Foreign Debt: The NDFP View

President Gloria Macapagal-Arroyo’s recent admission that the country is in a fiscal crisis has caused the issue of automatically appropriating funds for debt servicing to be increasingly being questioned. Bulatlat interviewed NDFP chief negotiator Luis Jalandoni, who is now in the country, on the debt problem and the solution advocated by the NDFP.

BY ALEXANDER MARTIN REMOLLINO
Bulatlat

Bulatlat interviewed NDFP chief negotiator Luis Jalandoni, who is now in the country, on the debt problem and the solution advocated by the NDFP. Below are excerpts from the interview:

Rep. Eduardo Zialcita (who belongs to the administration Lakas-CMD) mentioned at the recent launch of the Alliance of Concerned Citizens Opposed to Unjust New Taxes (ACCOUNT) that the Philippines is now P3.35 trillion ($59.8 billion) deep in debt – meaning that every Filipino owes P41,000 ($732.14). One of the solutions he proposes for the fiscal crisis is the combination of debt repudiation and debt renegotiation. What can you say about this position?

I think that is a good position, because we all know that the foreign debt is a long-standing problem of the Philippines and a sign of the exploitation by foreign multinationals and foreign governments of the Philippines.

However much we pay, our debt just keeps growing and growing, and now we have figures showing as much as 94 percent of revenues may be used to service foreign debt: not just the interest earnings, but also the amortization of the principal. Or, if we talk of the budget, 33 percent of the national budget for next year is for interest earnings, and 35 percent off-budget for amortization.

So the foreign debt problem has to be solved by the Filipino people.

The way the NDFP looks at it, there should be cancellation of parts of the foreign debt that are clearly fraudulent and anti-people, like the loan for the Bataan Nuclear Power Plant, for which we pay $2.1 billion and $655,000 interest per day. Such debts should surely be cancelled.

There is a possibility that some parts of the debt may be renegotiated, if these have no use for the Filipino people.

So parts would be cancelled, parts would be renegotiated or written down. Payment for foreign debt should be trimmed down to maybe just 10 percent, unlike now when it can reach as much as 94 percent of revenues or 70 percent of the national budget.

Based on the NDFP’s studies, are there figures on how much of the country’s debt is downright onerous?

There are ongoing studies, but we can already see that there is a large portion of this that can really be repudiated because these are clearly anti-people and were used for fraud... The experts in the Reciprocal Working Committere for the Comprehensive Agreement on Social and Economic Reforms (CASER) are working this out for the peace talks in Oslo.

Representative Zialcita also said that if debt repudiation or at least debt renegotiation would be carried out, the government may earn more than it projects to earn from its proposed eight new revenue measures.

Yes, I think so. There should also be a stop to corruption in the Bureau of Internal Revenue (BIR), Customs, and other parts of the government, as well as taking care of the Napocor (National Power Corporation) problem, a P600-billion debt and losses of P100 billion per year.

There are other possible measures. The government should not impose new taxes on the people without looking at all the solutions that should be undertaken.

As far as the NDFP is concerned, the solution of the foreign debt will require the firm upholding, defense, and assertion of the sovereignty of the Filipino people, because part of dealing with the foreign debt is asserting that economic and human resources of the Philippines will be for the benefit of the Filipino people.

For example, our oil and gas resources, like in the Malampaya project – 90 percent of that is in the hands of the U.S. and Dutch and British interests in Royal Dutch Shell, and only 10 percent is in the hands of the PNOC (Philippine National Oil Company), and the government is even being forced to sell that.

Such resources in Malampaya, and Liguasan Marsh with its huge gas and oil resources, should be for the Filipino people.

The CASER contains a provision that “As an immediate corrective measure, the GRP's (Government of the Republic of the Philippines) law on automatic appropriation for the public portion of the foreign debt service shall be repealed. ”

Repealed, yes. Thirty-eight percent of the budget going to debt servicing, that is very wrong and too big. That should be repealed, and the policy of selective renegotiation or writing down is what has to be done.

But doesn’t the Philippine Constitution prohibit automatic appropriations for debt servicing? It appears that particular provision is not being followed.

Ah, in the 1987 Constitution. Much of the Constitution is not being followed. The entry of foreign troops and military exercises, those are against the Constitution.

But when the regime is out and out in its servility, the Constitution is disregarded – even though it is a GRP constitution.

