The billion-dollar blunder

I join the rest of the country in the belief that lending a billion US dollars to the International Monetary Fund was a blunder on the part of the Monetary Board.

Even if we have the foreign reserves to afford the loan, the reality is that annually, 40 percent of our annual budget is automatically geared towards debt servicing.  A good part of these loans benefitted only a dictator and his cronies.  This means that only 60 percent of our national budget may be spent for all other expenses of government. I suspect that after deducting payroll and basic infrastructure, very little is in fact left of the budget to pay for delivery of basic social services. In fact, in the proposed 2013 budget of P2 trillion, only P318.5 billion is earmarked for education, social services and public health. This is a measly 12 percent of the total budget. And yet the Monetary Board now says we can afford to lend P42 billion to the IMF?

I do concede that it does look good for the country. But public finance should not just score “pogi” points. It must prioritize, like all other public policy decisions, what is best for the country and its people. On this basis, I dare say that the billion dollars could be better spent financing micro-livelihood projects for the very poor, or even earmarked for a new lending window for the country’s hard-pressed exporters.

Yes, the professed goal of assisting the debt crisis in Europe is noble. I have consistently written about this crisis since it does not appear to be high in the list of priorities of our policy makers. But the reality is that no one knows exactly how much would be required to bail out the debt-stricken economies of Greece, Portugal and Spain. Already, the 750-billion euro package approved by the EU does not seem enough. While the billion dollars which we lent may help, the reality is the amount is too large for us to lend, and yet too small to solve the problem.

Besides, given that a billion will not solve Europe’s financial woes, perhaps it would have been better to allocate the same towards alleviating the plight of Filipinos who will be affected by the crisis. Here, Filipino seafarers manning Greek vessels, as well as exporters to the continent, should have been given priority- if it is true that we have surplus capital.

Which bring me to another point. With total indebtedness of at least $60 billion and with Budget Secretary Florencio Abad declaring that at least 2 percent of the proposed 2013 budget will be financed through loans, it is obvious that we simply cannot afford to be a creditor. Perhaps, the billion dollars should have been spent to retire some of our foreign indebtedness in anticipation of the crisis in Europe.

But beyond policy, there too is the issue of legality. I recall that part of our successful challenge against the legality of the Northrail contract was that it was not, among others, submitted to Congress despite the very clear constitutional requirement that no public fund shall be spent without an appropriation provided by law. At least 30 percent of this project was to be financed by public funds and the rest financed through a loan to be extended by the Chinese EXIM bank. The test in jurisprudence on what should be covered by an appropriations law is whether an act is likely to involve a charge on the national treasury. And unless I am wrong, while the Bangko Sentral has the task of safekeeping our foreign reserves, it does not have unrestricted powers on how the reserves should be disbursed. Insofar as it may have a charge on public coffers, a law from Congress would be required.

But even assuming that congressional approval is not required for the loan, there is still the issue of whether the lending falls within the powers of the Bangko Sentral. The law creating the Bangko Sentral had to be passed precisely because the Central Bank of the past became bankrupt. Nonetheless, under the new Central Bank Act, the institution had powers to regulate the banking industry and to promote stability of the peso. I doubt that the billion-dollar loan could fall under any of these two broad legal mandates. Perhaps, members of the Board believed that insofar as the billion dollars may alleviate the crisis in Europe, it might fall under the mandate of promoting the stability of the peso. This, though, is a stretched argument as the usual tools in defending the value of the peso is through the bank’s mandate in determining money supply, setting borrowing rates, and intervention in the forex market.

The conclusion is that the billion-dollar loan may have been ultra-vires.


(Published in the Manila Standard Today newspaper on /2012/June/28)

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Centerlaw Press Release : For Immediate Release Expelling Jordanian journalist unconstitutional and violates freedom of the press

What  DILG Secretary Jesse Robredo wants to do with Jordanian journalist Baker Abdulla Atyani – either out of ignorance or over-enthusiasm – is unacceptable and is  unconstitutional. Roberedo’s order denies every journalist in this country, foreign and local alike, a fundamental human right protected both by the Philippine constitution and Article 19 of the International Covenant on Civil and Political Rights, freedom of the press.

