Infrastructure Investment News Analysis

Costly roll of the dice

The Millennium Challenge Corporation (MCC), the US aid agency which sought to focus Philippine President Rodrigo Duterte’s attention on the error of his ways – in the conduct of his war on drugs, in particular – is now discovering the error of its ways; that threatening to close-off assistance funding to the island republic succeeded in pushing it closer into a Chinese embrace … just about the last thing the Washington administration needed right now.

Duterte has virtually told the US that it can ‘stick its money’ as new funding from China – we have to say, predictably – will be forthcoming and which will more than compensate for the potential loss of the MCC grant. The Philippine president didn’t dress it up: “We can survive without American money,” he said.

This, then, has turned out to be a fairly reckless throw of the dice by the MCC; certainly an expensive gamble. Two days ago, following the funding agency’s announcement last week that grant aid for the Philippines would need to be reassessed over human-rights and rule-of-law concerns, Duterte said that two military pacts are now in danger of being scrapped – American boots off the ground – smashing the ball back squarely into the American court and leaving US diplomats in Manila rushing for the fire extinguisher.

The US Embassy in Manila has now issued a statement to the effect that Washington would “work closely” with the Duterte administration to address any concerns it may have. But this looks like a case of too little, too late – for Finance Secretary, Carlos Dominguez, had already held meetings in the Philippine capital with the president of the China-led Asia Infrastructure Investment Bank (AIIB), Jin Liqun. And what they discussed was funding.

The Beijing-headquartered AIIB, seen by some as a rival to the World Bank, is a global financial institution capitalised at US$100 billion; and the Philippines is a fully paid-up member. In fact, with 1.11% voting rights, it’s the third largest stakeholder in the lender of any country in the Association of Southeast Asian Nations – Indonesia has 3.17% and Thailand has 1.50%.

There’s no clear indication of how much the MCC package would be worth, though it’s believed to be considerably less that the US$434 million which the agency made available in its 2011-2016 grant. Much clearer is what the AIIB will be facilitating – it will jointly fund, along with the World Bank, the US$470 million Manila flood-control project, and jointly fund, along with the Asian Development Bank, the US$756 million Edsa Bus Rapid Transit System.

These two large projects which aim to end much of the transport chaos of Metro Manila, are part of Duterte’s pledged PHP8.2 trillion spend for his “Golden Age of Infrastructure” to be carried out over the term of his presidency.

“The Philippines’ membership to the AIIB would provide the government another source of long-term funding … for the Duterte administration’s unprecedented infrastructure buildup,” Dominguez said yesterday in a statement. In it he quoted Jin as saying: “We are all very eager to finalise the infrastructure projects … This time, we are very happy we can really talk about something to do in your country”.

So there we have it, this is now a done deal as far as these projects are concerned. But this isn’t just about funding pieces of infrastructure – this is about something far bigger; and Washington knows it because it’s been in the same game for a long time. This is about buying influence and right now more of that is being done right across Southeast Asia with renminbi than it is with US dollars. And here’s the simple reason why …

China wants trade; basically that’s it. It wants to mop up as much of it as it can, and particularly in its extended neighbourhood – everywhere that can geographically be described as Asia. It’s not concerned with the internal politics of these countries – in fact, it makes a point of not being for the oft-stated reason that it doesn’t want anyone meddling in its internal affairs.

America also wants trade and as much of it globally as possible. But it wants more; it believes that it has a mission to export its particular brand of democracy – along with burgers and computers – to its overseas markets. And more than that, it wants compliance – not just with US-forged rules, regulations and standards, but with its notions of how societies should (or rather, must) operate.

China doesn’t seek to change the cultural norms of a country; the US does if that country doesn’t comply with its norms. Washington – this Washington; the one presided over by Barack Obama – has little tolerance (forget understanding) for nations whose laws fail to meet its progressive-Left standard. Such countries are regarded as ‘rogue’ and need to be corrected.

Ideally, it would like to win the hearts and minds of nations it deems ripe for conversion – often small, developing economies – through the shrewd use of aid programmes and by promoting American ideals as that greener grass on the other side. But if the carrot doesn’t work, it’ll bring out the stick. And that’s what we’ve been witnessing in its treatment of Duterte’s Philippines. It’s not followed instructions; its not come to heel – so publicly criticise its leader and threaten sanctions. Right. How’s that working out?

