In Crisis, a Primer from A to ZTE

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Global Networking : In Crisis, a Primer from A to ZTE


By Rodel Rodis
INQUIRER.net

Posted date: March 05, 2008


President Gloria Macapagal-Arroyo (GMA) was considered a loyal ally of the United States until July of 2004 when she “caved in” to Iraqi hostage takers’ demands to withdraw the Philippine government’s 51 soldiers and police officers from Iraq a month early, in exchange for the release of the Filipino hostage Angelo De La Cruz.
In directing the Philippines to be the 5th country (after Spain, the Dominican Republic, Nicaragua and Honduras) to withdraw from the US-led “Coalition of the Willing” in 2004, GMA incurred the wrath of the US government. It retaliated by reducing US military and economic aid and limiting loan assistance from US financial institutions.

Prior to that date, the Philippines had shown its loyalty to the US by rallying the Association of Southeast Asian Nations (ASEAN) to deal as one bloc to push China out of the Spratly Islands in the South China Sea, where four ASEAN allies and China hold competing claims. The Philippines was hailed by the US for standing up to China when it successfully prodded ASEAN and China to sign a “Declaration on the Conduct of Parties in the South China Sea,” to stop China’s growing military presence in the area.

After the US punished the Philippines by imposing de facto sanctions on and refusing any face-to-face meetings of GMA with President George Bush, the Philippines changed course.

As Barry Wain wrote recently in the Far Eastern Economic Review, “President Gloria Macapagal Arroyo’s hurried trip to China in late 2004 produced a major surprise. Among the raft of agreements ceremoniously signed by the two countries was one providing for their national oil companies to conduct a joint seismic study in the contentious South China Sea, a prospect that caused consternation in parts of Southeast Asia…The Philippines also made breathtaking concessions in agreeing to the area for study, including parts of its own continental shelf not even claimed by China.”

According to Philippine Star columnist Jarius Bondoc, “There might be a hint of the real reason there. For, soon after RP capitulated, China offered to lend $2 billion a year till 2010 for government projects. China wasn’t doing it out of the goodness of its heart, though. It was bursting at the seams with $2 trillion in reserves, and was to collect 4-percent interest, hardly concessional in a period of much lower rates. China was only too willing to look like it was accommodating a new ally.”

These generous Chinese loans may have helped the Philippines reach an unprecedented 7.3% growth in 2007, the highest in 30 years. But they laid the ground for the present crisis which may yet topple the Arroyo government.

In 2007 alone, the Philippines signed 33 new projects for financing by the China Export-Import Bank. One of the projects was the NBN-ZTE deal which the Philippine government signed in April of 2007, where Zhong Xing Telecommunications Equipment (ZTE), the Chinese telecommunications giant, was awarded a contract worth US$ 329.5 million to set up the National Broadband Network (NBN) to improve government communications capabilities nationwide.

On August 29, 2007, Rep. Carlos Padilla in a privileged speech in the Philippine House charged that Philippine COMELEC Chair Benjamin Abalos brokered for the ZTE deal. A week later, the Philippine Senate called for hearings on the ZTE-NBN deal.

On September 10, 2007, Joey De Venecia, son of Joe De Venecia, then Philippine Speaker of the House, testified before the Senate and claimed that he was with Abalos in China when he heard Abalos “demand money” from ZTE officials.

Although Joey De Venecia was barred by Philippine law as the son of a high official from participating in and obtaining Philippine government contracts, he nevertheless submitted a losing bid for the NBN project as president of Amsterdam Holdings. He told the Senate that the president’s husband, First Gentleman Mike Arroyo, had counseled him to back off” from pursuing the project and offered to compensate him.

On September 22, 2007, GMA announced that she was suspending the ZTE-NBN contract. On September 26, National Economic and Development Authority (NEDA) Chair Romulo Neri and COMELEC Chair Abalos appeared at a Senate hearing. There Neri claimed that in a golf game earlier in the year, Abalos offered him $4-M (P200-M) for signing off on the ZTE deal. Abalos denied the charge.

On October 1, 2007, Abalos resigned his post as COMELEC chair. On October 2, GMA traveled to China to tell Chinese President Hu Jintao of her “difficult decision” to cancel the ZTE contract for the NBN project.

On January 30, 2008, the Philippine Senate issued warrants of arrest for Neri and NEDA consultant Rodolfo “Jun” Lozada, Jr. Neri went into hiding to avoid being served the warrant and Lozada flew to Hongkong. When he returned from Hong Kong On February 5, 2008, a Senate team was waiting to arrest him to take him to the Senate to testify on the ZTE-NBN deal. Before he could be served the warrant, however, he was whisked away by unidentified military personnel, only to be later dropped off under media pressure to join his family at La Salle Greenhills.

The day after his return, Lozada testified that Abalos and Mike Arroyo were behind the “kickbacks” in the deal, charging that they stood to make about $200-M from the $329.5-M contract. He said he warned them that the overcharge was too high and wouldn’t fly, but they ignored his warnings.

For allowing his son to testify against the GMA and the FG (First Gentleman), Speaker De Venecia would be voted out as Speaker of the House. On Friday, February 29, approximately 50,000 people gathered at the Ninoy Aquino monument in Makati in an Inter-Faith Rally that called for the resignation of GMA. The next day, Jose Maria Sison, leader of the Communist Party of the Philippines (CPP), called for 100,000 Filipinos to gather in a street protest in Manila to unseat President Gloria Macapagal-Arroyo. This should be enough, he said, “to ignite the withdrawal of support from the regime by the bureaucracy and the military."

That’s the A to Z of this saga, from Angelo De La Cruz to the ZTE telecom giant, all in less than four years.

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