"COVID19, Neo-liberal policies and Chinese Imperialism"
By Prof. Edberto Malvar Villegas
Background:
Originally posted in social media site Facebook, this article made some months ago was presented in two parts and given in three posts: The first part covers "COVID19 in the Phillippines", "The Imperialist Neo-Liberal Policies of the IMF-WB-WTO", and the "The Neo-Liberal Policies and US Overproduction". The second part comprises "The Emergence of Chinese Imperialism", "China's AIIB", "China's Debt Trap", "The US-China Rivalry and COVID19" and the "Conclusion".
While the rapid spread of COVID19 in the Philippines is due to its poor health system because of the policies of the IMF-WB, the virus was directly caused by the easy entry of Chinese nationals into the country due to the too open accommodation of the Duterte's adminstration of Chinese imperialism.
I
COVID19 in the Philippines
The COVID19 pandemic has put into full light the long neglect of the Philippine government of its health system because of its strict adherence to the neo-liberal policies of deregulation and privatization initiated by the Group of 7 capitalist nations, led by the US, in the developing countries, starting in the latter 1970's, Private hospitals in the Philippines, which purchase their drugs and other medical supplies from the foreign multinational corporations (MNCs) have continuously increased their prices, as the government has abided by the deregulation policy. Hospitalization for an ordinary Filipino worker costs three months or more of his monthly wages. Even government hospitals like PGH, because of government low priority for health, have hiked their fees and reduced the number of their free patients to still remain viable. Further, the Duterte government is planning to privatize 33 out of 72 government hospitals like the National Orthopedic, the National Center for Mental Health, the Eastern Visayas Regional Medical Center, Dr. Jesus Fabella Maternity Hospital and others. (InquirerNet) These policies of deregulation of prices and eventual privatization of public hospitals have compromised the quality of health services extended to the general public so that when Covid 19 came roaring into our shores, brought by Chinese tourists, there was a dire lack of PPE (personal protective equipment) like face masks and shields, long sleeve gowns, gloves and respirators for health workers. Ventilators and hospital beds for COVID19 patients were inadequate. Testing for the virus was also very limited so that people may not even be aware that their neighbor is already Covid positive.
The Philippines due to its unprepared health system coupled with the gross incompetence of Duterte has become no. 1 by April 15, 2020 with COVID positive people in Southeast Asia with 5,222 cases and 335 deaths followed by Malaysia with 4,917 cases and 77 deaths. (Statista) The martial-law like implementation of the enhanced community quarantine (ECQ), only in the Philippines, has added more sufferings to the inhabitants of Luzon apart from the high costs of hospitalization if they catch the virus.
The low regard of the Philippine government for the health of its people compared to its payment of foreign debts is shown by the constant decrease of its health budget through the years. For example, from 2016 to 2020, the health budget declined by 11% from P113 billion to P101 billion. (DOH website) The DOH measly P101 billion in the 2020 national budget is far below that of the payment for interest alone for foreign and local debts of P451 billion and the budget for the Armed Forces at P192 billion in the same year.(2020 national budget) In the Philippines there is only 1 doctor to every 33,000 Filipinos when the required ratio should be 1 to 1000 and it is worse for the no. of nurses at 1 to 50,000. Thousands of Filipino nurses and doctors go abroad to work since there is a lack of job opportunities in the country and salaries are very low. This is why 6 out of 10 Filipinos die without seeing a doctor. (Ibon) Philhealth, which seeks to lower the costs of hospitalization,has been mired in corruption and some have even called for its abolition.
Private hospitals cannot be relied upon to meet the growing health needs of Fillpinos because their expertise are concentrated on the sickness of the rich like cancer and heart diseases and give less priority to contagious diseases like the COVID19 pandemic which hit the poor the most. Infectious diseases fall under the category of public health concerns which government hospitals are supposed to be more expected to address. Private hospitals exist primarily to profit from the sick after all and not for public service. The inequity of Philippine society has come to the fore because of the Covid pandemic with more poor dying from it than the rich.This is further exacerbated because the costs of medicines in the Philippines are also the highest in Southeast Asia, benefiting the foreign pharmaceutical MNCs like Pfizer, Wyeth, Sanofi Aventis and Abbot that dominate the drug industry in the country.
