How to peddle influence
Manila has bypassed local social and environmental regulations and has paved the way for Chinese dam builders to break ground on projects quickly.
Daily TribuneManila has bypassed local social and environmental regulations and has paved the way for Chinese dam builders to break ground on projects quickly.
A Carnegie Endowment for International Peace-funded in-depth study of Chinese global infrastructure contracts had the Philippines figuring in it prominently.
The research conducted by Alvin Camba, an assistant professor at the Josef Korbel School of International Studies at the University of Denver, indicated that Chinese construction contracts and development finance had increased massively in recent years.
Citing experts, Camba said these projects were largely “transplants designed to offshore and export Chinese technology, labor, and policy programs to host countries.”
It said that under the past administration, “political elites in the Philippines pressed Chinese firms to adapt to some of their demands for political expediency on key infrastructure projects.”
Mentioned as projects falling under this project for expediency were the Kaliwa Dam and the Chico River Pump Irrigation Project, which Camba said had both made substantial progress previously.
The study indicated that “Manila has bypassed local social and environmental regulations and has paved the way for Chinese dam builders to break ground on projects quickly.”
The main motivation for China was satisfying the will of political elites in a targeted country while “limiting or sometimes completely avoiding relationships with opposition elites and ties to civil society members.”
The paper explained that projects supported by the then regime might not have the same traction under the successor, which was the reason Chinese concessions earned favor during a particular administration. “Such tactics may prove unsustainable over the long term and could easily spur future resentment against China among local communities marginalized by this decision making,” it said.
It was Filipino, not Chinese, actors who mostly set the agenda for these major infrastructure projects, except on a few specific contractual terms.
According to the report, the Chinese fund that financed the projects was chosen to win the support of key local elites and maximize the political clout of the incumbent.
Despite all the rhetoric, Japanese lenders remained the largest foreign aid provider to the Philippines, according to the report.
However, choosing Japanese partners to fund these two major projects might have derailed plans to use these projects to reward local elites, so work with more amenable Chinese partners was chosen instead.
Chinese partners were also chosen to expedite projects so they would be finished during the term of the friendly administration.
The reason given was that the choice of Japanese partners, who would have demanded more stringent social and environmental standards, would have delayed the projects.
The friendly administration needed the projects to be finished during its term to cement its legacy.
Chinese lenders’ interest rates, which were higher than the Japanese rates on offer, were not important since a sizable portion of the repayment schedule would fall to the successor.
Chinese negotiators acceded to key Filipino demands but held firm on others.
According to the study, the then officials asked Chinese lenders to slash the interest rates and offer a higher local labor share in the projects.
China placed stringent conditions on the projects, according to the study.
Chinese negotiators insisted that the agreements’ details be shielded by nondisclosure terms, that the projects be excluded from the lending provisions of the Paris Club, and that Chinese laborers receive higher wages.
The Paris Club is an informal group of international creditors that allows debtors and multinational banks to coordinate to find sustainable solutions to debt burdens.
The nondisclosure agreements were later modified to allow the Philippine government to disclose project terms under certain conditions.
China’s insistence on these terms kept the deals bilateral, limiting the capacity of third-party lenders to restructure debt or propose new payment terms for host countries.
Such imposed conditions aligned project financing with China’s objectives.