China, meanwhile, only had to sit back and watch the inevitable unfold and then, by means of precision pragmatism, extend a helping hand to its Asian neighbour, to help it out of a difficulty. And so, through trade and a much clearer cultural understanding it was able to bring it into its fold. It’s not so much that China won the tug-of-war for the Philippines with its offers of aid and trade, it’s that America lost it with its demands and reprimands. The one attracted, the other repelled.

The question now is will Washington – which includes the Prog-Left fellow travellers in the media and the civil liberties establishment – continue to dig itself deeper into this sink-hole over the Philippines, or will it realise that if it stops banging its head against the wall it’s headache might stop?

Actually, at this stage that’s academic – as Duterte remarked: “I will let Obama fade away and if he disappears, then I will begin to reassess”. The new reality is that Washington’s about to be washed clean of Liberal ideologues who believe they have the divine right (figuratively speaking because most don’t subscribe to “notions of God”) to impose their gospels of human rights and rule of law universally.

The good news for US-Philippines relations is that incoming President Donald Trump has zero interest in ideology and less in foisting any of it on anyone else. His approach will be more in line with that of Beijing; after all, he’s also a pragmatist. And that makes 2017 look a whole lot rosier than 2016 on both sides of the Pacific.

106 Comments

  • The US blew it big time. They thought Duterte was another puppet like the predecessors from Cory down to her son. Now they need to pack up and leave the PHL and the containment strategy of the US against China has been seriously punctured. Duterte is a disciple of geopolitics.

    • tama ka Rolita Zerna…kasi hindi nila mapasunod si F.E.MARCOS sa gusto nila…kasi alam ni MARCOS na mas mayaman pa ang PILIPINAS kay sa AMERICA…kaya nga bumwelo ng husto si MARCOS ng pagpapa unlad ng PILIPINAS…na nakita ng AMERICA na kung hindi sila gagawa ng paraan mapaalis si MARCOS kilan man hindi na nila magagawa ang pasunurin pa ang mga namumuno sa PILIPINAS.

    • Every nation has its own interest to protect, us is one of them. How about china? I know u knew it in the 1st place. Our claim in west phil sea is at stake, do u think it is best for us to set aside our claim in exchange of a signal for conditional fishing on that area which is supposed to be ours on the basis of unclos declaration of eez to the phils? And finally the international court decision that ruled in our favor. Its the last admins. Achievement that will go to waste if not pushed, how can the nxt generation claim what is ours if these present govt. Keept it unattended in excahange of ample alms from a clever would be friend? Just wait and see coz all the signs are slowly uncovered. Good day and thank u!

    • Please bear in mind that when China started to build structures in the contested reefs, the mighty USA knew it thru their surveillance satellites.

      What did the mighty USA do then?

      Imagine the enormousity of construction that China did by way of bringing the required materials and equipment.

      What is the mighty USA’s purpose on why they did not even lift a finger knowing that there is PH-US MDT and EDCA which states that US will assist PH in case there is an invasion to PH sovereignty.

      MCC, WB and other US lending institution knew that the money they lent will go into corruption yet they proceeded because they want PH to be eternally indebted to them.

      Here comes an administration who is transparent enough and is more than willing to alleviate the miseries of the people yet US still has the gall to force PH to tow their line.

      Pray tell.

      • It will not be good for the country to ally ourselves to either U.S. or China as they both have stakes and interests in here. But for now I think Duterte is just buying his time, the Chinese will not back down by just filing a protest. This has been done by the previous admin and we even won the Hague ruling! But Who will enforce the Hague ruling?! The U.S. did not enforce it, and suggest that we should solved this by peaceful means?! This is what the U.S. wants, to maintain the “Status Quo” because we will always be dependent on them in this status quo.

        We cannot confront China now because our AFP nearly lacked anything that is Modern.. Insults and curses against the Chinese wont kill them, much more make them stand down in their claim. Bear in mind that our defense people are actively checking and shopping wares for the military in Israel, Russia, and just recently Portugal. So I think Duterte is just buying his time and playing politics (as this is the only option we have currently)

    • Do not worry too much about our claim in the west Philippines sea. It’s there. Time will tell. For now, our focus is the welfare of all Filipinos. We can take it back to us in due time.

