Debt activists urge donor countries and agencies to stop providing Arroyo loans and aid

ANGELES CITY, Pampanga — A day after civil society organizations finalized their “Citizens’ Report on Official Development Assistance (ODA) in the Philippines,” around 100 debt and development activists led by the Freedom from Debt Coalition (FDC) and ODA Watch conducted a protest action during the formal opening of the 2008 Philippine Development Forum (PDF) Wednesday at the Fontana Convention Center, Clark Freeport here. The Philippine Government and the World Bank (WB) jointly organized the said event.

These activists who came all the way from Manila joined other Kapampangan protestors from the Kilusan para sa Pambansang Demokrasya (KPD) and Bukluran sa Ikauunlad ng Sosyalistang Isip at Gawa (BISIG) and demanded donor countries and multilateral institutions participating in the PDF to stop providing loans and aid to the corrupt government of Mrs. Gloria Macapagal-Arroyo.

FDC said that one way to prevent the proliferation of corruption in the country is “to plug the funneling of funds from loans and aid which is the source of kickbacks that are being used by this corrupt and illegitimate administration for political survival.”

Aside from the government, the groups also lambasted donor countries and lending institutions such as the World Bank, the International Monetary Fund and the Asian Development Bank for using debt, aid and the promise of “development” as leverage to impose ill-conceived economic policies and unfair conditions which aggravated the country’s accumulation of illegitimate debts and economic mal-development.

In their “Citizens’ Report,” the groups said they share the national outrage brought about by anomalies behind the planned $329-million ZTE-National Broadband Network (NBN) project, which they believe is the latest in a grim harvest of scandal involving projects funded by official development assistance (ODA).

“It comes in the heels of one unrelenting controversy after another—the North Luzon Railways Project, the South Luzon Railways Project and the Cyber Education Project—to name just a few under the Arroyo administration. The scale of new exposés on ODA misuse brings to mind the dark days of Marcos’ authoritarian rule when foreign assistance had acquired the vile reputation for corruption, bribery, human rights violations and environmental degradation, among other social evils,” the groups said.

“While we recognize that ODA has a role to play in Philippine development, we also affirm that inadequacies in the country’s foreign aid system has persisted for far too long, and a judicious end is nowhere in sight. After over five decades, accumulated evidence reveal countless instances of political influence peddling, huge kickbacks for government officials, questionable altruism among aid donors, useless yet expensive projects that cost Filipinos billions in loan repayments and a host of other issues associated with the sourcing and utilization of foreign aid money,” the groups said.

“Worse, indications are rife that what financial experts described as an already critical situation will get aggravated by new surges in ODA loans from countries like China, exacerbating longstanding problems and threatening to sink the Philippines in a debt crisis similar to that of the 1980s,” they stressed.

“We believe that clearly, change is imperative and it must begin by reaching a consensus on the systemic problems plaguing foreign assistance in the Philippines, as well as by the immediate initiation of concrete and accountable processes to govern the quality, quantity and effectiveness of aid by stakeholders from civil society, donors and government organizations,” they added.

Other signatories to the Citizens’ Report include: Initiatives for Dialogue and Empowerment through Alternatives Legal Services, Inc. (IDEALS, Inc.); Social Watch Philippines; Philppine Network of Rural Development Institutes, Inc. (Philnet - RDI); Philippine Rural Reconstruction Movement (PRRM); Management and Organizational Development for Empowerment (MODE); Pambansang Kilusan ng Kababaihan sa Kanayunan (PKKK); Sustainability Watch; Partido Kalikasan; and, Justice, Peace and Integrity of Creation Committee (JPICC-AMRSP).

Inside the Fontana Convention Center, civil society representative Prof. Leonor Briones of the Social Watch Philippines distributed to and presented before the PDF participants the “Citizens’ Report” which affirms the following findings:

1. Billions of dollars that poured in Philippine coffers since 1986 under the aegis of official development assistance largely failed in its mission to promote sustainable social and economic development and the welfare of the Filipino people. Instead, there are very strong indications that ODA benefited the economies and businesses of lending countries, as well as local ‘loan brokers’ who facilitated the transaction of foreign aid loans. Filipino taxpayers get the short end of such dealings, as ODA loan obligations add up to the nation’s debt burden.

2. Philippine experience with ODA-funded projects exacerbates conditions that sustain poverty and inequality. Development management processes that encompasses strategic planning, implementation and assessment—from which all foreign-funded development projects should be based upon—is not inclusive, transparent, accountable nor coherent with rights-based aspirations of the poor and marginalized in society. A collective/ communal response from civil society organizations is urgently needed to address these basic problems that lie behind longstanding problems associated with ODA.

3. Exorcising and dismantling the evils associated with the current crisis in ODA requires that civil society be given full play in holding donors and the government to account in implementing and enriching the principles of aid effectiveness, as well as empowering the poor and marginalized to assert their rights. Concrete steps need to be initiated towards strengthening empowerment, local capacity, participation, transparency, leadership and joint responsibility. Aid reforms need to be undertaken through the establishment of a broader and more equitable governance system for ODA.

The civil society groups also said that ODA’s longstanding (structural) inadequacies and failings negate its avowed purpose and its effectiveness. Hence, the Filipino people do not need:
• Aid that does not go to their intended beneficiaries and does not effectively contribute to social development and poverty alleviation;
• Aid that is “tied” to onerous and disadvantageous conditions;
• Aid that helps degrade the environment and violates the rights of people; and
• Indiscriminate aid that simply increases the national debt burden.

The following are their recommendations to donor governments and multilateral institutions:
• Increase and improve the quality of aid allotments
• Realign the loan-grant mix to favor the latter
• Increase the share of projects on human and social development
• Realign regional and provincial distribution of aid to poorer areas
• Address social and environmental concerns
• End all tied aid
• De-link aid from the war on terror, particularly in Mindanao
• Reform technical assistance to respond to national priorities and build capacity.

The following are the groups’ recommendations to the Philippine government:
• Fix implementation problems
• Plug the hemorrhage of government funds in repaying loans
• Address the foreign consultants’ issue
• End human rights violations in aid projects
• Focus on long-term and alternative sources of development financing
• Strictly follow the legal requirements in negotiating loan agreements
• Adopt a policy of transparency and popular participation
• Draw up comprehensive and consistent ODA performance standards
• Re-evaluate government policies and thrusts on ODA
• Adopt a policy of preferential option for untied aid

The Philippines Development Forum or PDF is the primary mechanism of the government in facilitating substantive policy dialogue among stakeholders on the country’s development agenda. It also serves as a process to generate commitments among development partners, funding agencies and different stakeholders.

The last PDF formal meeting was held 8-9 March 2007 in Cebu with participants from Government, Multilateral (ADB, WB IMF) and Bilateral Donors (e.g. UK, US) and international development partners (OPEC, UN), and other stakeholders. -30-

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