globally over-extended albeit still most militarily powerful country and the Philippines’ former colonizer.

It is a testament to how far we have stagnated and, to some extent even retrogressed, as a sovereign nation.

The official statements on the Aquino-Obama meeting keep alluding to the two countries’ “special relations” and “enduring alliance”, echoing a myth cultivated by the US and Philippine governments over the past century.

What is not generally known is that these relations began with the US sending an expeditionary naval force to the Philippines at the outbreak of the Spanish-American War in May 1898 to prepare for invading, occupying and turning the islands into a US colony.  This was achieved in August 1898 when US forces boxed out Filipino revolutionary forces from the walled city of Manila and prevented them from completing their victory over the Spanish colonialists.  As part of a secret deal, the Spanish forces instead surrendered to the Americans, and Spain eventually ceded the Philippines to the US for USD 20million in the Treaty of Paris on December 10, 1898.

Deceit, treachery and violence has characterized the entire century of "special relations" including the waging of a genocidal war of suppression against Filipino freedom fighters from 1899 to 1913. Numerous eyewitness accounts, including the reports of  US troopers and field commanders themselves attest to the killing of several hundreds of thousands Filipinos, who were victims of  scorch-earth (“kill-all, burn-all”) and no quarters (no prisoners taken) orders, reconcentration camps and indiscriminate shelling and bombardment such as in Abra, Batangas, Panay, Samar and Sulu.

All these belie then US President William Mckinley’ “Benevolent Assimilation Proclamation” in which he justified the colonization of the Philippines after he reportedly heard the voice of God urging him to “uplift, civilize and Chrstianize” the Filipinos who were depicted as half-savages incapable of self-rule. It took half a century before the US “granted” nominal independence to a people who had fought valiantly to achieve it and had been the first in Asia to inaugurate a modern-day republic, with its constitution enacted on January 20, 1899, by the Malolos Congress.

The truth, as clearly reported in the American press at that time, was that the US was raring to become a global economic and military power.  It coveted the “limitless market” in China with the Philippine Islands as its military and commercial outpost and springboard.  It also saw the islands as a source of raw materials and cheap labor and a dumping ground for its surplus products and capital in its own right.

After profiting immensely from its first expansionist foray outside the American continent; violently suppressing any attempts to express and rally to nationalist yearnings; rearing a domestic elite brainwashed to maintaining the Philippines as its “little brown brother” in Asia; putting in place an educational system and engendering a popular culture that paints it as a benevolent colonizer -- the US took advantage of the country’s prostrate conditions post-World War II to impose lopsided treaties such as the Laurel-Langley Agreement, the Military Bases Agreement and the Mutual Defense Treaty rendering meaningless the grant of independence in 1946.

Subsequently, US domination of the country’s socio-economic, political and cultural affairs saw the fledgling republic unable to pursue nationalist and democratic policies that would have allowed it to develop into a more equitable, just, prosperous and truly independent nation.

The US had little problem dictating policies favourable to it on the Philippine government, whose officials mostly come from the big landlord and comprador (merchant capitalist) families who benefit most from the backward agrarian economy, being the local partners and agents of US capital.  Without exception, all Philippine administrations kept alive the lie that the US and Philippine interests were identical.

US sponsorship of a succession of repressive client regimes culminated in its backing for the Marcos fascist dictatorship, in an attempt to suppress the growing political awareness and resistance of various sectors in Philippine society to the reality of US neocolonial rule amid intensifying economic and political crisis.  Only when Marcos had become so politically isolated versus a broad united front of anti-dictatorship forces (that included the armed, communist-led revolutionary movement) and the people’s resistance had erupted into an unarmed popular uprising in the cities, did the US finally withdraw its support for Marcos.

Moving swiftly to regain its fractured image as the beacon of democracy in the world, the US shifted its support for the Cory Aquino presidency.  The latter, much to the approbation of the US government and domestic ruling elite, only restored the trappings of democracy but did little to address the festering problems of a backward, impoverished semifeudal society still straining under US neocolonial domination.

For one, the “icon of democracy” set the tone for land reform by exempting Hacienda Lusita, her clan’s vast landholdings, from distribution to landless peasants.  She also upheld the “honorable debtor” policy that tied the country to pay back even the onerous debts incurred by the Marcos regime and continued the automatic appropriation for debt servicing that foreign creditors had lobbied for but drained government coffers of funds for vital economic programs and social services.

The US-backed Cory regime “unsheathed the sword of war” against the CPP-NPA-NDF harnessing the US-trained and equipped Philippine military and police forces that had been the dictatorship’s attack dogs against the revolutionary forces and people.  In the process her government only managed to blacken the country’s human rights record with more condemnable violations than even those seen during the dying years of the Marcos era.  Mrs. Aquino also reneged on her earlier pledge to remove US bases in the country and attempted a last-ditch effort to get Senate approval for a renegotiated RP-US Military Bases Agreement but failed.

After the US bases were kicked out, the succeeding US-backed Ramos regime lost no time in negotiating a status-of-forces-agreement (SOFA) that would provide the legal umbrella for US military troops going to the Philippines for joint military exercises and training, rest and recreation, civic action and humanitarian missions, and other undeclared purposes.  The Ramos watch also presided over the almost complete legalization and institutionalization of neoliberal policies and programs sought by the IMF, World Bank and World Trade Organization, dominated by the US and other imperialist countries.

The short-lived Estrada regime for its part harnessed its clout over the Senate and popularity with the masses to have the SOFA negotiated by the Ramos regime approved as the RP-US Visiting Forces Agreement (VFA).

The overstaying US-backed Arroyo regime, using the so-called war on terror as justification, managed to slip in the Mutual Logistics and Support Agreement (MLSA) as a low-level agreement that did not require Senate ratification.  The VFA and the MLSA together provide the legal wherewithal for the US to station its forces, preposition its war materiel and dock its airborne and naval war vessels (including those nuclear-armed in contravention of the Philippine Constitution) on Philippine territory in an unlimited, open-ended and unregulated fashion tantamount to having its permanent military bases back.

The Arroyo regime opened the doors wide open for the US military to utilize the Philippines as jumping board for its wars of aggression in Iraq and Afghanistan even as it also accelerated US military involvement in the government’s counterinsurgency campaigns against the MILF and CPP-NPA touted as assistance to counterterrorism efforts targeting the bandit Abu Sayyaf that had been upgraded into a full-fledged “terrorist” group with purported links to Al Qaeda.  (Next week “Special relations under Pnoy”) #

Published in Business World
15-16 June 2012