Before President Rodrigo Duterte’s visit to Japan, there was his more controversial visit to China, where he officially announced our country’s “separation” from the United States.
Acting like a global toughie while obviously trying to please his Chinese hosts, he also announced that the Philippines can now go to war with both China and Russia on his side.
Most of our long-time allies were shocked and alarmed over Duterte’s statements. The European Union and the United States demanded clarification.
Some local senators saw it as bad diplomacy and advised the President to watch his mouth. As expected, Duterte continued to address the United States with expletives but softened his stand and said that there was no severance from any alliances, after all, but only separation from the old foreign policy that has been dependent on America.
His staunch supporters saw it as a clever move of “recalibration,” forcing America to take the Philippines more seriously while flirting with the former enemy. China, of course, knows the move and has no illusions over Duterte’s sweet words for them. Chinese media, all of them under government control, showed that Beijing understood fully Duterte’s “genius strokes.”
Meanwhile, Duterte came home bragging about the 24 billion dollars worth of “soft loans” and investments from China. Soft loans are, of course, a euphemism. They are still loans to be paid by all of us Filipinos. And, just like any loans, there are interests to be paid and conditions to be met. Those conditions almost always favor the creditor.
As Duterte has committed the whole nation to pay for these loans, it becomes imperative for us to see the fine print. What will happen if we fail to pay? How will our new friend, the bully that is now our big creditor, treat us if we will not be able to pay? Will our islands serve as collaterals?
We know, of course, from previous experiences what will happen if we fail to pay. Former president Ferdinand Marcos also borrowed billions from the World Bank and the International Monetary Fund to finance his huge infrastructure projects and social welfare programs. The flow of money from the banks created an illusion of growth during the first few years of the dictatorship.
But this growth was only artificial and short-lived as the country soon had to struggle to stay afloat, with most of its revenues going out to pay for the debts. As part
of conditions on delayed payments, the foreign creditors stepped in to force governments to agree on certain terms, giving the impression of our country being dictated by such banks.
As far as economic disaster brought about by unpaid debts is concerned, there is also the experience of Greece. Back in the 70s and the 80s, the socialist government of Greece tried to fund its ambitious social welfare programs with money borrowed from foreign banks. For a while, the citizens enjoyed big pensions, housing subsidies, free education and health care, and other privileges from a generous patron state, whose president had become hugely popular.
But it was only good until it lasted. Without solid manufacturing base and dependent only on tourism for revenue, the Greek socialist state later on struggled to pay for its debts until it declared not so long ago that the amount had become so huge, it was just impossible for them to pay.
It tried to keep its commitments to the former workers who now occupied the retiree class still entitled to big pensions, free health care, and other benefits. But the state had to do so at the expense of the new generation of workers, the younger citizens who are not only robbed of the same benefits but had to shoulder the cost of continued privileges for their forebears.
The country recently faced economic collapse, kept afloat only by stimulus package from richer co-members of the EU. As a result, the Greek government had to be under dictates from such countries and their big creditor banks. Meanwhile, the failed welfare state has only bred resentment between the younger and older generations.
This adds a new twist to the saying, “Fear the Greeks when they send gifts.” But for us recently, it applies to China which has just sent us huge gifts.
Yet, President Duterte is trying to convince us that our image of China is largely the result of black propaganda by America and other Western countries. He is telling us that China is actually a more preferable partner being more sincere and respectful to Filipinos.
But such revisionist portrait fades upon every recollection of past experiences: How the Chinese tried only very recently to hack our government and private websites, how their Coast Guard vessels rammed into the small boats of our fisherfolks, and how they actually occupied our islands in the West Philippine Sea.
But China wins not so much by waging wars but by gentler strategy of control: soft power. This means giving away trojan horses, like financial aids, loans, investments, and even help in government projects that all have strings attached. They did that to certain countries in Africa and to some member states of the Asean. As a result, China not only enjoys interest payments but soon gets to control these countries through mutually-agreed conditions. They also get these countries to take their sides in international forums and alliances.
Part of soft-power strategy is to influence local politics. This is done by secretly funding campaigns of friendly candidates or bribing those already in power (Remember the ZTE deals?). No wonder, making friends with China has become very tempting for politicians nowadays. Even our global toughie appears to be lured into the traps of China’s soft power.