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Justice calls for Debt Cancellation, Climate Reparations, Not Loans

Manila, Philippines – The Freedom from Debt Coalition told the Asian Development Bank (ADB) and the World Bank (WB) to "stop hovering like vultures around a Yolanda-stricken Philippines, taking advantage of this catastrophe to suck blood profits out of our people." This is the response of FDC through its President, Ricardo Reyes, to the ADB and the World Bank loan pledges amounting to one billion dollars following the devastation of Supertyphoon Haiyan (Yolanda).

The ADB and the WB pledged loans amounting to $523M and $500M, respectively, for reconstruction and rehabilitation effort.

FDC said that Filipinos should not forget that these are the same institutions that drove our country, like many other countries of the South, deeper into debt-dependence and mal-development. Their structural adjustment programs (SAPs) – which cut public spending to basic social services – and loan conditionalities of privatization and market liberalization produced in just two decades one of the highly unequal economies of the world beset by jobless growth and massive poverty.

"This inequality and extreme poverty account for the disproportionate vulnerability of the majority population to climate-related crisis and other disasters. The poverty-stricken population and regions are the least resilient. They are the least financially capable of undertaking and sustaining disaster management and adaptation measures, such as building of sea walls, or procuring up-to-date early warning systems, or at the very least fortifying their houses so they can endure a super typhoon. Likewise, the poorest are the least materially capable to recover from the various impact of climate disasters," FDC explained.

The Philippines ranks sixth in the Climate Change Vulnerability Index, and the third most vulnerable country to disaster risks and natural hazards in the World Risk Index 2011. Climate-Change Financers

FDC also scored the IMF-WB and the ADB for their hypocrisy in claiming they have been out to fight climate change. "Far from being concerned about climate change, these IFIs are co-culprits of highly-industrialized countries and their corporate elites, with the ADB and World Bank in axis of financing climate change-inducing projects like coal and other fossil-based energy projects," FDC said.

Experts say that the power industry is a major contributor to climate change with power plants utilizing fossil fuels such as coal and diesel contributing the highest amount of CO2 emissions to the atmosphere.

In the 2012 study the World Resource Institute (WRI), the WB and the ADB ranked number two and three among the top IFI funders of coal in the world, with the total funding of US5.3 billion for 29 coal plant and US3.9 billion for 21 coal plants, respectively.

In the case of the Philippines, after the ADB together with other IFIs, successfully pushed for the privatization of the power industry, the ascent of dirty energy hastened. New coal-fired power plants were built, and the capacities of existing power plants expanded. Some of these energy projects were co-financed by the WB and the ADB, like the coal-fired power plants in Masinloc, Zambales, in Calaca, Batangas and in Naga, Cebu, which they heralded as "clean and sustainable."

According to Philippine Movement for Climate Justice (PMCJ) data, 84% of Philippine energy is derived from fossil fuels, and as of August this year, there were 31 coal operating contracts at the development and production stage. An additional 17 coal plant projects using a total of 26 boiler facilities are in the pipeline.

Debt Cancellation, Not New Loans

FDC President Reyes said that justice for the Filipino people demands debt cancellation, especially the illegitimate ones – odious, onerous, patently illegal, violative of human rights, harmful to the people, environment and climate, and bereft of institutional processes of consent of the people.

Climate justice demands reparations to countries like the Philippines in accordance with the United Nations Framework Convention on Climate Change (UNFCCC) principle of common but differentiated responsibility. This responsibility takes the form of grants and aid to enable the Philippines to develop resiliency to climate change and compensation for losses and damages like what it suffered from Yolanda and previous other climate change-induced natural disasters.

Reyes challenged President Aquino to lead the call for debt cancellation and climate reparations to the international community. ###

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President Benigno S. Aquino III or P-Noy got elected on a mandate to correct the unprecedented corruption under the previous administration. However, there is another equally, if not more, compelling problem, the solution to which can no longer wait. This problem is widespread poverty and the failure of the economy to provide the majority of Filipinos a respectable and dignified life.

P-Noy did take some bold steps to deliver on his anti-corruption promise. To the other problem, he adopted, unfortunately, a"business-as-usual" approach. Sad to say, his was no different from that of Gloria Macapagal-Arroyo.

While P-Noy couched his economic program as "inclusive growth" upon the promptings of ADB and IMF-WB and his economic team, it says little that is new aside from more jobs, more infrastructure, more social spending and more safety nets for the "poorest of the poor."

The P-Noy administration's strategy is still anchored on market-oriented and private sector-led economic growth with trickle-down impact on the majority.

