Tuesday, February 12, 2008
With the Philippines’ cancellation of the controversial ZTE deal with China, economic, security and political repercussions are expected to strain in varying degrees the country’s foreign relations with said country as well as with other countries the Philippines is diplomatically close to, most notably the United States of America.
The Senate’s inquiry into the kickback-rich $329-million contract between the Philippine government and Chinese firm ZTE Corporation is potentially ruinous economically. While the revelations of overpricing and bribery are mere allegations, this was enough reason for the Chinese people to attest that government corruption in the Philippines is indeed spectacular. No company in its sound corporate mind will dare tarnish its reputation with participation in anomalous deals, hence the readiness of the ZTE people to file suits against those who vilify the firm or its products or projects. More importantly, corruption-ridden contracts like the ZTE deal will be cancelled one after another until such time these aborted dealings, with no one trusting them anymore, will already turn the Philippine economy into a bearish hibernation.
China is the Philippines ’ third biggest trading partner, following Japan and the US. Also, it has the fourth largest market for tourists. This economic enjoyment can be reduced if China eventually closed its doors to the Philippines . The country might lose one ally with so much money that it offers no conditions over the country’s credits. The Philippines currently enjoys a whooping 80% of loans from China for the funding of local projects. In addition, the Asian superpower is the country’s fifth biggest lender. With the scandal created by the ZTE deal, China might have to think twice about lending loans again, to the detriment of the local projects benefiting from these credits.
If this scandal creates a domino effect, then the country might even lose its biggest trading partner, the US . Known for its hard-hitting stance over countries riddled by corruption, among other social ills, the US might also cancel its economic aid to the Philippines in the midst of the ZTE fiasco. Lost of loans to fund project is of course terrible to the developing Philippine business.
Problems on security may also crop up following the ZTE controversy. While the US may be preoccupied with Middle East concerns, the Philippines ’ other superpower all China might take opportunity at the internal problems of the Philippines and just take over unexpectedly. This is not entirely unfounded, given the rebel infestation problem, terrorism, illegitimacy hounding the presidency of Gloria Arroyo and government corruption. If predicaments like these make the country vulnerable, then China might invade us with all its tremendous powers utilized to confront the local forces. It does not help that China seeks better relations with countries comprising the ASEAN, for its established friendship with the ASEAN may prove a tactic for China to widen its imperial reaches. China being more secured than the Philippines , the latter is an easy prey to the superpower.
However, such an act of barbarism may be a last resort by a country the Philippines has had a whole generation of diplomatic ties with. Whereas the tie binding China and the country only became tighter during Arroyo’s administration, it might also be imperiled right before Arroyo gets to step down from her office, granted she does not get overthrown. The ZTE deal may be cited for such a risk tearing the two countries apart.
This is truest if the statement of Arroyo regarding China relations after the cancelled deal will be taken apart. The President has signed the contract even if she found the contract full of loopholes, all for saving the relationship the Philippines has with China. Arroyo has placed more importance on the political relationship with China than the interest of the Filipino people she is representing in that scrapped deal.
On the other hand, the fiasco brought about by the failed national broadband deal might create no serious impact on our bilateral link with China since the country is dealing with a matter of internal bidding that just happened to involve a firm from China. It would have been more serious if the company was identified with people close to the Chinese government, in which case a ngative impact would have threatened to end the golden period of RP-China diplomacy.