MIM Notes No. 197	 December 1, 1999

Imperialism strangles Filipinos with debt

by MC53

President Joseph Estrada (Erap) of the Government of the Republic of the 
Philippines (GRP) has ordered an "all-out-war" against the Communist 
Party of the Philippines (CPP) and the CPP-led New People's Army 
(NPA).(1) The GRP's all-out-war follows continued strengthening of the 
Maoist-led revolution. Erap claims to be the president of the poor, yet 
like previous GRP presidents, he has furthered the interests of the 
imperialists and bureaucrat capitalists in their search to increase 
exploitation of the Filipino people.

The u.$., Japanese, Canadian, Australian and other imperialist powers 
prop up bureaucrat capitalists within the Philippines to smoothly 
extract profits from the exploited masses. These compradors then receive 
a portion of the stolen wealth in return. Imperialist loans and debt 
servicing -- related interest payments and financing fees -- constitute 
one method of stealing resources from the Third World. As of May 1999, 
the official "debt" of the Philippines rose to $41.4 billion, up from 
$40.4 billion at the end of 1998 and up from $34.4 billion five years 
ago.(2,3) Between 1990 and 1997, an average of 33.8 percent of the GRP 
budget was allocated to debt repayment while social services received an 
average of only 22.2 percent.(4) 

During November and December of 1999, MIM is engaging in a campaign to 
build opposition to imperialism by exposing and fighting the deathgrip 
of debt. We call on progressive allies to work with us to demonstrate 
that revolution is the only solution to ending Third World exploitation. 
Through International Monetary Fund (IMF), World Bank (WB) and other 
imperialist institution loans, it is the imperialist countries, the 
multi-national corporations, the puppet compradors and imperialist-
nation parasites that are living off the labor, the sweat and even the 
deaths of the majority of the world's population.

Debt causes poverty

In 1977, Marcos issued the Automatic Appropriations Law (AAL). This law 
requires that the GRP use its "revenue" for debt servicing before other 
spending. Aquino, Ramos and now Estrada consciously honored the 
imperialist loans and carried on the AAL instead of meeting the needs of 
the people. This year, the GRP has allocated close to $6 billion to 
repay loans, half of this going toward interest payments alone.(5)

The current u.$.-GRP regime has agreed to increase debt further. In 
December 1998, the World Bank gave the GRP $600 million in loans for 
recovery projects. These loans are geared toward contracts for MNCs and 
other imperialists. Also, in October 1999, the IMF reported the 
preliminary go-ahead for a $290 million loan to the GRP regime after 
almost a year of scaling up the loan amount.(6) In March 1999, Japanese 
imperialists announced that they would lend approximately $4.5 billion 
for the year to support the "Philippines' reforms."(7)

The IMF and WB require restructuring of a country's economy to secure 
loans. The price of basic commodities can not be subsidized, unions must 
be banned and devaluation of the currency is often required. 

According to the GRP, poverty decreased from 40% in 1991 to 33% in 
1997.(8) But still, the Philippines was the only large country in East 
Asia where the absolute number of people living on less than $1 a day 
did not decline over the 1985-1995 period, according to the World Bank. 
According to a 1998 World Bank Survey, more than 90 percent of Filipino 
families reported being adversely affected by higher prices of food and 
other basic commodities and 17 percent of families reported reduced 
wages.(9)

Erap does not reveal that debt servicing and repayment of loans 
necessitates decreased government spending on social services, such as 
medical care and education. In addition, the actual amount that a 
Filipino is taking home buys less because of increased inflation and the 
devaluation of currency -- both of which are results of the GRP taking 
out loans and entering into Structural Adjustment Program agreements 
with the IMF. 

The GRP attempts to disguise the level of Filipino impoverishment and 
the fact that the majority of Filipinos are exploited by categorizing 
families into two groups in its 1998 Annual Poverty Indicators Survey 
(APIS). The APIS states: "Of the 14.37 million families, 5.75 million 
belonged to the lowest 40% income group while 8.62 million were in the 
highest 60% income bracket."(10) The GRP tries to hid behind numbers, 
pretending that the information that 40% + 60% = 100% says something 
about the state of poverty in the country.

To further sugar-coat inflation and exploitation of the people, the GRP 
heralds the rise in income. However, while the GRP figures show an 
average income increase of 18.7% between 1994 and 1997, average 
expenditures rose 17.9% during the same period.(10) Capitalists call 
this 'growth' whereas communists know that the people are still not 
eating just like they were not eating in 1994.

MIM does not pretend that the GRP would actually give the money to the 
people if they were not spending it on debt payments. But we do hold the 
GRP and the imperialists directly responsible for poverty that is 
clearly a direct result of their policies and actions.

Hefty payments for no power

The Philippine Nuclear Power Plant I in Morong, Bataan (PNPP) is an 
example of theft by the imperialists under the guise of loans for 
development. For the cost of $2.3 billion Filipinos have received no 
power from the PNPP yet the loans for its construction amount to the 
single largest portion of the country's total debt -- accounting for 5%. 
Between 1986 and 1998, Filipinos paid over $1.2 billion for the nuclear 
power plant. Of the amount paid, about $1.15 billion of the payments 
have gone toward debt servicing alone.(11)

The plant does not work and is located less than 60 miles from Manila, 
close to several earthquake fault-lines and near an active volcano. 
After the ousting of Marcos, international inspectors stated that the 
plant was unsafe. Aquino decided to halt plans to activate the plant in 
1987, but she continued to use Filipino money to make payments on loans 
for it. In 1995, Ramos announced plans to convert the facility into a 
non-nuclear power plant, and he continued to pay the debts with Filipino 
blood. Finally in the fall of 1999, the PNPP had decided not to pursue 
use of the plant for power generation, still the GRP pays the debts with 
Filipino money.

