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MEL STA.MARIA | A hard look at the benefits from Duterte China trip, risks of its embrace

President Duterte is greeted in Hanoi by Vietnam's President Tran Dai Quang in this Sept. 29, 2016 News5 video grab. Vietnam, which like the Philippines has a maritime row with China, has warned against the Asian giant's bully tactics.
The online news portal of TV5

It is not unthinkable that China itself, was surprised at the unexpected gravitation of President Duterte towards it, especially after the West Philippines Sea decision. It is, thus, understandable that the Chinese government  gave Mr. Duterte a rousing red-carpet treatment. In fact, they joyfully applauded when he declared the military and economic separation from a “good friend,” meaning the United States. China was presented a preferential recognition by the President of a country of  about 100,000,000 people - a potentially huge market. And I believe that it is only from that perspective that China sees the Philippines and our people now - a potentially huge market, nothing more and nothing less - ready to be exploited with what may be, happily for China,  the  unexpected cooperation  from  the Duterte administration.  

And China must have likewise been initially perplexed at this Duterte policy, albeit, in a pleasant and “feeling-lucky” way. The Duterte policy essentially meant that the Philippines, through President Duterte - the head of state -  courted  a country with a history of violating our territorial rights for possible equal, if not better, trade and loan concessions than the US and possibly the EU have given. It is an unstable policy. Considering the previous animosity that existed between the two countries, capped by the blow that the defeat in the West Philippine Sea case dealt to China's international reputation, the Duterte administration must not be so naïve as to assume  that China was, is and will be so benevolent and free from ulterior motives. Certainly, China cannot be prompted by any altruistic cause and “brotherly-love”  towards  the Philippines in pledging those loans and trade accommodations. We are just a market to China.

The US$ 13 billion in trade and loan commitments to the Philippine brought in by President Duterte look spectacular.  But huge as they may appear, the benefits to the nation are unknown. The public still has to be informed of the details, conditions, formulations, durations,  guarantees, pledges, cross-default-provisions and the other  terms of reference of these accommodations.

Questions must still be asked: Are they more onerous than gratuitous? What are the trade-offs? Are there non-reciprocal preferential favors granted to the Philippines equal to or better than the European Union’s considerably reduced or zero tariff for 6,800 Philippine products entering EU’s 20 member-countries? Will they match or even approximate the billions of dollars which poured over the years into the Philippines through the EU’s General System of Preference Plus (GSPP) system? Can it equal the aid given to the Philippines by the United States during times of calamity like super typhoon Yolanda?

President Duterte must continue to discern the real intentions of China and act correctly. He cannot make decisions based on what he personally thinks, and then equate it with public interest.  He must also look outward and be guided by the experience and warnings of other countries. For example, Vietnam, a communist state like China, cautioned the Philippines that China should not be trusted. President Duterte, while not compelled to heed the warning, must nevertheless listen to and learn from it. Insights can be obtained that can lead to better resolutions. Moreover, Vietnam has the wherewithal in matters concerning relationships with China. Vietnam was previously the trading partner of China, but later turned to Russia. After Vietnam and the US war ended in 1975, both countries decided that it was to their mutual benefit to start diplomatic relations. It happened in 1995. Vietnam now is actively engaging the US in trade. Vietnam also followed the lead of the Philippines in obtaining GSPP status from the EU. It is now prospering.

Taking to account Duterte’s statement  addressed to China that, “I’ve aligned myself to your ideological flow” and that "only China can help us,"  the  Philippines might just follow the tragedy of Venezuela. Through its loud and socialist leaders, Venezuela alienated the west, particularly the US and EU, and followed China’s “ideological flow”. Venezuela turned to China for huge trade and loan accommodations. The capital and interest payments were so huge that there was a time Venezuela paid China with  oil, its priced resource, not having enough cash to make settlement. China even abandoned the construction of the bullet-train infrastructure which it had committed to do. Now Venezuela  is generally considered a failed-state as it is bankrupt.  China is about to  get out of Venezuela’s economy, leaving Venezuela with a payable to China of about US$20 billion.

Another point: China is a communist state but is engaged in capitalist  practices. As a communist state, it owns or controls corporations and businesses. If it wants to stop a certain business, it can do so efficiently without or with little  objection from the corporations. China is a dictatorship, after all. On the other hand, as one undertaking capitalist concepts, its motivation is to get as much from the other party in the contract. If it thinks that the other party-state, like the Philippines, into which it poured so much financial accommodations, is not living up to expectation, China is capable of  stopping projects, delaying or even halting financial loans, and retarding drawdowns of payments.  The other party-state is thus brought to its knees  by China and compelled to accede to whatever further onerous conditions  it will impose. 

China can be a bully. The Philippines had been a previous victim when China engaged in grabbing our islands, ignoring all overtures for substantial and meaningful  negotiations in violation of treaty obligations.

And so my unsolicited advice to President Duterte: Proceed with caution. Your fascination with China might burn us all like Rizal’s moth, felled by the flames of the oil lamp it so admired, or Icarus whose wings melted because he did not keep distance from the sun and flew too high for his own good. Should our relationship with China prove to be onerously one-sided, it is the Filipino people who will ultimately pay the price, both emotionally and financially. 

Atty. Sta. Maria is TV5 resident legal analyst and is dean of the FEU Institute of Law. He is also co-host of the weekday program "Relasyon" on Radyo5.