The Neo-Liberal Policies of the IMF-WB-WTO
The reason why the International Monetary Fund and the World Bank, the implementers of neo-liberal policies in the Philippines,have demanded privatization and deregulation in the country's health system is that these financial institutions, both dominated by US capital, want the government to prioritize the payments of foreign debts obtained from the Group of 7 nations. The priority for the defrayment of debts has been made legal by PD 1177, an obsolete law passed during the martial law regime of Marcos which should have long been abolished after EDSA I. This law allows the automatic appropriation for debts in the national budget so that if our debts grow so huge, there may be 0 budget left for health and other social services like education and social welfare..This is why the government, in order to meet its debt obligations, has also squeezed more taxes like Train 1 and 2 (VATs required by the IMF-WB) from the masses since the rich has preferential treatment for decrease in taxes from the Duterte regime.
Among all nations, the Philippines has been the most obedient client of the IMF(the Fund) with 34 stand-by agreements with this institution (completed in 2002). The debts of the Philippines from the IMF-WB consortium has resulted in the high foreign debts of the country, reaching $83.7 billion at present (2020), which still includes the debts stolen by Marcos and his family and new loans from Chinese banks (to be discussed later) The Duterte government has borrowed the greatest percentage of our foreign debts during only its four years in office. (Ibon)
Accompanying the stand-by agreements with the Fund are the structural adjustment programs (SAPs) dictated by the WB (the Bank) as conditions for new loans from it and the Fund and from their bank clubs, called the London club and the Paris club. Capitalist banks need to acquire profits from their surplus capital and those of their big depositors, the industrial and commercial capitalists, and they do this by lending this capital to other nations, particularly in the Third World for it to earn interests instead of just lying idle. Loans of surplus capital, particularly to other sovereign nations, also aid the capitalist countries to offset the falling rate of profit due to overproduction in the firms of the industrial capitalists.(to be discussed below). And the IMF-WB, their protector, make sure that those who borrow this surplus capital from capitalist banks and their investors will pay their debts on time. Thus, the stand-by agreements of the Fund and the SAPs of the Bank.The tie-up between the financial capitalists who own banks and other financial institutions with the industrial capitalists(commercial capitalists sell the goods of the industrial capitalists) is what constitutes the "financial oligarchy" or monopoly capitalism(imperialism).
The WB various SAPs covered industry, the energy sector, the financial sector and agriculture. The main thrust of these SAPs is trade liberalization in developing countries, aside from its policies of privatization and deregulation. Trade liberalization of goods was more fervidly pushed after the long-delayed founding of the World Trade Organization (WTO) in 1995. WTO became the third member of the capitalist triad, apart from the Fund and the Bank. The Philippine Agreement on Agriculture (AoA) in 1996 with the WTO has become the most oppressive of all the country's trade agreements with the capitalist nations, killing local agriculture particularly the planting of staple crops of rice and corn, and pauperizing millions of Filipino peasants and farm workers. The capitalist nations, particularly the US, were dumping their surplus agricultural products on the Philippines to avoid overproduction. The increasing importation of rice by the country demanded by AoA eventually made the Philippines to become the no. 1 importer of this crop in the world by early 2000 in spite of its very fertile soil. There was extensive land conversions accompanying the AoA, favoring the compradore bourgeoisie in the real-estate business, like the Villars and the Ayalas, because agricultural lands were being turned into subdivisions and leisure places for the rich like golf courses and high-class resorts.