In substance and effect, this neo-liberal strategy is about subordinating government and the public sector to private corporate ends and mechanisms in running the economy.

Three years after and midway into P-Noy's term, the consequences of this economic governance have been bad for our country. As NSCB data of 2012 shows, there has been no significant decline in the poverty ratio since 2006 despite claims of moderate to high growth rates during these years. Worse, inequality has worsened which is a clear sign that neo-liberal growth has favored only those at the top. Seventy six percent (76%) of GDP growth for 2011 is equivalent to the income growth of the richest 40 families in the country. In 2009, the Philippines' gini coefficient (WB, 2009) already made it the most unequal country in Southeast Asia (no figures for Burma) and one of the highly unequal countries in the world.

This experience shows that the lack of growth of the economy is not the main, much less the sole reason behind the problem of poverty and failed economy. Rather, it has been the result of historically-entrenched deep inequalities in the control of sources of wealth, access to education, health and housing services and the enjoyment of political power between a small oligarchic elite that enjoys the support and patronage of global powers, particularly the US, and the vast majority.

Monopolies and oligopolies dominate almost all sectors of the economy, allowing them to frustrate, even strangle the growth of micro, small and medium businesses. Big landowning clans and big agribusinesses control and benefit from the main lifelines of agriculture and fishery and frustrate agrarian reform. Full and meaningful participation of the majority in the economy is blocked by the bitter reality that only 10 percent finished tertiary education and 40 percent did not complete secondary education. Malnutrition is significant among children and adults and adequate health services are beyond the reach of many among us. Four million families or roughly 20 million persons live in substandard and unsecured houses and land.

Enlarging the pie through sustained economic growth to increase the share of the majority will not redress this situation. What is needed is redistribution of assets and incomes. However, this is rendered impossible to achieve by the neo-liberal strategy and policies which successive governments since Cory Aquino's have pursued. By allowing corporate-driven markets and global powers to dictate the course of our economy, both industry and agriculture have been consigned to the backburner in favor of externally-oriented services. The commons, our inalienable natural resources, our water, land, minerals, forests are now steadily being privatized and commodified.

Neo-liberal growth has created widespread joblessness, job insecurity and rampant violations of workers' rights. The Filipino diaspora count of 9 million workers is still increasing, depriving the nation of citizens with skills, enterprise, and resources.

Furthermore, the Philippine Government's addiction to debt to finance what it calls development and its own operations has made it a captive of various policy impositions by the international financing institutions, the commercial banks and foreign governments. Turning to bond markets as the primary source of external and domestic loans maintains debt-dependency and makes it vulnerable to global and regional financial instabilities and manipulation. Social debt – the unfulfilled State obligations to to its citizens in the area of food, education, health, housing, and other social needs in compliance with its own laws and programs and international covenants have accumulated in gargantuan terms as a result of putting debt service payments as the topmost priority of government spending.

Economic solutions alone will also not suffice. In fact, they cannot be resorted to without simultaneously democratizing the political and State system of the country. This system adopts democratic ends formally but institutionalizes means which empower the oligarchic dynasties to rule over our country, not the people who should be the master in a democracy. This system also allows foreign, especially US, interference in the internal affairs of our country which they desire to retain as an imperial preserve.

Winning the fight for equality and justice is also essential to winning the fight against climate change. While some forward steps have been taken to adapt the country to climate change and mitigate carbon emissions, the Philippine government must take a really consistent stand for climate justice. It must be more aggressive to demand reparations and more responsibility from rich and industrialized countries which did the most damage to the globe's climate and environment. It must reject global corporate greed to commodify nature and thus turn climate change into another arena for profiteering through loans and other financial instruments.

P-Noy has wasted the opportunity of his first three years to turn the country around towards making a better life for all Filipinos. Those three years were precious for striking out on new directions, rather than having allowed himself to be regaled by hypes coming from international credit agencies and international financial institutions like the ADB and the IMF-World Bank.

There is no alternative to altering the neo-liberal course of the Philippine economy and correcting the systemic economic and political inequality. Our country, especially our young, has suffered so much from repeated lost decades. We cannot afford to have another lost decade and a lost generation that goes with it.

Freedom from Debt Coalition

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MANILA, Philippines – There are two perilous trends in the Philippine education sector that are missed out in the barrage of conflicting claims and the raging debates on its current state, the Freedom from Debt Coalition (FDC) said Monday.

Ricardo B. Reyes, FDC president, said these trends are the mounting social debt incurred by the Philippine Government to education and the increasing relinquishment by the Philippine Government of its basic duty in providing education for our people to private or corporate business.

