Research group IBON today warned that the much-hyped US visit of Pres. Benigno “Noynoy” Aquino may result in more harm than good, as the group expressed serious concern that his first official foreign trip may further deepen the implementation of economic policies long discredited for undermining national development, destroying local industries and jobs, and marginalizing the poor.
The group issued the statement as President Aquino leaves for the US today for a week-long visit to attend the United Nations (UN) General Assembly in New York, meet with US investors for his administration’s public-private partnership (PPP) projects, and witness the formal signing of a US$434-million compact grant agreement under the US government’s Millennium Challenge Account (MCA).
IBON said that the financial assistance from the MCA will put additional pressure on the Philippines to further open up its economy to more imported commodities and foreign capital. It added that MCA is a highly conditional aid, noting that the MCA requires the Philippines to maintain so-called economic freedom to continue receiving the aid. Other MCA requirements include fighting corruption, public investment on education and health care, etc.
Economic freedom means business freedom in reality, as it spells the least possible government intervention in the operation of businesses that entails dismantling barriers to the free flow of trade and investment through liberalization; elimination of government regulatory functions through deregulation; and dismantling of state monopoly over certain economic activities through privatization. IBON noted that conservative US think-tank and staunch advocate of free market and limited government, the Heritage Foundation, designed the index used to measure a country’s so-called economic freedom to become eligible for MCA funding.
The US has repeatedly raised the issue of barriers to US trade and investment in the Philippines through the annual report of the US Trade Representative (USTR), among others. In its 2010 report, the USTR reiterated its long-standing position that certain provisions of the 1987 Constitution represent barriers to US trade and investment such as the constitutional ban on foreign ownership of land as well as foreign equity limits on utilities, telecommunication, mass media, etc.
IBON said the MCA gives the US more leverage to pressure the bankrupt Philippine government to address these issues. It also added that with renewed commitments from both countries to negotiate a bilateral free trade deal, the MCA funding could be used to compel the Philippines to agree to a one-sided agreement.
Meanwhile, IBON said that Aquino’s plan to step up his privatization efforts by aggressively inviting US investors to participate in his PPP campaign in his US visit ignores almost three decades of experience with privatized utilities and infrastructure. The country’s experience with the privatization of the power and water sector as well as toll roads, for example, has only resulted in exorbitant user fees while deepening the government’s fiscal woes.
The group urged the Aquino administration to seriously rethink its economic policies if it sincerely wants to bring about change that will benefit the country. Otherwise, the President’s visit to the US will do more harm than good and will result in more of the same problems that the economy has faced for decades.