    • Mannie Quicho first that is the south China sea ever since and will be its name till the end of time. yes the disputed islands are ours. but due to your selective truth, your american pet abNOY Aquinto sold those islands to the chinese himself, he even approved the quarrying of sand from Zambales for them to build their bases! premier Xi Jin Ping has admitted to it and officially announced to his people to brace for world war 3 because now they have a rightful claim, the international court has been deceived by the last administration, so i cant wait for their reaction. and regarding alms you can keep begging but you keep us out for we are not beggars but equals with any first world! you can send your kids and your whole family to go to war with china but you can never tag any of us along dont worry we will cheer for you!!!

  • Great leaders of the past like Pres Quezon and Marcos, and Senator Mirriam Santiago, have stood up to the US for treating the Philippines as a vassal country and not a true ally.

    Given that the provision in Article II of the Constitution calls for an INDEPENDENT foreign policy, the previous Presidents should be made accountable for not imposing said provision.

  • We will feel sorry if the u s dont help the philippines anymore but we will be happy because we will grow as an independent nation that no one will say do this and do that.

  • its time that we filipinos must take our spines of bravery to stand up and work on our own. we are a strong nation founded with hopes and dignity….let us suffice ourselves with our own vision of progress and excellent strategies…its time to STOP BEGGING & STOP BEING TOYED.

  • … i wish US will stop threatening our President Mayor because it won’t work… we don’t owe them anything… whatever aid they give are compensated by letting them use our lands and bases for military exercises.
    … i still pray for Peace especially on the coming years to come.
    … Merry Christmas, Volatilian !!!

  • The Volatilian’s logic or the abscence of it is as volatile as dry ice. Kaya po ganoon dahil po ang Volatilian ay sumusuporta sa panguluhan ng isang bano, na gawa ng mga bano, at para sa mga bano. Bow.

  • Do not worry too much about our claim in the west Philippines sea. It’s there. Time will tell. For now, our focus is the welfare of all Filipinos. We can take it back to us in due time.

    • Deuteronomy 32:20 And he said, I will hide my face from them, I will see what their end shall be: for they are a very froward generation, children in whom is no faith.

      Matthew 17:20 And Jesus said unto them, Because of your unbelief: for verily I say unto you, If ye have faith as a grain of mustard seed, ye shall say unto this mountain, Remove hence to yonder place; and it shall remove; and nothing shall be impossible unto you.

  • our smart president is right in his decision to get off that mellinium aid..for we are not beggars to feed on the scraps fallen under the table..we filipinos deserve foods on top of the table..the reason why pinos are treated second class people are bcause of that notion that they are beggars,,they have a corrupt officials selling their constituency for their pockets..anong akala nila hindi tau mabubuhay kung hindi nila ibigay ang kapiranggot na yon..
    pinos can live comfortably even without that aid..which sometimes leads to corruption.

  • If US is a true ally and freind to Phils. They will not do that kind of move. Phils. Is independent country there is no need for other country and a freind to manipulate their ally. It is not proper to lend a help to a freind and ask something in return. Aid is a help that don”t need something in return.

  • and then the message that they will always be working closely ithe Pinas, tama si PRRD, they’re treating like dogs with short lease, dangling those aid, then pulling it back from our grasp ….

  • That was Obama, Clinton and Kerry pushing that crap. We have what is expected to be a much nicer President in Donald Trump. An American President that is not tied to the underworld and stands for what is right.

  • the americans are government are suckers,the last time I remembered after the gulf war,they sucks oil from kuwait for protections because they make kuwait a nation.we have been sucks by usa since then and only now we come to our senses because of our president who open the hidden values of america,it was marcos who had done this before but it was then stop and change because of aquino an instrument of cia tobaco.now we must fight for our own not slave and colony as they look like.to let them know that we are not egnorant like them.