Atyani and his Filipino  crew composed of audio man Ramelito Vela and cameraman Rolando Letrero went missing in Sulu last week, and were initially feared to have been abducted by the terrorist group Abu Sayyaf.  Now it turns out they are indeed inside the terror group’s lair somewhere in the jungle fastness of Sulu, but not as captives but to interview one of the group’s commanders.

Secretary Robredo wants the bureau chief for Southeast China of the Al Arabiya TV news network sent home and declared persona non granta for interviewing the Abu Sayyaf without informing the government.  He is also is quick to invoke the Human Security Art against the Jordianian journalist, which move only  confirms our worst fears about the same law: that it may be used to unduly restrict media reportage or commentaries on what should be everyone’s concern.

And given the murky history of terrorist groups in Southern Philippines, including their alleged ties with shady characters in the police and the military, the automatic invocation of the HSA against any media reportage on terrorist activities could well be deployed as a tool to repress any call for public  accountability for any official mischief.

Secretary Rebredo should know that mere press statements issued by government officials warning media about alleged or imagined infractions of the law is prior restraint that casts a chilling effect on free expression.

And since when did journalists need to ask for permission from the government to be allowed to exercise their profession?

In the case of Chavez v. Gonzales (G.R. No. 168338, Feb. 15, 2008), the High Court addressed the unconstitutionality of press statements issued by a top official of government warning media of criminal consequences, saying that these cannot stand constitutional scrutiny, for the reason that: “[a]ny act done, such as a speech uttered, for and on behalf of the government in an official capacity is covered by the rule on prior restraint.”

Perhaps, he needs some reminding that this case arose from warnings issued by the then Justice Secretary Raul Gonzales and the National Telecommunications Commission against the airing of the “Helllo Garci” tapes. Gonzales threatened to prosecute any media entity that did so.

And the Supreme Court stamped its foot down on it: “in resolving this issue, we hold that it  is  not  decisive that the press statements made by [government officials] were not reduced in or followed up with formal orders or circulars. It is sufficient that the press statements were made by [them] while in the exercise of their official functions. Undoubtedly, Defendant Gonzales made his statements as Secretary of Justice, while the NTC issued its statement as the regulatory body of media.”

As a supposed advocate and icon of good governance, Secretary Robredo should know that free expression is good governance.

It is good governance because allowance for free expression on the public interest empowers citizens; it grants citizens information and opinion on questions that concern the commonweal, and in many circumstances, exposes official wrongdoing that otherwise would have been whitewashed by “praise releases.”            -30-

Beware of Chinese Doublespeak

China’s failure to remove its vessels from Panatag Shoal is clear evidence of Chinese shadow play in the resolution of the dispute. Remember that about a month ago, Chinese authorities declared a fishing ban in the area for a period of two and a half months. Philippine authorities, in an effort to calm the standoff, followed suit and declared a similar ban. But contrary to the ban, no less than 20 Chinese fishing boats remain in the lagoon of the shoal, an area that is approximately as big as Quezon City. This number is in addition to no less than three Chinese government vessels in the area. This is clear doublespeak.

Despite China’s doublespeak, President Aquino still ordered our two remaining government vessels in the area to leave. The pretext was the onslaught of a powerful typhoon. But diplomatic pundits do not buy this. They say that the real reason is that our policy makers probably miscalculated that China, like us, would want to reduce the tension the area. They hoped that Chinese authorities would reciprocate the order for our vessels to leave. This did not happen.

At least, it is now clear that China does not intend, or wish, to scale down its action.  It is also now clear that China will not settle for anything less than our relinquishment of our claim to the shoal. This is their desired end-result when they espouse a “diplomatic” solution to the standoff.

The question in our mind is why is China taking this position only now? And why the brazenness of its acts?

Observers posit that China’s actuations are a precursor of further trouble to come. The real battle ground is Recto Bank where we are about to drill for oil. Our responses to Chinese provocation in the shoal will in turn determine their future actuations in Recto Bank. On the basis of their current track record in the shoal, we should expect the Chinese to send its entire Armada to Recto should we persist in our effort to drill for oil in the area. Already, China has announced that it would conduct military exercises aimed at defending their perceived right to explore for mineral deposits in the West Philippine Sea. This is a clear message that China will use its recently acquired military might to defend its interest in these troubled waters.