Social Debt

FDC came out with the concept of a Social Debt in recognition of the historical fact that the country's historical debt burdens and continuing debt dependence have stood in the way of the Filipino people's development and well-being. The Philippine Government continues to uphold a law on automatic appropriations for debt service which prioritized debt payments over other public expenditures, including such vital public services as education, health and housing.

FDC defines Social Debt as "the State's unfulfilled obligations to its citizens, which can be approximated from the State's commitments in its Constitution and its laws, the socio-economic targets set by all previous development programs and plans, and the international standards set by the United Nations and other international covenants."

To measure the Social Debt to education, FDC uses the UNESCO recommendation of at least six percent of gross national product (GNP) public spending on education which government expenditure cannot sink without serious consequences for fulfilling, protecting and realizing the human right to education and the universally shared aspiration of quality education for all.

In addition, FDC includes all the unfulfilled commitments the Philippine Government made to education in its series of Medium-Term Philippine Development Plans since 1986, other national policies and the promise of the 1987 constitution of universal secondary education for all Filipinos.

"Since 1996, when the Delors Commission submitted its recommendations to UNESCO pegging its benchmark for public expenditure to education at 6% of GNP, the Philippine government's Social Debt to education accumulated to roughly around P3.763 trillion," said FDC researcher Marc Batac.

Gross domestic product (GDP) is an estimated value of the total worth of a country's production and services, on its land, by its nationals and foreigners, calculated over the course on one year. GNP, meanwhile, is an estimate of GDP plus total worth of production and services of its citizens on foreign land.

"While we note the Aquino administration's efforts to increase the education budget, we lament that these are not enough. The public education expenditure of 2.2% of GNP in 2012 is a far cry from the international benchmark," said Batac.

FDC added that despite the declaration in the Constitution that education shall be the budgetary priority of the State, from 1986-1996 and 2000-2012, interest payments exceeded education spending. In 2012, budget for principal and interest payments (P739 billion) was three-fold compared to that for education (P224.9 billion). For 2013, earmarked education spending is even lower than 15.03% post-EDSA administrations' average (1986-2012), a meager 14.97% of the national budget.

Citing data from UNESCO and the World Bank, FDC said that the Philippines has the lowest education spending in proportion to the total budget (except Singapore), as percent of GDP, and per student. Further, the country's spending level is below the East Asian regional average of 3.6% of GDP and South Asia's average of 3.8%.

Annual school blues

Given the (lack of) priority that government accords to education, it is not surprising, therefore, that the right to quality education in the country effectively remains to be beyond the reach of millions of poor Filipinos.

Benjo Basas of Teachers' Dignity Coalition (TDC) said that the perennial problem of the country's school system again surfaced on the first day of school year – the lack of necessary resources such as teachers, books and other learning materials, chairs, classrooms, toilets and others.

"It only shows that the government's fund for education is not even enough to operate the existing program, yet we are talking about the more expensive K-12 program. First things first!" stressed Basas.

Erika Erro, chairperson of Youth Against Debt (YAD), said that another important manifestation of the increasing Social Debt to education is the high number of out-of-school youth.

Citing data from the National Statistics Office (NSO), Erro said that one (1) out of eight (8) Filipinos, or around 6.24 million Filipinos, aged between six 6 and 24 is an out-of-school youth. She added that six percent of the estimated 29 million children 5 to 17 years old are working children.

"Two main reasons why these youths are not in school are the high cost of education and the need to earn a living," Erro lamented.

Relinquishment of duty

Fidel Fababier, secretary-general of Action and Solidarity for the Empowerment of Teachers (ASSERT) said that the increasing relinquishment by the Philippine Government of its basic duty in providing education for the people, especially the youth, to private business or big corporate interests in the country, can be seen in some glaring examples. These include Government Assistance to Students and Teachers in Private Education (GASTPE), private-public partnerships (PPP), weak regulation over private schools as manifested by brazen tuition and other fee increases through the years, decentralization of public school management which encourages the entry of private business, and continuing tax privileges to some private schools.

FDC's Reyes said: "Increasing private or corporate business incursions into Philippine education has been consistently justified by the Philippine government on grounds that it lacks the money or the fiscal capacity to respond to the expanding needs of Philippine education. But public budgeting is basically a question of priority. Philippine budgets over the decades do not show education as a central priority of the government."

Crucial steps

Reyes stressed that the biggest challenge of Philippine education is to bring education at the center of State priorities and to assert the central role of the State in providing education to the people.

The first step is to increase to 6% of GNP its annual budget for education. This can be done by repealing the automatic appropriation for debt service law and by a set of progressive taxation to raise, more revenues for education.

