Where is ‘Dutertenomics’ taking us?

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Those who have lived to experience what martial law was like seem to be having a déjà vu of sorts as President Duterte trumpets his economic plans, echoing the way the late dictator Ferdinand Marcos went full throttle proclaiming his.

In fact, this is how the deposed despot’s son and namesake parades his father’s alleged accomplishments, which earned him the “honor” of being the “greatest Philippine president” ever. Throughout his failed vice presidential campaign last year, Bongbong Jr. in his various social media postings, aided by his trolls, proudly extoled Marcos Sr.’s infrastructure projects as unprecedented and without rival.

But, he expediently glosses over the fact that these same projects were what placed the Philippines in debt shackles, with repayment being shouldered by the Filipino people until 2025, or a good 39 years after Marcos Sr. was forcibly kicked out of office in 1986 by multitudes of people angered by his abuse.

Dutertenomics simply means ramping up public spending on infrastructure in the hope that such a move will bring about much-needed economic growth. If the previous administration was unfairly labelled as a miserable miser, Duterte wants to be known as a wise spender.

Parallel to Dutertenomics is the President’s so-called independent foreign policy, where he has swiftly shifted reliance from the country’s traditional allies in favor of Russia and China. He is now courting the two communist states to increase bilateral ties in economics
and security.

The shift is brought about by what the president views as “interference” by the US and the European Union in the country’s internal affairs. Duterte scoffs at the unfavorable view of these democratic nations of his centerpiece war on drugs, which the US and the EU see as a desecration of due process and the rule of law.

Peeved, Duterte rejected the $280-million EU aid, which he says has strings attached. He once again scoffed that the EU has no right to tell him how to conduct his war on drugs, never mind that it has been our reliable trading partner through the years.

EU’s support to the peace process in Mindanao is vital, as it has provided around 80 percent of the total funds of the Mindanao Trust Fund, a facility set up by various donors to fund socioeconomic recovery of conflict-affected communities in southern regions. On the economic side, the Philippines-EU partnership has reaped us billions of pesos in trade, lifting the economy and creating job prospects for Filipinos. The Philippines benefits from Generalized System of Preferences Plus (GSP+), which licenses us to export 6,274 products to the EU at zero tariff, the biggest recipient of which is the renowned tuna of General Santos City. This makes EU one of the country’s biggest trading partners.

Before the country’s acceptance in the GSP+ in 2014, Filipino exporters suffered heavily from the deteriorating trade with the EU, from 8.5 billion euros in 2002 to 5.1 billion euros in 2014.

But Duterte will have none of this, believing that his new friend, Chinese President Xi Jinping, has his back.  Dutertenomics will be propelled by around $290 billion (P14.4 trillion) of expensive loans from China, which some economists fear will put the Philippines in virtual debt bondage.

But let us assume for a moment that whatever debts we take will be well spent, graft-free (although this is highly doubtful) and will build badly needed infrastructure. Profiting from these endeavors isn’t a sure thing.  How are we going to repay these debts? Raising taxes is the only way to fill the gap. This, again, will put a heavy burden on taxpayers who, until now, are hard up paying for the debts incurred during the Marcos regime.

Duterte appears to have warmed up so well to China, and vice versa, that he is expected to get what he wants from the economic giant.

But as Milton Friedman says, “There’s no such thing as a free lunch.”

Aside from having to pay through the nose the stiff interests of commercial loans, our country has the sovereignty of our shoreline territories in the West Philippine Sea (South China Sea) at stake.

Duterte has already taken the first step of giving up these territories to China. During the recent Asean Summit held in the country, he ignored the egging of other member-states to bring up the Philippines’s success in the arbitral ruling of the United Nations Convention on the Law of the Sea, which nullified China’s so-called nine-dash line covering the entire South China Sea.

In his talks with Xi in his recent China visit, Duterte claimed he brought up the maritime issue with the Chinese leader, but that the latter threatened war in which he, not in so many words, meekly replied, “what is there for me to say?”

Duterte claims that there should be no strings attached when dealing with friends. In eschewing the support of the country’s traditional trading partners, however, it seems that it is China that is pulling the strings.

(As of this writing, Marawi has been undersieged by Isis, while the President in on a state visit to Russia. I hate to say this, but it was really a bad idea to drop the US military as our security partner, which has sophisticated monitoring systems to swiftly aid us in foiling any terrorist threats.)

 

For and suggestions, e-mail me at mvala.v@gmail.com

 



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