“I need China.”
This was how President Rodrigo Duterte explained his third visit to Beijing in less than two years in a pre-departure press conference early this month in Davao City, apparently the country’s new seat of power.
“If you do not have money, you are not my friend. I go to China, plenty of money. That’s the truth. I need money,” he said. “Anyway, I just simply love Xi Jin-ping. He understood, he understands my problem and he’s willing to help. And I’d like to say: Thank you, China,” the President added and off he went to imperial China, to whom the Philippines, he said, is being good in exchange for financial perks.
Even how badly the statement may have sounded, we can at least give credit to the President for being candid about his feelings for his newfound friend and ally. But note that Duterte used the word “I” instead of “the country” in emphasizing the importance of being friendly to the country’s powerful neighbor.
The statement simply showed that Duterte’s foreign policy, and for that matter his style of governance, is based on his own personal needs and beliefs. The President, for example, is mad at the United States, the European Union and the United Nations, among others, because they dared oppose his brutal war on drugs that has resulted in more than 10,000 killings of mostly drug users.
He pulled out the country from the International Criminal Court not because the country would not benefit from it or be disadvantaged by its existence but because ICC prosecutors have singled him out for investigation for possible crimes against humanity in relation to his deadly drug war.
He has also lambasted the United Nations because it is allegedly interfering in his mission of eliminating the drug menace in the country by sending a strong signal to drug users and drug dealers that they could end up in the Manila Bay to be feasted upon by sharks.
His perception of who to call enemy or ally is based not on long-term geopolitical factors but on who is criticizing his disregard for the rule of law and basic human rights, and on who is willing to loan his government money without telling him to observe the rule of law and due process or to respect human rights.
Thus, he would rather turn to China for funds to finance his ambitious “Build, Build, Build” infrastructure program although Japan is offering loans, according to economists, at interest rates up to 12 times lower than those offered by the Chinese.
The loans from China, which will be used to finance infrastructure projects, come with an interest rate of 2% to 3%. Loans available from Japan, on the other hand, have interest rates between 0.25 and 0.75.
The three projects being given priority for the Chinese loans are the Chico River Pump Irrigation Project, the New Centennial Water Source-Kaliwa Dam Project, and the North-South Railway Project-South Line. As in all Chinese loans, one major condition is that Chinese contractors should be the ones to work on the projects. Economic Planning Secretary said the Philippines would have to choose among three Chinese contractors which ones will work on which projects. In other words, no way Jose for local contractors.
Some economists also pointed out that these contractors bring with them their own workers, thus minimizing the chance of gaining employment for Filipino workers.
But what’s even more frightening are the concerns raised about falling into what is known as the “Chinese debt trap.” It has been pointed out, and rightly so, by many economists and political experts that many countries heavily indebted to China eventually had to give in to the conditions set forth in the loans when they found it difficult to repay the loans.
In exchange for these huge loans, these poor countries usually agree to use as “collaterals” their natural resources and strategic assets. This has been the case with many African countries, many of whom were forced to allow Chinese companies to exploit their agricultural and mineral resources.
For example, these loans helped Chinese oil companies obtain exploitation rights to multiple oil blocks in Angola and Ghana. The China Railway Group also gained mining rights to Congo’s huge copper and cobalt mines. In addition, Chinese contractors were able to secure at least 70% of the projects funded by Chinese loans in Africa and other indebted countries, with 30% going to “local” firms that are actually joint ventures with Chinese companies.
Venezuela, which borrowed $63 billion in a seven-year period and is now in a serious economic crisis, is now being forced to repay the Chinese with oil. The same with Turmekistan, which had to give the Chinese access to natural gas supplies to repay its debts.
As to strategic assets being used to back Chinese loans, Vice President Leni Robredo, in warning against falling into the Chinese debt trap, cited the case of Sri Lanka, which in December had to give the strategic port of Hambantota to Beijing on a 99-year lease as a way of repaying more than $8 billion in Chinese loans. Experts have also raised concern that the same thing could happen to Kenya, which could also lease out the Port of Mombasa in exchange for the $3.8-billion Chinese loan to fund a railway project there.
Also cited was the case of Djibouti which last year allowed the construction of China’s first overseas military base, on top of paying China $20 million per year for its outstanding debt.
In addition, China has used its economic might to pressure highly indebted countries to support its stand in various international fora, such as the ASEAN and the United Nations.
In the light of all these, we cannot understand why Duterte would still go blindly to obtain billions of dollars in Chinese loans because “I need money.”
Even before a single dollar could reach the country’s coffers out of the billions of dollars already pledged by China, Duterte has already agreed to go into joint exploration with Chinese companies of the rich oil and gas deposits in the disputed Spratlys, has allowed Chinese scientists to probe the Benham Rise, has allowed Chinese companies to go into critical industries such as telecommunications and public utilities (and even in Boracay), has allowed Chinese boats to shoo away Filipino fishermen in the rich fishing grounds near Panatag Shoal, has agreed to shelve a UN tribunal ruling that categorically stated that Panatag Shoal belongs to the Philippines, turns a blind eye to the reclamation and militarization of several disputed isles and reefs in the South China Sea, hints of an Axis alliance with China and Russia, and has no second thoughts about turning its back on longtime allies like the US and Japan.
What is it with China that Duterte is willing to throw caution to the wind? Is it just the loans that China has promised to fund his infrastructure projects? What is it really?
(valabelgas@aol.com)