The Neo-liberal Policies and US Overproduction
The neo-liberal policies, particularly trade liberalization, were adopted by the capitalist triad due to the growing crisis of overproduction of goods of US monopoly capitalism or imperialism, which started to manifest itself again in the middle of the 1970's after a lull of 25 years.(Brenner, 1998) After the war periods which ended in 1976, comprising World War II, the Korean and the Vietnam wars, the rate of profits of US corporations were falling by a worrying 40% caused by overproduction of goods as production for wars has ceased. It is always profitable for the US military industrial complex (MIC) or the American monopoly capitalists to have wars in the world so that they can sell their war materiel to the US government which cost so high. It is to be noted that during the US war with Iraq in 2003, the American economy grew by 4.3%, the highest after the lull and never attained since then. After hot war periods (the US MIC's profit from the cold war with the USSR was less compared to the hot wars), in order to offset the continuing decline in their rates of profits, more and more US corporations and even other foreign corporations were turning to the financial market, particularly the stock market to sell and buy stocks and other financial papers,for their surplus capital to earn profits through credits. This is the reason why after hot wars, bubble economies grow and burst, victimizing ordinary people who also buy the stocks of the capitalists. The worst of such bursting after the 1929 Great Depression in the US caused by a plunge of stock values in Wall St. was the financial crisis of 2008, which also originated in Wall St., the center of world capitalist activities.
The growing poverty in the developing countries, which includes the Philippines, manifested, among other social factors, by the inaccessibility of the poor to affordable health care is due to the imperialist neo-liberal policies implemented by the IMF-WB. (from Adjustments Effects on Child Welfare, Cornia, 1990) In truth, there has long been a pandemic of poverty among the lower echelons of society in the developing countries as shown by the fact that in the Philippines alone, 85 children on the average die every day due to malnourishment, (31,000/year), higher than from any contagious disease that has visited the country.(Save the Children. org) This is a foregone conclusion since the SAPs affecting the health systems and other aspects of society and the payments of their foreign debts cause the client state of the Group of 7 to suffer budget deficits and they are made to raise more taxes to continue paying their debts and to balance their budgets. The IMF stand- by agreements. are euphemistically called by the IMF-WB "stabilization programs" to attain supposedly stable economic fundamentals, meaning for governments to balance their budgets with savings to boot, the latter of course adding to the defrayment of foreign debts.
II
China's Debt Trap
The Philippines, which is an original founder of the AIIB and is a participant in the Belt and Silk Road initiative, has borrowed from the bank the amount of $217 million for development of infrastructures in the NCR. Duterte has also borrowed from the Chinese government-owned Eximbank, which will finance 19 of his 75 projects under his vaunted Build-Build-Build (BBB) program, which includes a P4.37 billion loan for the Chico dam and P12.2 billion for the Kaliwa dam. It is to be noted that out of the BBB 75 projects, only 9 are barely starting and it is the last lap of Duterte's term. Where are all the borrowed money from China, with its high interest of 2% per annum, 10 times higher than Japanese loans? It may be just lying idle in the Bangko Sentral ng Pilipinas or being used elsewhere than its intended purpose.
We fear that the Philippines will just fall into another debt trap with China as it has with loans from the IMF and WB. Zambia, Djibouti, Guyana, Pakistan and Sri-Lanka are already in the deadly grip of such Chinese debt traps with Sri-Lanka having to give up its Hambantota port in its southernmost part to defray unpaid loans from Chlna. The acquisition of Hambantota was accomplished through the help of a $8 million bribe the Chinese extended to Sri-Lanka president Rajapaska to support his presidential campaign. (New York Times, April 20, 2019) Actually, China Construction Company, the parent company of China Harbor which constructed the Hambantota port, using Chinese workers, was banned by the WB from participating in the biddings for the Bank's projects for 8 years due to corrupt practices in the Philippines. (Forbes, op. cit.)
China has insidiously inserted in its loan contracts with other countries a provision which specifies that in case of a default on its loans, a country must give up its immunity of sovereign rights and forfeit property, which could include land and sea. This is found in the contract for the Philippine loan for the Kaliwa Dam in Article 8.1(Waiver of immunity). Such onerous provision has also been included in China's loan contracts with other developing countries like Guyana, Zambia and Kyrgystan (Rappler, Made in China, 2019) Workers in Kitwi, Zambia, have protested such odious condition, rioting and battling police and attacking Chinese shops, when they found out that their government-owned timber company, ZAFFICO, will be turned over to China since their political leaders could not pay a loan to Beijing. They were afraid that they will be replaced by Chinese workers as Chinese investors are wont to do in countries where they operate. Beijing. confronted with such violent reactions to its planned acquisition of ZAFFICO, restructured the loan. (Forbes, ibid.)
