PH has walked into China debt trap
Let us consider this scenario. A basketball coach consented to the following rules: The game will be played in his home court. However, the referees will be chosen by his opponent. If the game ends in a dispute, a tribunal located in his opponent’s territory and not in a neutral place will judge the dispute.
In addition, the game will be governed by two sets of rules, an overt set known to all, and a covert set of rules known only to his opponent. In case of conflict, the covert rules will override the overt rules. Moreover, the covert rules can be changed at any time at the pleasure of his team’s opponent.
Needless to say, the coach who accepted these rules will be promptly labeled a nut.
The foregoing comes to mind based on the report that the loan for the Kaliwa Dam will be governed by Chinese law and the tribunal that will decide the case is based in Hong Kong. Our officials who signed this agreement ignored the reality of doing business with a communist government. China’s Communist Party has monolithic power; there is no independent judiciary. If one has a dispute with an American businessman, he can bring suit in any US court and he will have a fair chance of winning. The United States has an independent judiciary. US President Donald Trump cannot dictate the decisions of US courts. Proof of this is the many times Trump has been rebuffed by US courts.
But in China, Xi Jinping, the “Great Leader,” can do no wrong. He can dictate the decisions of Chinese courts.
In addition, there are two sets of laws in a communist country — the laws of the state which are known to all, and the covert law loosely termed party rules. In case of dispute, the party rules override state laws. The worst part is that the party rules are issued in the broadest terms possible, such as “adventurism,” “parasitism,” “antisocialist conduct” and “deviationism.” Nikita Khrushchev was deposed for “adventurism” for having installed nuclear missiles in Cuba without the sanction of the Politburo. The morbid joke in the Soviet Union then was, “The party rules are short, the trials are shorter, and the lives of those charged are the shortest.”
“Deviationism,” loosely meaning deviation from party doctrine, is often used to justify the periodic purges of communist party members. Many Bolsheviks, including comrades-in-arms of Vladimir Lenin, were executed on orders of Joseph Stalin for deviationism.
Party rules are what a “Great Leader” like Stalin, Mao Zedong or Xi says they are, and that’s the problem. These rules could oscillate like a pendulum. Mao’s “Let a thousand flowers bloom,” the Cultural Revolution and the Great Leap Forward, illustrate this oscillation. The Tiananmen demonstrations should have been the logical outcome of Mao’s “let a thousand flowers bloom” initiative. But, to the chagrin of those who initiated the Tiananmen events, they suddenly found out they were on the wrong side of party rules. Many of them ended up in gulags or were executed.
A complex project like the Kaliwa Dam has so many aspects that could end up in a dispute. Settling the dispute in a Chinese court and using Chinese laws are the equivalent of playing a card game with a stacked deck. The judge in China who will decide the case is not truly independent, when he knows that at some point he could be charged with “antisocialist” conduct for the court decisions he makes.
From the perspective of our laws, serious questions also arise by making the details of the loan confidential. It is inconsistent with the provision on the accountability of public officials found in Article XI of our Constitution. Moreover, lack of transparency in contracting the loan is a ready-made system for kickbacks. The billions of public funds stolen under the Marcos regime was made possible by the absence of transparency. We could end up with counterparts of the Bataan Nuclear Power Plant, a white elephant that we paid for over many years without any economic benefits to our country.
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Hermenegildo C. Cruz is a career ambassador who served in the Soviet Union from 1986-1989, during the waning years of Communist Party rule.