The other important step is to stop the trend of allowing more and more private corporate incursions into our education which can only turn it into money-making machines exploiting Filipino labor.

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FDC logoThe Freedom from Debt Coalition asserts that the unchanging poverty incidence is a result of persistently high inequality in the country. It should not come as a surprise.

On April 23, the National Statistical Coordination Board (NSCB) revealed that poverty incidence, or the proportion of people below the poverty line to the total population, during the first semester of 2012 was estimated at 27.9 percent. In 2006 and 2009, first semester figures were estimated at 28.8 percent and 28.6 percent, respectively. This means that poverty incidence in the Philippines has remained unchanged as the computed differences are not statistically significant, according to NSCB.

As expected, President Benigno S. Aquino III is in a state of denial. Newspaper reports quoted him as saying: "I have a bit of a doubt since they used the wrong population data, which is the basis for computing per capita income." He also admitted never having the chance to study poverty incidence thoroughly, but questioned the 2009 figures which could not be compared to the 2012 figures.

Presidential Spokesperson Edwin Lacierda attributed the latest poverty incidence to the poor development of agriculture as the main culprit, while the Asian Development Bank, through its senior country economist, Norio Usui, attributed to lack of jobs the main cause of this economic malignancy.

While both reactions contain a piece if the truth, they missed the most essential point. While unemployment leads to poverty, unemployment itself is a result of a long-standing and deeply rooted condition of high inequality of access to, ownership and control of capital, technology, knowledge and land. This is the same with the sluggish agriculture.

The lack of a strong industrial base which ADB's Usui pointed out is the outcome of our colonial past when American colonizers refused to allow us to industrialize, and of our continuing past of highly unequal competition between multinationals and local industries forced upon the country by a regime of liberalization which began in the middle 80s structural adjustment program (SAP) and which culminated in the Philippine entry to the World Trade Organization (WTO). Most industries are highly monopolized or under the thumb of oligopolies which are combinations of big regional or global investors and big local partners or dummies. They crushed medium and small scale firms where most Filipino entrepreneurs are involved.

The failure of Philippine agriculture to develop and create more employment and livelihoods is the failure to carry out thoroughgoing land reform and modernization of agriculture and fishery, including the promotion of many small and medium scale agribusinesses. Until now, despite a second extension of the Comprehensive Agrarian Reform Program (CARP) since 1988, most of the big prime agricultural lands held by powerful oligarchs are not yet covered by the reform. Credit is highly scarce for small farmers and fishers, even for medium scale agricultural entrepreneurs.

Moreover, access to quality education (or the lack thereof) further exacerbates gap between the rich and the poor. One (1) out of eight (8) Filipinos, or around 6.24 million Filipinos, aged between six (6) and 24 is an out-of-school youth (National Statistics Office-Annual Poverty Indicators Survey, 2010). Even for the "luckier" ones who get to go to school, only seven (7) out of ten (10) finish elementary while only five (5) of this ten (10) will graduate from high school (Basic Education Information System, 2008-2009). Only two (2) out of ten (10) high school graduates proceed to college (CHED, 2010).

While on the one hand the costs of private education continue to rise beyond the means of a minimum wage-earning family, on the other, the capacity of public education institutions to absorb the brightest and promising young minds continues to be strained by the withdrawal of State support. In both sides of the fence, the poor is the one left out, stuck in poverty trap for generations. Despite all the lofty promises of leaders and the ubiquitous acknowledgment of the right to education by all sectors of society, in praxis, education is not a right but has become a commodity – access to which is dictated by one's capacity to pay. Education, in fact, is not the perceived equalizer, but has become a means promote the same chronic inequalities in society it supposedly promises to correct.

Thus, it should not come as a surprise that inequality remains rampant and embedded in the country. Among ASEAN countries, excluding Brunei Darussalam and Myanmar, the Philippines recorded the highest income inequality in 2009 (0.448), followed by Singapore (0.425), Thailand (0.425), Cambodia (0.407), Indonesia (0.394), Malaysia (0.379), Vietnam (0.378) and Lao PDR (0.326), according to the Human Development Report 2009.

National President
Freedom from Debt Coalition

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fdc march 8 2013Over the years, International Women's Day has taken on a festive character, a contrast to its beginnings more than 100 years ago when women workers, facing terrible labor conditions took to the streets demanding better treatment.

Many of the rights we enjoy today are the fruits of those early years of difficult struggles, and yearly, on March 8, we pay tribute to our sisters who were detained, beaten, deprived of their basic freedoms, in their determination and belief that women can enjoy a better quality of life, free from violence and discrimination.