Costly pivot
Former president Rodrigo Duterte’s controversial foreign policy pivot toward China and Russia during his six-year term is now unraveling at a big cost to taxpayers. First were the much-touted Chinese investments, many of which failed to take off, and funding for major infrastructure projects. It even had to terminate, early this year, loan negotiations with China after Beijing insisted on high interest rates. The latest came just days before Duterte ended his term last June, when the government unilaterally canceled a P12.7-billion contract to buy 16 Mil Mi-17 helicopters from Russia for fear of economic sanctions from the United States. Now, the Philippines risks losing the P2 billion it gave as down payment for the aircraft deal.
“We don’t know if we could still get back the money since we are the ones who terminated the contract,” noted former defense secretary Delfin Lorenzana, who now heads the Bases Conversion and Development Authority. He said it is up to the new administration if it wanted to ask Russia to return the initial payment, and if it decides to do so, “it will take some time for the negotiations for us to get back the P2 billion.” The former defense chief, as the signatory in the contract finalized in November 2021, said he terminated the deal last June 25.
Lorenzana explained that it was the decision of Duterte to cancel the agreement upon the recommendation of then Finance Secretary Carlos Dominguez III to Jose Romualdez, the Philippine ambassador to the United States. “He (Duterte) said that it is better for us to terminate the contract because the disadvantage that we will get is greater than if we pursue it,” Lorenzana pointed out. Enacted in 2017, to punish Russia for its alleged meddling in US elections and its later aggression in Ukraine, the US Countering America’s Adversaries Through Sanctions Act sanctions countries dealing with Russia’s defense industry. Among these punishments cited by Dominguez, according to Lorenzana, include the freezing of the Philippine government’s bank accounts abroad and halting remittances of Filipinos from the US to the Philippines.
The Philippine Air Force (PAF) had been considering American-made Chinook helicopters for its heavy-lift requirements for years, but government funding was always a problem. The PAF needed such aircraft to transport bulky loads for various missions, including disaster response and combat operations. However, buying something totally different was ill-advised in the first place. As pointed out by foreign policy expert Renato de Castro, an international studies professor at the De La Salle University, the selection of Russian helicopters was more of a political decision as these air assets would not have been interoperable with the systems used by the Armed Forces of the Philippines, which were compatible with those sourced from the country’s military allies and partners, especially the United States.
President Marcos Jr. was already informed of the decision made by the previous administration and he planned to honor it, Romualdez had told the Inquirer, adding that the US was also informed of the decision and “they are pleased to offer us alternatives.” Since it was Washington that forced the hand of the Duterte administration to cancel the Russian helicopter deal due to the threat of economic sanctions, it seems incumbent upon the US government to provide the Philippines with the heavy-lift helicopters that the PAF badly needs — newer ones and at the same cost, or even lower, than the Russian’s.
Beefing up the air force is one of the priorities under Mr. Marcos’ military plan. Speaking at the 75th founding anniversary of the PAF on his first full day on the job last July 1, Mr. Marcos said the ongoing defense modernization effort “would complement this administration’s vision for a stronger, bigger and effective air force capable of defending and maintaining our sovereign state, and of assisting our people in times of dire consequences and today’s reality that this dictates.” The third and last horizon of this modernization program is set for 2023-2028 under the Marcos Jr. administration. The US needs to prove that the Philippines is an important ally, as it often brags to the world, by providing the AFP with many of the newer military equipment it needs to modernize — not those Vietnam war era Hueys and other antiquated vehicles.
As for the P2 billion in initial payment given to the Russians, the Marcos Jr. administration must exert all effort to get it back. Romualdez, when asked about this, told the Inquirer: “We will work on it.” This is a bit reassuring, considering that the P2 billion will go a long way in, for instance, providing cash relief to the millions of poor families still suffering from the pandemic, or in rebuilding the classrooms destroyed by recent calamities. It is hoped that the botched helicopter deal will be the last of the unwanted repercussions of what experts called the Duterte administration’s failed strategic rebalancing, the so-called pivot to China and Russia.
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