Philippines Warned of China’s Ecuador Debt Entrapment

The Philippines can fall into China’s debt entrapment like Ecuador. And like Ecuador, the Philippines has waived immunity from suit and patrimonial property rights in the loan.

Supreme Court most senior Justice Antonio Carpio, warns of China’s seizure of oil and gas-rich Recto Bank off Palawan. And that’s in case of default in repaying Beijing P4.37 billion for a China state firm to build the Chico River Pump Irrigation in the Cordilleras. Justice Carpio said Philippines mineral resources will be China’s for the taking. He reveals that the government has also allowed itself to be sued for default.

Arbitration will ensue, under Chinese laws, presided by the China International Economic and Trade Arbitration Commission. There will be three arbiters, one each for Manila and Beijing and the third, their common choice. And should they disagree over the third man, CIETAC will assign a Chinese functionary. Justice Carpio has described this as a ‘raw deal’. “China will have its pick of Philippine assets to garnish,” he said. “The only exceptions are those already for diplomatic, military or common public use. Article 8 of the loan exempts only those three from the waiver of immunity.”

Justice Carpio says Beijing’s likely choice is Recto Bank. According to the US Energy Information Administration report in 2013, Recto holds up to 5.4 billion barrels of oil and 55.1 trillion cubic feet of gas. Although the bank is within the Philippines’ 200-mile exclusive economic zone and 650 miles from China, Beijing warships drive away Filipino drilling vessels. In 2005-2008 Malacanang treasonously let China explore the area in Joint Marine Seismic Undertaking. In 2009, Beijing unilaterally laid claim to the whole South China Sea. Then seven years later, a United Nations court upheld Recto Bank as Philippine maritime jurisdiction.

Beijing has refused to accept and the Duterte administration to assert the verdict.