There is also a provision that “Foreign borrowing shall be reduced, except to finance deferred payments for the importation of equipment and technology for the establishment and development of heavy and basic industries.” Could you explain this a bit further?

We can still see that there is foreign currency to be gained through exports, and then we try not to have only exports of primary products: we should have processing here also to gain more. And we really have a need for capital equipment, etc.

So borrowing will not be totally taken out, but reduced to reasonable proportions, for things that we really need. And then when we use something from abroad, we would like to have a transfer of technology in due time, within a few years.

We are not against foreign investments or foreign relations with other countries. What we want is that the foreign relations will be equal in character, will be mutually beneficial to the Filipino people and to those who are investing, and not unequal and exploitative of the Filipino people.

So that part on foreign investment and foreign borrowing, is this in essence similar to what was called for by the late Sen. Claro M. Recto?

Yes, and we can see nationalists among the businessmen who have such an outlook: that our patrimony and economic resources should be for the Filipino people. So we don’t go against foreign relations: we are not self-contained.

We have many natural resources which, if developed well, will provide sufficiently for our population. But we know that we need to have relations with other countries – exercising however the principle of national sovereignty, meaning that the interests of the Filipino people will be primary in carrying out this policy, and that the relations will be beneficial to the Filipino people as they can also be beneficial to others.

Profit-taking should be regulated. There should be reinvestment here.

All these regulations can be made by a government that is concerned with the interest of the Filipino people.

And at the same time, foreign borrowing should involve thoroughgoing negotiations?

Oh, yes, thoroughgoing negotiations between two parties that are sovereign and working out what is to the interest of each country – not the master-puppet relation, but relation between two parties that are equal in position. Especially since our rich natural resources – gas, oil, gold, bauxite; there are so many – plus our marine and agricultural resources, these are for the benefit of the Filipino people.

Now if other countries want to participate in developing these, they can do so, through regulated agreements that will be benefiting the Filipino people, and they can have their reasonable share in profit.

Zialcita did not explain if there is a connection between the debt problem and what is called neocolonial economics. Does the NDFP think these are linked?

In the neocolonial pattern of trade and investment, the foreign debt through usurious loans becomes a major aspect of the exploitation leading to death actually. Aside from the foreign debt through usurious loans, there is also the unreasonable profit that they get from investments and the neocolonial pattern of trade that results in this kind of huge foreign debt which becomes unpayable and already unmanageable. Now when we look at that neocolonial pattern of trade, then we know that it is a major cause.

It is part of the semi-colonial, semi-feudal nature of the system prevailing now, and that’s what we have to break. So we have to go into a program of national industrialization coupled with genuine land reform to destroy this neocolonial pattern of trade and set up an independent and progressive system that is not backward and not totally dependent on loans – usurious loans – that drive the country to a debt trap.

Would you also say that the foreign debt problem stems, among other things, from what is described as the export-oriented, import-dependent character of the economy?

That’s part, I think, of the neocolonial pattern of trade. It is export-oriented and all our products are primary products being taken out, and so it means the exploitation of our natural and human resources without the people gaining from these.

Is that because we are confined to exporting cheap raw materials and importing expensive semi-processed goods?

Yes, that’s part of it, so imagine all our raw materials are exported and then they come back at very high prices! Well actually, we (can) also develop, through national industrialization, our capacity to process these products and sell them as finished products also to other countries; or at least take a huge part of the processing in our own hands.

Based on the studies of the NDFP, just how much capacity does the Philippines have for national industrialization?

Well, just think.

We have huge human resources, with very skilled and intelligent and capable personnel for different fields. Second, we have huge natural resources with so many rich mineral resources, and also marine and agricultural resources.

These are basic ingredients for national industrialization coupled with genuine land reform. So we can see that it’s really there, it’s just that the system has to be changed. We have the capacity based on our rich human resources and also very extensive natural resources.

That’s why all these multinationals greedy for profit are swarming all over the Philippines. They want to get the gold, the oil, the gas, the nickel, the bauxite, the diamonds – besides of course the U.S. wanting to control the whole Southeast Asian region.

When the goals of the struggle are realized, what role will genuine land reform play in the process of national industrialization?

Oh, agrarian reform has a vital role. It will sort of form the base so that the huge army of the peasantry that’s now impoverished because of this system will have the capacity to develop also agro-industries...so we will also have the capacity to combine agricultural development with light industry, and the possibility of heavy industry.

So the combination of these three will bring about what is needed for the Philippines to be prosperous and independent. Bulatlat 

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