    • DISAGREE…THIER AID AY HINDI BIGAY DAHIL MAY KAPALIT, MAY CONDITION…THE SAID AID IS ACTUALLY OUR SUPPOSED REBATES DAHIL NANGUNGUTANG ANG PILIPINAS SA MGA LENDING INSTITUTION NA PINAMUMUNOAN NG U.S..BUT B4 THEY WILL LEND PHILIPPINES MAY TAX INCREASE SILA NA IPAPAGAWA.mostly affected r the ordinary pilipinos dahil sa consumer base product sila normally nag dadag..AT SA MGA BIG BUSINESSES NAGBIBIGAY NAMAN SILA NG TAX HOLIDAYS…THE REALITY, THE U.S AID MONEY IS ACTUALLY GALING DIN SA PILIPINAS.PINAIKOT LANG NG U.S ANG PERA NG PILIPINAS…KUNG LAHAT NG NAMUNO SA PILIPINAS AY KATULAD NI PRES MARCOS AT PRES DUTERTE, ANG PILIPNAS AY NAPAKA ASENSADO NA..THE PHILIPPINES NEEDS DUTERTE ALIKE FOR 6 CONSECUTIVE TERM PARA SA TULOY TULOY NA PAGBABAGO AT PAG ASENSO..

  • american aid always comes with strings attached,that’s a fact of life.kaya lahat ng naging presidente natin are likes puppets on a string,they have to dance to what the puppeteer says.until digong came.now they know they don’t own us.

    • Any aid from any country comes with strings attached,so it’s not just Americans ! You’ll find out the hard way that aid from china/Russia comes with a lot more changes than you realize,and by the time you do realize it,it will be too late ! If you owe those nations,they OWN you !!!

    • Donald Nixon maybe you’re right but it depends on what kind of strings.how long have we depended on american aid and what good has it done for us?so maybe it’s time to try something new.And because digong has shown true and selfless love for the filipino people,i trust him to do right.

  • Pati ba naman MCC pinopolitika pa. Daang taon na may base ang US dito at wala silang bayad. Kung tutuusin amerika na may kontrol sa mcc ang may malaking pagkakautang pa sa Pinas. Ganyan ang gnawa nila sa CUBA 50 years na trade embargo pero nabuhay ang CUBA.

    Ang pilipinas ay mayaman sa natural resources mataba ang mga lupain. Magtanim lang tayo ng ating mga produktong makakainabubuhay ang mga pnoy. Ang mga magagalit o magwawala ay yong mga elitista na hindi marunong magpatulo ng dugo at pawis para makapamuhay.

  • Seas & Oceans are international. Any country that tries to impede free trade is doomed to conflict. It is telling that USA is not a member of UNCLOS China is. But very very expensive US Lawyers were employed by PH

  • Di naman namin naramdaman aid na yan…kung mayron man binigay malamang napunta lang sa magnanakaw…kaya kung tutu-usin wala din..

    Mabuti pa wag nalang…hanapbuhay nalang ng sarili…

  • People of the the Philippines , including all of you losers and hypocrites (read: Yellows ), should know by now that the president has been right all along. Yet we can move forward faster if only these assholes ( Including media) stay out of the way. 5 years is not eternity. Play your cards well and you might regain power. No way can you impose now.

  • IT MAKES SENSE, U.S. MISCALCULATED, U.S. GOT A BITTER TASTE OF THEIR OWN MEDICINE, FOR THEIR ARROGANCE, AND THE DECEPTIONS THEY HAVE PERPETUATED, MAINTAINING THE PHILIPPINES THEIR MENDICANT COLONIAL STATE…..HEHE

  • fuck! the americans..,Let the marcoses – pull out their gold assets at citibank of New york.,it worths 3.2 trillion dollars..enough to make good investment with china.. We will see what happened..

    • the US has been helping the Philippines since 1945 (71 years) and the latter is still poor…I wonder what kind of help it was (may have been peanuts compared to those given to others)

    • POLITICAL DRAMA OF THE PRESIDENT SO THAT HE CAN BOAST OF HIS DOINGS. STILL HIS WRONGDOINGS TO THE COUNTRY WERE STILL WAITING TO BE DISCOVERED. GOOD POLITICIAN HE IS, I DON’T THINK SO. ONLY DEATH LOVING CITIZENS IF THE COUNTRY WOULD LOVE HIM.

    • Ramon Reyes The US was never supposed to be the sole support of the Philippines. Your problem is leadership, you have never had a great leader like Singapore and South Korea have had. Blaming the US is just a waste. We did not help Singapore, New Zealand and other successful countries. We helped Japan and the Philippines after WWII, it was the Japanese that rebuilt their country.