Filipinos are collectively paying $170,000 a day in interest payments 
for the plant.(12) As it stands, Filipinos will be paying an additional 
$282 million to imperialists until the year 2018 for a power plant that 
never worked.(11)

Who benefits from the debt?

The Amerikkkan imperialist corporation Westinghouse won the bid for 
building the Bataan monstrosity in 1974. Westinghouse outbid General 
Electric for the contract by giving kickbacks to u.$. puppets and by 
stating that the cost would be $600 million.

In 1975, Westinghouse adjusted its bid to $1.2 billion.(11) By the time 
the GRP applied for financing, Westinghouse's price jumped to four times 
the amount originally stated for the bid. This did not deter Eximbank 
(the u.$. export-import bank), the bank underwriting 60% of the project 
cost. Why? More money for Eximbank in interest payments.

While Eximbank and other financiers set the table for their feast, 
Marcos and other compradors fatten their wallets. Westinghouse bribed 
Marcos and Herminio Disini so that they would expedite the bid's 
acceptance and the project's approval during martial law. Marcos 
received $80 million in kickbacks from the deal and Disini received 
estimates of $35 million, though Westinghouse only admits giving $17.3 
million in cash to Disini.(11)

As of April 1999, the nuclear plant's outstanding obligations stood at 
$269 million and $11.4 million (to foreign and domestic creditors 
respectively).(11) The US Export-Import Bank guaranteed the Japanese 
banks' loans for about $14 billion yen originally. Japanese banks 
provided another $16 billion yen that was guaranteed by the Philippine 
government.(8) Bank of America, American Express, Citicorp, Bank of 
Tokyo, Union Bank of Switzerland, Mitsui & Co., Citicorp Int'l., 
Sumitomo Corp. and Morgan Guaranty all partition the profits of this 
financial venture.(11)

Maoist revolution demonstrates

path to end deathgrip

Estrada's plans to decrease poverty amount to little more than the 
window dressing created during the Ramos administration as it attempted 
to look good internationally while squeezing as much from the masses as 
possible. As the NPA has stated, it is the Estrada regime that is 
recruiting for the NPA by repressing and impoverishing the people.

The Government of the Republic of the Philippines (GRP) has stepped up 
its war against the people citing the failure of peace talks. The 
National Democratic Front of the Philippines (NDFP), led by the CPP, 
broke off peace negotiations in June after the GRP signed the Visiting 
Forces Agreement with the United Snakes.

Estrada's recent announcement of "all-out-war" tailed the NPA's fourth 
successful raid within five days. During the raid, the NPA captured 
Major Abelardo Martin, the police chief Dolores in Quezon province. The 
NPA also expropriated 11 guns during the raid. In raids earlier in the 
week, the NPA captured three other agents of the u.$.-puppet 
dictatorship and secured additional arms.(1) The NPA has for over 30 
years engaged in the righteous Protracted People's War against 
imperialism, bureaucrat capitalism and feudalism which exploit and 
oppress the people of the Philippines.

The GRP also reports dramatic increases in the membership of the CPP and 
NPA. At one point, the GRP considered placing a price on the capture of 
leading comrades, such as Jose Sison, leader and founder of the CPP. 
Estrada and company dropped the bounty hunt plan and instead attempted 
to build the regime's facade of being a government for the poor. The 
Communist Party of the Philippines has exposed this facade of the GRP 
repeatedly. But the people know because of material conditions and 
broken promises that the Estrada regime is no more concerned with 
poverty and exploitation than the previous u.$.-puppet fascist regimes 
of Marcos, Aquino and Ramos. 

MIM urges readers to join the campaign to cancel all Third World debt. 
We make this call in the context of fighting u.$. militarism and 
imperialism that exploits the people and props up fascists. 

MIM supports the armed struggle in the Philippines to seize state power 
from the fascists and install a proletarian dictatorship that represents 
the oppressed. It is only through proletarian dictatorship that the 
fundamental relations of society will be changed for the better. With a 
proletarian government, the Filipino people will stop paying all 
previously honored imperialist debt agreements and begin the process of 
taking back what the imperialists owe. We urge our readers to work with 
us to expose imperialist exploitation and take an immediate stance 
against debt, but to go further and support the revolution in the 
Philippines. 

Notes:

1. South China Morning Post:

http://www.scmp.com/News/Asia/Article/FullText_asp_ArticleID-
19991104032537709.asp

2. Jubilee 2000 website: http://www.jubilee2000uk.org/main.html

3. Support the National Democratic Front of the Philippines pamphlet.

Available from MIM for $2, postage included. Or at: 
http://www.etext.org/Politics /MIM/fil/pammenu.html

4. Philippine Daily Inquirer: 
http://www.inquirer.net/issues/jun99/jun18/news/news_3.htm

5. Philippine Daily Inquirer: 
http://www.inquirer.net/issues/jun99/jun18/news/news_3.htm

6. News Brief No. 99/65 October 1, 1999 International Monetary Fund 700

19th Street, NW Washington, D.C. 20431 USA at: 
http://www.imf.org/external/np/sec/ nb/1999/NB9965.HTM

7. http://www.worldbank.org/html/extdr/extme /2125.htm

8. http://www.worldbank.org/html/extdr /offrep/eap/jmsboard/phannx.htm

9. September 1999, THE WORLD BANK GROUP http://wbln0018.worldbank.org 
/eap/eap.nsf/87d06ef07cb6cd69852567c90077a6de/60c82fc6c29c6796852567d700
7c23e8

10. http://www.census.gov.ph/data/sectordata /dataapis.html

11. Philippine Daily Inquirer: 
http://www.inquirer.net/issues/jun99/jun17/news/news_2.htm

12. http://www.guardianunlimited.co.uk/