China's "debt diplomacy" is a military as well as an economic strategy in its fierce competition with the US to control vital sea and land routes. China has docked its submarines at Hambatota port in Sri-Lanka since it is located in a strategic area near the Suez Canal where thousands of ships, including 4,500 oil tankers pass by annually. Beijing has also already installed military facilities in the Spratly Group of islands in the West Philippine Sea (South China sea to Beijing) as its route is traversed by 50% of world trade yearly. . The weak Philippine Rodrigo Duterte has accommodated, in fact acceded to China's takeover of the Spratly islands, even though they lie within the exclusive economic zone of the Philippines, whose claim to the area was upheld by the UN arbitral tribunal at the Hague in 2016. Duterte refuses to assert the Philippines's sovereign rights to Spratlys, claiming China will declare war on his country if he did. What a deriliction of duty! He should resign or be booted out from power if he is such a wimp of a president that he cannot even defend the. integrity of the country. China consequently warned US ships from patrolling in the vicinity of the Spratly's Groups of islands, insisting they lie within its territorial jurisdiction.
US and China's Rivalry and Covid 19
The deadlock struggle of US and China to control global trade has even led them of accusing each other of creating COVID19 in the other's respective laboratory for biological warfare. US military scientists say that COVID19 is a man-made combination of viruses obtained from bats and pangolins which accidentally leaked out from a lab in Wuhan, China, due to faulty handling. They debunked China's claim that the virus came from bats in a wet-market in Wuhan as a cover-up since there are no bats for sale in that market. The lab concerned is only several blocks away from the market. Chinese officials fired back that the virus came from a lab in Fort Derrick, US, and was brought to China by American soldiers during a military sports competition in Wuhan in October, 2019, (Read the arguments of both sides which are replete in the internet and decide for yourself.) Be that as it may, whether COVID19 originated from a Chinese or American lab for biological warfare, its effect on the world has been devastating with hundreds of thousands dying from it. The deadly activities of the imperialist powers to prepare for war against each other by creating dangerous viruses in their labs should be condemned by the UN and an investigation started by this body on the real origin of this world pandemic after we have passed through it.
The quarrel between American and Chinese imperialists is also adversely affecting the job security of US workers caused by the raising of tariffs by the Trump government on goods coming from China, leading to the rising ;of production costs in American firms and the retrenchment of workers. (In the US, it is to be noted that the top 1/10 of 1% of Americans own almost as much wealth as the bottom 90%, according to erstwhile candidate for US president, Senator Bernie Sanders, based on the findings of his research team..) We do not know the effects of the US-China trade war in Chinese factories, since Xi Jinping's government is very secretive regarding the going-on in his society.
Conclusion
We will survive this COVID pandemic, but there is still a heavy responsibility facing all of us.
US monopoly capitalism (imperialism) and its rival, China, with its equally rapacious imperialism, are causing the Filipino masses and other peoples of the world to be impoverished, while their leaders subservient to the imperialists wallow in wealth and power. Indeed, imperialism with its predatory activities and its contradictions, primarily its warlike nature using the masses as cannon fodder, is the scourge of humankind. Imperialism must be finally expunged from the face of the earth in order to uphold the well-being of the exploited classes, the wretched of societies, and to prevent the destruction of our planet caused by capitalist greed. A new generation of socially-dedicated and unselfish individuals, coming from a united front led by the enlightened working classes with their allies, both national and international, must arise to finally dismantle the dominance of those whose main concern is to plunder for profit no matter the costs.
A new world order must be built to advance first and foremost the welfare ot the majority classes and zealously guard the rights of all persons. History is calling each of us to be counted in this new generation and contribute what we can to accomplish this great task for the salvation of our species and our mother earth.