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Commentary
The Economics of Charter Change

By Arnold J. Padilla

Just like in the past, the current move to amend the Constitution is very much driven by the globalization agenda.

In fact, politicians are only in disagreement over the term limits of elective officials and how the Charter change (Cha-cha) shall be carried out. But they are one in saying that the country’s Constitution should be in tune with the times, meaning it must conform to globalization.

Rapid globalization in the 1990s has drastically affected the views of many policy makers on the Constitution. In justifying his Constitutional Correction for Development (Concord), ousted President Joseph Estrada, once argued protectionism in a global economy is “anti-people, anti-democratic, and anti-Filipino.”

It is true that the International Monetary Fund (IMF) and the World Bank (WB) have not categorically cited Cha-cha in their structural reform arrangements with the Philippines. Nonetheless, their globalist prescriptions practically require the bankrupt government to restructure the country’s supreme law.

Thus, Estrada’s Concord aimed to amend the Constitution to allow 100% foreign ownership in retail trade, utilities, mass media, and lands. Cha-cha proponents during former President Fidel Ramos’s term, on the other hand, identified the review of Article XII (National Economy and Patrimony) as a proposed parameter for discussion.

Liberalization, deregulation, and privatization usually run in direct contrast with the Constitution. Changing the highest law of the land therefore ensures consistency with the country s commitment to globalization.

It is in this sense that the pressure to amend the Constitution really comes from globalization. Under the so-called ASEAN Vision 2020, for instance, countries are envisioning a completely liberalized economic environment where national treatment of foreign investors and the free flow of skilled labor are allowed. This involves not only Southeast Asian countries but also even those outside the region.

The same is true with regards the Multilateral Agreement on Investment (MAI) in the World Trade Organization (WTO). These globalist policies contradict certain constitutional provisions. For example, according to Art. XII, Section 12 of the Constitution, the State shall promote the preferential use of Filipino labor, domestic materials, and locally-produced goods, and adopt measures that make them competitive.

On the other hand, Sec. 1 of the same article provides for the protection of Filipino enterprises against unfair foreign competition and trade practices. Similarly, Sec. 10 requires the State to encourage the formation and operation of Filipino-owned enterprises.

In fact, the government is sometimes forced to slowdown on its globalization thrusts due to constitutional constraints. A case in point is the Supreme Court (SC) decision aborting the sale of Manila Hotel to Malaysian investors. The SC cited provisions in Art. XII of the Constitution that give Filipinos preference in the granting of rights, privileges, and concessions.

The high court also cited Art. XII provisions in declaring Republic Act (RA) 8180 (the first oil deregulation law) unconstitutional. According to the SC, RA 8180 violated constitutional provisions on unfair competition and protection of domestic industries.

It is true of course that even within the framework of the present Constitution, neoliberal economic policies have already been implemented. But this is more an issue of political will on the part of the country’s leaders to resist globalization. The Constitution, in spite of its inherent weaknesses, does not lack provisions that can be invoked to combat neoliberalism.

Globalizing the Constitution

Legislators are still debating on three primary issues regarding Cha-cha. These are the people’s support for Cha-cha, its mode, and timing. Moreover, most of the possible amendments that have surfaced so far are political in nature. However, the possibility of reviving proposed economic amendments to the Constitution such as those Estrada supported are not farfetched.

For example, Sen. John Osmeña has not made secret the proposals that he will push for once the Constitution is opened for amendments. These include a regional structure of government, a parliamentary system, removal of term limits, and 100% foreign ownership of land and public utilities.

Sen. Francis Pangilinan, for his part, said that administration and opposition senators have already reached a consensus over certain constitutional provisions to be changed. These are adopting a federal system of government, the return of power over the police to local government units, and foreign ownership of land and public utilities.

Art. XII, Sec. 11 of the Constitution states that no franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to Filipinos, or to corporations at least 60%-owned by Filipinos. Further, the said provision limits the participation of foreign investors in the governing body of any public utility enterprise to their proportionate share in its capital.

