Red flags and debt deja vu

January 09, 2019

Are we being set up for a debt trap?

Like it or not, we are suckers for accepting a helping hand from parties whose intentions may not be noble or beneficent.

We readily embrace strangers and visitors offering bear hugs that soon turn into a crippling headlock.

Before we know it, we are down, face on the ground, pressed on all sides.

We are snared in a sticky financial spider web from where there is no escape.

And the worst part is that we have been in this situation before but apparently we have not learned our lesson.

We are no different from the psychiatric case of a patient doing the same thing again and again but expecting a different result each time.

Call it debt deja vu.

With the attractive promise of new infrastructure, what appears to be an enticing agreement may soon condemn the country into a debt it cannot repay.

The closure of Estrella-Pantaleon Bridge is slated for the weekend, and its demolition is fast approaching.

Only eight years old, the bridge connecting Estrella Street in Makati to Barangka Drive in Mandaluyong would be torn down to undergo reconstruction; it would be widened with two more lanes.

This would be the second attempt at this project, following a short-lived effort in September that only resulted in the bridge reopening two days after its closure because of strong public outcry.

The reconstruction of this project is funded by the People’s Republic of China with a 5 billion-peso grant it would only share with the reconstruction of the Binondo-Intramuros Bridge—a steep budget, considering that the current bridge, built by the Austrian government, only cost  300 million pesos to build.

In fact, since the Duterte administration began, China has “donated” 9.729 trillion pesos to the Duterte administration’s Build, Build, Build infrastructure campaign, counting the grants made even outside of the 29 agreements signed by the Chinese and Philippine governments in November 2018.

These consisted mostly of memoranda of understanding and nebulous frameworks. Without any substantial movement towards concrete infrastructural plans, these agreements look more like the thin veneer of something insidious.

Despite President Duterte’s early promise of protecting the Philippines’ interests against Washington and Beijing, several of his infrastructure initiatives depend on Chinese coin, much to his constituents’ chagrin.

Polling data shows that more and more Filipinos are growing skeptical towards China’s involvement and investment. They’re right to be suspicious, given China’s debt-trap diplomacy.

To the discerning eye, the generosity of China is anything but the charitable act of a neighbor. This is the ace in China’s hand, the best play in its book.

Debt-trap diplomacy, also known as debt colonialism, is one of China’s strategies to sow the seeds of its influence.  China entices governments with attractive loans that they would ultimately be unable to repay, and are given no choice but to default.

China then demands concessions as a form of payment. When Sri Lanka was unable to pay back over one billion dollars of indebtedness, they conceded a port to state-owned Chinese companies on a 99-year lease—a lease just signed in 2017.

China is already reaping the benefits of this strategy: several developing countries, such as Mongolia, Montenegro, Vanuatu, and Kyrgyzstan, all owe massive debts to China due to the very same promise of infrastructure.

Djibouti, which hosts the US military’s main base in Africa, is in danger of losing its key port to Beijing due to debt. This would help solidify China’s presence in Africa as part of President Xi Jinping's Belt and Road Initiative, which is a project to construct trade routes throughout Eurasia while keeping China in the center.

Joining the other developing countries locked in this strategy is the Philippines. With the country still chest-deep in South China Sea negotiations, it stands as the prime candidate rife with assets that would boost Chinese expansion.

Despite The Hague ruling in favor of the Philippines in the dispute, along with the unanimous agreement of the diplomatic community, the Philippines’ claim on the territory is ripe for China’s picking if the mounting debts are unpaid.

Compounded with the fact that the 29 agreements include “cooperation” in oil and gas development between the Philippines and China, the 9 trillion-peso debt trap we find ourselves entrenched in seems all the more insidious.

Despite the seemingly amicable relationship between Duterte and Xi Jinping, it’s looking more like the former is gambling the country right into China’s hands. There may be more than speculation to this. In the case of the Estrella-Pantaleon Bridge project, the Department of Public Works and Highways partnered with Chinese companies CCCC Highway Consultants Co. Ltd. and its subsidiary China Road and Bridges Corporation.

Both companies were blacklisted by the World Bank for fraudulent practices in a previous infrastructure project in the Philippines.

Undeterred by numerous glaring red flags, the Philippine government is more than eager to dive into partnerships with China.

There is little ordinary Filipinos can do in the face of bilateral negotiations or to combat signed international agreements, but if public outcry can postpone the reconstruction of a bridge that doesn’t actually need it, then it is time to raise our voices again.

Behold God’s glory

and seek His mercy.

Pause and pray, people.