It is imperative for Philippine policymakers now to acknowledge this state of affairs. Yes, diplomacy is the preferred mode of international dispute settlement. But this is only when the parties to the dispute observe good faith in their negotiations to arrive at a mutually acceptable solution to the dispute. It cannot be the solution when the Chinese view is that diplomacy should only result in our recognition of their claim to the area.

I have consistently argued hence that the only recourse for the country is to resort to the binding and mandatory dispute settlement procedure of the UNCLOS. The question was asked recently in a forum sponsored by the Ortigas library on why the Philippines has not brought the matter earlier to this dispute settlement body.

Professor Randy David had a notable observation. President Gloria Arroyo, according to him, courted Chinese support precisely by sitting on our options in asserting our national territory. This appears plausible given that instead of asserting our sovereignty, PGMA and her cohorts at the DFA and other line agencies—many of whom have recycled themselves as being pro-P Noy today—allowed the Chinese to engage, among others, in the exploration of our natural resources through the Joint Maritime Seismic and Exploration Agreement of the West Philippines Seas and the grant of mining grants in Diwalwal and North Davao to the company behind the botched National Broadband Network, ZTE Corporation. This is, many believe, in return for the many fraudulent Chinese funded projects entered into by the Arroyo regime, including the Northrail contract and the NBN-ZTE deal. In short, it was territory in exchange for pay-offs, or “tongpats.”

It is hoped that President Aquino will hence assert Philippine sovereignty in territories that are in fact ours.  The starting point is a clear and unequivocal declaration from a body such as the International Tribunal on the Law of the Sea on which country is entitled to explore and exploit the natural resources in Panatag and in the Kalayaan group of islands.

America: The former superpower

America is now an ex-superpower. First, it ceased to be the biggest economy in the world. It is now only the second-biggest economy. China has long overtaken it and the tables have been turned. Communist China has not only become an economic tiger; it has also become the biggest creditor of capitalist America.

And the decline of superpower America goes beyond economics. With China’s recent foray into bullyism (yes, I invented that word) in the West Philippines Sea, it has allowed China to challenge its pre-eminence in the Pacific front. This used to be its bastion since World War II. This was why despite granting the Philippines nominal independence, it insisted on utilizing the country as an unsinkable military carrier with take-off points at Clark and Subic. These were bases that used to be its biggest military installations outside the mainland US.

Today, it is longer the US Navy that is feared in this part of the world. It is now the Chinese Navy that lords it over in these waters. First it took possession of Mischief Reef in the disputed Kalayaan groups of islands from Filipino soldiers then assigned in the island. Today, it has effectively driven away all Filipino presence in Panatag Shoal, an area that is literally the backwaters of the province of Zambales. And if the respected journalist Chito Santamaria is correct, China is not just interested in the fishing waters around Panatag. The real battleground, according to Chito, is Recto Bank where Manny Pangilinan is about to drill for oil.

Amidst this newfound Chinese expansionism, where is America? Well, at the first sign of a conflict, Hilary Clinton declared that it would take a neutral stance and urged a peaceful settlement of the dispute. Later, when the standoff persisted, she declared during a US Senate concurrence hearing on the UN Convention on the Law of the Sea that China’s claims to the vast waters of the West Philippine Sea exceeded what is allowed under international law. And recently, when President Noynoy Aquino went to the US begging anew for help, no less than President Barack Obama was clearly non-committal. This is apparent in a White House release after the meeting between Obama and PNoy stating, among others, that the two leaders merely agreed on “firm support for a collaborative diplomatic process among claimants to resolve territorial disputes in a manner consistent with international law and without coercion or the use of force.”

Make no mistake about it. Uncle Joe can’t be counted upon to deal with China- the bully.

Central to American foreign policy is that as the lone superpower of the world, it can be counted upon to maintain peace and order in this planet. At the very least, if its economic woes have become so bad that it can no longer play the role of superman, it should have sufficient resources to stand by its long-standing ally when needed. But no, nowadays, the American position is for its allies to swim or sink. Full stop.

This is not to say that the American position is wrong. I for one have never believed that mother America will ever come to our rescue solely to defend our interests. This is why I have been a long supporter of the likes of Claro M. Recto and Jovito R. Salonga, who believed no one can be counted to uphold Philippine interest but us -Filipinos.