The reason for such provision is obvious. Public utilities such as water and electricity play a strategic role in the people’s day-to-day lives. Thus it is in the country’s best interest that the Philippine government and Filipinos exert substantial control over these utilities. In fact, some nationalist members of the 1986 Constitutional Commission wanted a total ban on foreign participation in public utilities. Unfortunately, they were crushed by the majority.

Allowing 100%-foreign ownership of Philippine public utilities will hasten the process of liberalization and privatization in the country’s public sector. Already, transnational corporations (TNCs) such as the French Lyonnaise des Eaux, and British Northwest Water and Bechtel, control the country’ s water sector. These TNCs and their local counterpart were responsible for the series of water rate hikes in recent years as well as the displacement of around 8,000 workers.

There are many other possible economic amendments detrimental to the national economy and patrimony, local enterprises, workers, and others that will surely surface once the rewriting of the Constitution began.

As major players in the global economy, TNCs stand to benefit from Cha-cha. No wonder that even TNCs operating in the Philippines have expressed overwhelming sentiment for it, as described by Pimentel.

Arroyo's opposition

Before he left for Japan, Malacañang spokesperson Rigoberto Tiglao was quoted as saying that the administration can pursue economic reforms even without a Cha-cha. President Arroyo herself has expressed opposition to Cha-cha though she encourages the debates and will not stop lawmakers from pursuing it.

But Malacañang s initial reaction on moves to tamper the Constitution must be viewed with a cynical eye. For one, Arroyo’s neoliberal economic program will be greatly boosted by Cha-cha. Not to mention that with Cha-cha, the possibility of President Arroyo staying in power beyond 2010 (assuming that she gets reelected) is not entirely remote.

Globalization, Cha-cha, and staying in Malacañang go hand in hand. To stay in power, Arroyo needs the support of its foremost patron, the U.S., as well as foreign creditors like the IMF-WB. To get their support, she has to ensure the total globalization of the Philippine economy, which will be expedited by Cha-cha.

It is apparent that President Arroyo is not sincerely anti-Cha-cha contrary to her media pronouncements. Her appeal to Congress to first rush her 16 pet bills before discussing Cha-cha is an obvious attempt to forge a compromise with the legislators.

Arroyo’s safe statements on Cha-cha is understandable given her sagging popularity among the people, as shown by all poll surveys. Aware how the people overwhelmingly rejected previous moves to alter the Constitution, Malacañang’s strategy is to distance itself from the issue, while not openly and decisively opposing it. After her all-out support to Washington’s global war on terrorism and Balikatan, Arroyo cannot afford to draw another flak from the public.

Indeed, President Arroyo has to make sure that there is a popular clamor for Cha-cha before publicly supporting it. As Tiglao said, the President’s position depends on the results of the public hearings being conducted by Congress.

Cha-cha and national development

IBON concedes that the present Constitution is far from perfect, to say the least. In fact, nationalists who opposed its ratification in 1987 pointed out that the Constitution perpetrates foreign control and lays down the foundation of neocolonialism. The State even invokes its provisions to justify its anti-people policies.

However, the present campaign to tinker with the Constitution aims not to correct such flaws but to exacerbate them. The globalization agenda behind Cha-cha will ensure further subjugation of the country’s political and economic sovereignty.

It also does not help that the prevailing culture of politics in the country is that power ensures protection of economic interests and therefore the need to extend and expand it.

Its proponents want the people to believe that in a rapidly globalizing world, there is no other way but to implement Cha-cha to survive. Such pronouncement is apparently oblivious to the fact that globalization has caused unfathomable misery among countless workers, peasants, urban poor, women, indigenous people, small entrepreneurs, and other poor sectors around the world.

If ever Cha-cha must be pursued, it must be in the context of building a truly independent and progressive nation that looks after the interests of basic social sectors. It implies that the issues in Cha-cha are not simply limited to transparency, consultation, or mode.

It implies that Cha-cha should not be implemented now when the country’s development framework is founded on globalization. Nor should it be implemented 10 years from now (as suggested by President Arroyo) as long as the basic policy is to abide by the dictates of foreign interests. (Reprinted from IBON Foundation) Bulatlat.com

Arnold Padilla is senior researcher at IBON Foundation.

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