  • wala ring kasigurohan kung uunlad ba ang bansa sa pamumuno nang ating presidente. hindi rin natin masisiguro na mawawala na ang mga corrupt na official nang gobyerno. baka dumami pa nga dahil naglitawan na ngayon na mga drug lord ang mga sumusuporta sa pagkandidato ng presidente.

  • They dont like president duterte simply because they cannot control him… the true intention of their assistance was to ask more than what they gave…. if they only analyze it properly… the assistance would go into the people of the philippines not by some officer in the government just like the past administration….

  • People wg tyo msydo myabng wg ntin compare s cuba ang pilipins ang cuba hindi umusbong ngkunwari clang nkaraos pero hindi nmn. ng suffer cla ng mlupit kya s pgkamaty ni castro unti unti clang ng babalik loob s US pero kailngn muna nilng ayusin ang humn rights nila kc iniwn din cla ng russia wa cla ibng mlpitn america p din bkit d cla lumpit s china ndala n cla mgnda ang relasyon ntin s america sinisira lng ng iln dhil s sriling interes wg tyo mnisi ng iba kya tyo d ngybong ay dhil s mga politikong gahamn n hanggang ngyon ay ptuloy prin nting iniluluklok s pwesto my ngsasabi d rw nila nramdmn ang aid dhil ng yn s mga politikong ghmn n nkaupo prin at ang iba ay ngbabalik s pwesto d nmn kaila n kpg ny skuna s ating byn cno b ang lging nauuna tumulong cgurado china yn he he he kailngn p b memorize yn ang mga kano d ng lng tyo mrunong mgpsalamat ngyayabng p plibhasa wg nmn sna d tyo ang direktong napektuhan kya d ntin nrmdmn ang mga ngawa at naitulong nila mtnong ko kyo s mga bnsng nsalnta cno b ang ntulungn ng mga china wla cla pkialm ngyon ipgyayabng mo p n nndyan cla s tbi ntin kya cla gnyn ngyon s atin kc mismo s sriling bibig ng ating wise president d nya gagawin sandign ang desisyon ng unclos as long as china will keep its mouth shut lbn s knya nasaan ang interes ng bnsa ntin d ko kc mlman kung ano ang benefit ntin doon cla mga nakaupo cigurado meron mtuto tyong mgpasalamt at tumnw ng utng n loob iln b ang mga minhan n sumira s ating kaliksan n pinsra ng denr at cno ang ngmamay ari mga intsik dba bkit ng b cya sinibk at muling ibinalik halata kc msyado

  • BYE BYE – -I knew several friends who worked there and really this office pay much. . . I met one guy from that office in one of the workshop – – – sobrang yabang – – -sa iba – – – he he he mabait naman sa akin ^_^ nay noong nag critiquing ng presentation weeeh laglag siya. USAID funds goes to their own pocket as well – – – with hefty foreign Consultancy fees, plus local consultants? ? ? and the local employees ^_^

  • There’s a difference in giving something with all their heart, and giving something if you follow their desires. That approach from USAID will fit in with a Mar Roxas, Aquino, and Robredo, but not to Duterte who has a lot of pride.

  • Una hiv virus yan naging full blown atAIDS na oh maraming nkinabang na kurap dyan…nkatikim ba mga pilipino lalo na yolanda victims!!hahaha sana una nyo e report kung sino nkinabang pweeeeeee 72billion walang ntapos na bahay kung meron man mabuti pa bahay ng aso ni aquino mganda yung bahay na pinagawa nya ngag papicture pa sya di nahiya !!malaki international aid saan na???yung dswd nilibing lang mga aid mas ginusto pa ilibing kaysa pamigay sa tao. Sana kayo sa media nereport nyo yan!!sus !!!

  • US and China are just the same in granting/helping (kuno!) our country development… US will give us Funds only if allowed to use our Military Camps as their landing Bases and puppet-President… China will give us Funds only if allowed to stay in island & pump our Natural Resources e.g. Natural Gas deposits & haul our Black Sand for free….Both the same banana….unrespectful INTRUDERS/ messing in our National Territory…Both are Imperialist!!! No choice do yah?