Still, this lackadaisical manner by which America seems to regard the recent threat of Chinese expansionism is a major change in its foreign policy.

Make no mistake about it. While America couldn’t care less about the West Philippine Sea, it will come back to Subic and Clark not to defend us; but to uphold its own national interest. This is why it is in the process of sending 60 percent of its navy forces to Asia. Malacañang, I’m sure would want to take credit for this. But nope, this has been in the offing even before our recent controversy with China. At most, perhaps, the actual deployment of these forces to Asia was hastened by the dispute. They will come though not because Scarborough and the Spratly islands are ours. They will come because China’s claims to these territories may precisely hinder deployment of their ships into these waters.

We, unfortunately, are irrelevant to their policy.

On the conviction of Mubarak et al: they have it better in Egypt

As we were engrossed with removing ex-Chief Justice Renato Corona from office, two major events, both involving public accountability, escaped our attention. The first was the conviction of former Egyptian President Hosni Mubarak who was sentenced to life imprisonment for complicity in the murder of around 900 protesters in February 2011. According to the judgment, the former President “knew that the murders were to be committed and did nothing to prevent them.”

This conviction was noteworthy because Mubarak was the first leader of a country swept by the Arab Spring who was found guilty of atrocities against the protesting civilian population. It was also noteworthy because he was found guilty under the principle of superior responsibility. This is a manner of incurring responsibility distinct from actually ordering the commission of the crime. Liability under this principle is where a President, among others, knew that a crime was about to be committed and did nothing to prevent it.The media in Egypt published images of Mubarak detained in a prison cell, albeit in a prison hospital. This is as it should be.

Regrettably, this has never happened in our country because of our penchant for “hospital arrest”. Here, a former president accused of the commission of a crime is always detained at the presidential suite of V. Luna.

The second event was the conviction of yet another former head of state, Charles Taylor of Liberia, for war crimes and crimes against humanity committed in Sierra Leone by rebel forces under him during the period of 1996 to 2002. His conviction was for terrorizing civilians, murder, rape and kidnapping children to use as soldiers.

During his sentencing, the Judge from the Special Tribunal for Sierra Leone declared that “the prison term of 50 years of imprisonment for some of the most heinous and brutal crimes recorded in human history seems woefully inadequate and incomplete.” He will serve his sentence in a British prison.

Taylor’s conviction was the first conviction for war crimes against a former head of state since the Nuremberg trials at the end of World War II. Taylor financed his acts of terrorism through the trade of so-called blood diamonds. Witnesses in the trial talked about how mass killings were committed through machetes and how child soldiers were made to rape elderly women. The death toll during the limited time for which Taylor was convicted was a staggering 220, 000 lives.

In fairness, our own removal of the ex-chief justice was also reported worldwide and admired also as yet another act of promoting accountability among very high officials of government. The New York Times though was a bit sarcastic when it noted that this was the first time we removed a high-ranking official through legal means. Normally, the newspaper observed, we removed them through people power. But the case of Corona was simply for removal. It was not a conviction for crimes, which I am sure would take many, many more years to happen.

In any case, we should learn from the experience of Taylor and Mubarak. Heads of states, when they commit crimes, should be tried and punished as soon as possible. Note the quick conviction of Mubarak for acts committed within a year of his conviction. We note that in the case of the Maguindanao massacre, we’re on already on our third year and we have still to see even the light at the end of the tunnel. Certainly the following figures will indicate how different our criminal justice system is from the Egyptians’: out of 197 accused in the Maguindanao massacre, only 97 have been apprehended. Of this number, only 71 have been arraigned.  It would appear that at the rate the prosecution is proceeding, I might be a very old man before the trial ends, if at all.

Perhaps there is now reason for our own government to examine and compare our criminal justice system with those of Egypt and even the international tribunals created to prosecute the most horrific international crimes. It is high time we determine why a country like Egypt, which we have always thought to be behind us in development and in institutions, not to mention democratic processes, can make the wheels of justice work against the high and mighty. The trial of former President Joseph Estrada, which I think was nothing but personal vendetta of GMA, took us six years to finish. Expect the trials against Arroyo to last longer given her omnipresent influence in the Judiciary.

The removal of Corona should contribute to the reform of our criminal justice system. Alas, as it stands, our system continues to be in ruins.

Buti pa sa Egypt!