Morales warns vs Sino loans

Former Ombudsman Conchita Carpio Morales on Friday called on the public to be more vigilant and demand transparency in the implementation of government projects which were chiefly funded by China’s “corrosive” Belt and Road Initiative (BRI) program.

“To borrow the word of an analyst, while it is recognized that the BRI can fast-track our country’s development, the whole work, the hard work and the studies are a mess,” Morales

said in an online forum of Stratbase Albert del Rosario Institute.

“We should be warned by how a growing volume of evidence suggests that capital emanating from authoritarian nations have a corrosive effect on democratic institutions and private enterprise in recipient countries,” she said.

She echoed the concerns of many international groups that China’s ambitious $1-trillion cross-border infrastructure investment program was not a benevolent initiative, but a means to advance its geopolitical interests, particularly in developing countries.

Australia projects

The former chief graft-buster and retired Supreme Court justice said that by entering into trade and investment agreements related to BRI, countries like the Philippines would expose themselves to possible debt traps, economic dependence and seizure of important national assets by China.

Last week, Australian Foreign Minister Marise Payne announced that the Australian government had decided to void two BRI projects between Victoria state and China to ensure “consistency of our foreign relations.”

“If there is any truth to the cautions, there then is no better word than ‘corrosive’ to describe how we are slowly being eaten away in the guise of great promises that would have far heavier trade-offs,” Morales said.

“There is no such thing as free lunch … Trade-offs are intrinsic part of any deal. But trade-offs (should be) predictable and understandable,” she said. “This is not to say, of course, that the BRI offers no win for those who have signed up.”

She noted that the Duterte administration’s policy in handling the Philippines’ maritime and territorial dispute with China had been largely affected by Beijing’s promise of investments and financial aid.

“The current administration has softened to China in matters of territorial dispute and eventually cooperated with China on (its) knee,” Morales said.

Morales emphasized the critical role of civil society groups and the people in ensuring that Chinese-funded infrastructure projects would comply with the country’s procurement law.

“We do these in hopeful preparation for an approaching time where rules and laws are primary, when rulings are upheld and not thrown away and when jokes won’t absolve anyone of accountability,” she said.

She pointed out that a number of Chinese companies involved in BRI projects had been implicated in corruption scandals in other countries and that some of the local projects awarded to the Chinese contractors were plagued by issues on transparency.

Kaliwa Dam

Among this, the former Ombudsman said, was the $88-million Chico River Pump Irrigation Project whose confidentiality clause “disallows the disclosure” of details of the project.

“This is an insult to the spirit of democracy, which allows for healthy discourse in terms of chartering the fate of a nation,” Morales said.

“If the BRI is ever to promote inclusivity, it is not to promote an onerous agreement in its favor,” she stressed.

One of the Duterte administration’s big-ticket projects funded by Chinese loans, the Kaliwa Dam in Quezon province, is touted as the solution to the water shortage in Metro Manila and nearby provinces.

The Kaliwa Dam project, also called the New Centennial Water Source Project, involves the construction of a gravity dam on Kaliwa River, which will include a reservoir with a surface area of 291 hectares.

The dam will have a gross reservoir volume of 57 million cubic meters at full supply level and has a discharge capacity of 600 million liters a day.

Environmental groups oppose the project, saying that the dam would displace communities, including indigenous groups, in Quezon and Rizal.

The construction of Kaliwa Dam, which will cost P18.7-billion, was awarded to China.

Morales blasted infrastructure projects bankrolled by China that used the country’s natural resources as collateral, saying the contracts in some of these stipulated that the Philippines “waives its sovereign immunity on its patrimonial assets and assets dedicated to commercial use… should an arbitration award be against it.”

“In other words, our patrimonial assets would be expended to satisfy China as the lender. This is onerous and a clear display of threats to seize assets and imposition of might,” she said, citing the Kaliwa Dam project.

Lacking impact study

Reacting to the issue of sovereign immunity waivers raised by opponents of Chinese-funded projects in March 2019, the Department of Finance (DOF) said then that there were “no collaterals in any of the loan agreements signed by the Philippine government” with China.

“A waiver of immunity is standard across loan agreements the Philippines has signed, whether explicitly stated or implied via an agreement to arbitral proceedings,” it said.

Such a waiver will allow the other party in the agreement with the Philippines “to take the country to arbitration, in the unlikely event that the Philippines defaults on its loans,” it said.

“Arbitral rulings are still subject to the Philippine Constitution, court system and public policy,” the DOF said, adding that the government was managing the country’s debt “responsibly.”

Morales said besides the allegation that a Chinese company was favored to implement the dam project, it was approved despite the lack of the mandated environmental impact study.

“Of course, we all know that there is much more to this. And the ultimate collateral is our sovereignty as a people and as a nation,” she lamented.

In January last year, the Chinese embassy in Manila, commenting on concerns over the Kaliwa Dam, said that the project was “one of the great achievements” in helping the Philippines with more livelihood projects through the two countries’ infrastructure cooperation within the framework of the BRI and the Duterte administration’s Build Build Build program.