Why go for China and Russia?

Honestly, never in the history of this country has any Filipino jolted the entire world the way President Duterte did. Due to his bravado, the country has either caught the fancy or ire of the global community. Whether it is for the better, we do not know. The fact remains that some countries where we had long standing alliances have been so critical of our president’s posturing.

Lately, for instance, the country slammed the grant from the European Union, another ally. Curiously, the country is warming relations preferably with countries (like Russia and China) where our existing alliances seemed to be at odds. Whether it is just a bluff, we do not know. However, if he really would cut ties with our existing alliances like the USA and some countries in Europe, and go for Russia and China, then, that will be worth delving in.

Russia, for one, is quite intriguing. First and foremost, Russia is in bad shape right now. In terms of the size of their economies,

the USA ranks first with US$17.95 trillion or approximately 24.5% of the gross world product while Russia ranks twelfth with just US$1.32 trillion. This is quite sad because Russia used to be among the top ten economies of the world.

Worse, unless oil prices improve, Russia will never be any better the next couple of years. According to Investopedia, “in 2015, 43 percent of Russia’s revenue stemmed from oil and gas”. With oil prices now just below US$50 per barrel, Russia’s economy will go further down. To recall, in 2008, Deutche Bank calculated how high oil prices have to be for Organization of Petroleum Exporting Countries (OPEC) to maintain their budgets and sustain their economies. Iran and Venezuela, two of the most vocal and seemingly arrogant countries who are often the first to call for production cuts, need the highest price per barrel of US$95. Russia needs about US$70, while Saudi Arabia, OPEC's largest producer and de facto ruler, needs about US$55 a barrel. So that, obviously, as we can observe, Russia, Venezuela and Iran are really in bad shape.

Consequently, Russia’s ruble declined by about 50 percent since 2014 against the US dollar. Simply put, this makes imports in Russia very expensive. Worse, according to the World Bank last year, “the poverty rate in Russia could hit 14.2 percent” in 2016. With Russia’s population just a little over 143 million, with a weak currency and with such poverty rate, to whom should we sell our products?

On the other hand, President Duterte wishes to improve ties with China. If it is pure addition, there is certainly nothing wrong with that. However, if we wish to have China and lose another one, that would be highly questionable. For one, the USA is the number one economy in the world. USA is where more than 50 percent of the monthly remittances of over US$2 billion from OFWs come from.

Yes, China is the second largest economy of the world. Yes, it is awash with money but is lacking in credibility. To recall, several countries have accused China of manipulating its currency to make

its products cheap in importing countries. Also, we are living witnesses of how unethical some of its citizens do business. For one, the country is flooded with counterfeit products. Most of these counterfeit designer brand garments and accessories usually originate from China.

These items find their way to the Philippine market either through importers or wholesalers. These items are more often undocumented and sneaked into the country through the backdoor. Finding difficulties through legitimate channels, these unscrupulous beings found some advocates in our sidewalk vendors. Badly, this misguided patronage is killing legitimate and taxpaying institutions due to unfair competition.

Moreover, Transparency International’s 2011 Bribe Payers Index survey (the latest available survey) can be utilized for further scrutiny. As TI stressed, “It (bribery) distorts the fair awarding of contracts, reduces the quality of basic public services, limits opportunities to develop a competitive private sector and undermines trust in public institutions.” Therefore, for all intents and purposes, bribery is corruption per se.

In this survey, TI ranked “28 of the world’s largest economies according to the perceived likelihood of companies from these countries to pay bribes abroad”. Representing 80 percent of the world’s outflow of goods, services and investments, the report “examines different types of bribery across sectors – including, for the first time, bribery among companies (‘private-to-private’ bribery).”

Among the 28 countries, Netherlands and Switzerland (both are countries in Europe) were seen as least likely to bribe. Curiously, the bottom two or 27th and 28th places were China and Russia, respectively. Incidentally, these cellar dwellers are countries President Duterte would prefer to have economic ties with.

To recall vividly, President Duterte declared war against corruption. Why go for China and Russia?