In the run-up to the Manila visit of US President Barack Obama, mass media attention has been riveted towards the cat-and-mouse game of Philippine and Chinese naval forces near the Ayungin Shoal and the high-profile declarations of support by the US for its defense treaty allies, Japan and the Philippines, in light of their territorial and maritime disputes with China.
In the meantime, a far more imminent and dangerous threat to national sovereignty and territorial integrity called the RP-US Increased Defense Cooperation Agreement (purportedly the lynchpin to beefing up the country’s external defense capabilities), as well as serious moves to further undermine national economic sovereignty at the expense of national development goals, social equity, and the people’s overarching welfare through the latest Charter Change (Cha-cha) offensive in Congress — have not merited as much sustained media, and ergo public, attention as they should.
In order to draw attention to these impending affronts on our people’s immediate and long-term interests and general well-being (not to mention aspirations for national development, social progress and a just peace) we wish to train a probing light onto the latest Cha-cha bid being railroaded in Congress. The House Committee on Constitutional Amendments has in fact peremptorily approved Resolution of Both Houses (RBH) No. 1 to amend what remains of nationalist economic provisions in the 1987 Philippine Constitution and has set this for plenary debates on May 5, barely a month from today.
One would think that the dire effects of the neoliberal policy environment of the past three decades under the “Freedom Constitution” of 1987 should be enough to give pause to the “free marketeers” and “globalists” among our policymakers in the executive and legislative departments representing foreign and domestic big business interests.
Apparently the simplistic and unsubstantiated line — the Philippine economy is backward because of the lack of capital; foreign investments can fill in that lack but restrictive Constitutional provisions act as a disincentive; and removing these Constitutional barriers will automatically up the volume of foreign investments thereby assuring vibrant economic activity, job creation and invariably, sustained growth and development — continues to have a stranglehold on official policy discourse and decision-making.
This is without a doubt attributable to the various “incentives,” material and otherwise, that powerful lobby groups (including interventions emanating from the Foreign Chambers of Commerce, international financial institutions such as the International Monetary Fund, and the embassies of the advanced capitalist countries in deep economic crisis) have utilized. This latest incarnation of Cha-cha in Congress that claims to be limited to economic amendments cannot be an exception.
Thus it was refreshing to have been able to participate in a recent round-table discussion among economic policy experts, academics, small-to-medium business groups, social activists, farmers’ organizations, legislators and media practitioners that highlighted and expounded on very straightforward and quite compelling arguments against RBH No. 1.
Bayan Muna representative Neri Colmenares underscored the highly suspicious speed and gross lack of democratic consultations that attended the passage of the Cha-cha bill at the committee level in the Lower House. Mr. Colmenares raised two major questions that remain unsatisfactorily addressed to date: 1.) whether Congress can introduce wide-ranging changes in the Charter “just like passing a normal law,” and, 2.) whether Congress can be allowed a free hand in overturning the protectionist, pro-Filipino provisions of the Charter by the mere exigency of tacking on the phrase “unless otherwise provided by law” to pertinent sections on natural resources, land ownership, strategic enterprises, public utilities, education, mass media and advertising.
Speaker Sonny Belmonte and his pro-Cha-cha cohorts are apparently taking advantage of the ambiguity in the 1987 Constitution about the method of Charter amendments via two-thirds vote of the two houses of Congress but without the necessity of convening a Constituent Assembly for the express purpose. More insidiously, Cha-cha proponents seek to avoid the necessity of rigorous crafting of Charter amendments on the aforementioned sensitive aspects of the national economy and the attendant vigorous debate such will entail by assigning omnibus power to the “honorable members” of Congress to henceforth make the changes as only as they deem necessary or desirable.
Private think tank, Ibon Foundation, through its Executive Director Sonny Africa, has sought to demolish some major assumptions of the Cha-cha proponents. For one, the conventional wisdom that foreign investments per se always redound to the benefit of the local economy, much more, the majority of the people, is belied by the Philippine experience of increasing foreign direct investment (FDI) since the 1980s but with little to show in terms of overall economic development. According to IBON, annual FDI inflows are currently 15 times larger than in the early ’80s from $243 million (1981) to $3.6 billion (2013). However, “(r) ising FDI has been accompanied by increasing unemployment, increasing labor export, falling real wages, shrinking domestic manufacturing and more volatile and exclusionary growth.” IBON provides the data to corroborate their analysis.
Part of the Cha-cha offensive is the conscious effort to denigrate the necessity and overall benefits of economic protectionism and state regulation of foreign capital. IBON takes pains to show how this baseless claim flies in the face of the clear historical precedents in a diverse range of countries, whether these be the United States of America, the United Kingdom, France, Germany and Japan in the late 19th century; South Korea and Taiwan in the ’60s and ’70s; and China, Russia and Cuba during their respective periods of revolutionary overhaul. All these countries resorted, at certain stages in their development, to state protection of the domestic economy from unbridled penetration by foreign capital.
While there is a place in underdeveloped or backward economies, such as that of the Philippines, for foreign capital’s contribution to national development, this only comes about with deliberate, responsible and democratic government intervention. Otherwise, foreign capital, especially in the hands of transnational corporations, will, by nature, put a premium on profit-making regardless of, or even in contradiction to, a country’s development goals. For example, while governments in the Third World have sought to impose certain requirements for investments in manufacturing like technology transfer and some percentage of locally sourced raw materials in the end commodities produced, or some form of equitable sharing in revenue generation for the exploitation of natural resources such as in mining or oil and gas exploration, advanced capitalist countries have consistently opposed these whether in bilateral or multilateral forums.
Moreover, since the global financial and economic crisis in 2008, even the more advanced economies and developed countries have resorted to protection and regulation. IBON cites the United Nations Conference on Trade and Development (UNCTAD) tracking of national regulatory changes worldwide since 2000 showing an increasing trend towards regulations and restrictions especially in the extractive, agribusiness and financial sectors. IBON also cites the Centre for Economic Policy Research (CEPR) with its similar observation of rising protectionism amid the worsening global crisis. In fact, the US, European Union (EU), Germany, Russia, China and India are leading the pack.
Concrete analysis of historical experience, whether global or Philippine, clearly trumps the uncritical and even unthinking acceptance of foreign capital as the be-all and end-all of domestic growth and development. Most especially so if we speak of growth for the majority of the people, not just for the elite few and their foreign business patrons and partners; and of genuine development for the entire country, not just for a few economic enclaves in highly urbanized areas that are merely a cog in the global supply, production, and marketing chain controlled by transnational corporations, in turn based in the advanced centers of capitalism.#
(Next week, Cha-cha on foreign land ownership, exploitation of natural resources, ownership of public utilities, educational institutions and mass media and advertising, and their concomitant political implications.)
Published in Business World
April 10, 2014