The Spratly Betrayal

Perry Diaz

In my article, "Dangerous Liaison or Masterful Plan?" (September 24, 2004), I wrote: "After surviving the biggest threat -- the Angelo de la Cruz kidnapping -- to the stability of her presidency, President Gloria Macapagal Arroyo (GMA) made a bold move by visiting China. Chinese President Hu Jintao rolled out the red carpet for GMA's state visit.

"A total of five bilateral 'agreements of cooperation' were signed covering tourism, energy, fisheries, trade and investments. China and the Philippines agreed to conduct a 'seismic study' of potential petroleum reserves in the South China Sea which included the Spratly Islands, a small group of islands claimed by the Philippines, China, Vietnam, Malaysia, Taiwan, and Brunei. Included in the deal were financing of several major infrastructure projects. And, according to Philippine Communications Director Silvestre Afable, Jr., 'the two countries agreed to cooperate on defense and security by sharing intelligence and technology.' It was not clear if 'sharing intelligence and technology' was covered by an 'agreement of cooperation' or, simply, by a good-faith handshake between the two leaders, the mechanism of which would be worked out by their respective resident spies, oops, I mean diplomatic attaches. What was in GMA's mind when she thought of paying her giant neighbor a visit?

"It's like a kitten entering the tiger's den and extending her cute little paws as a friendly gesture. Evidently, it worked. GMA left a good impression upon President Jintao and took the bacon home."

Little did anyone know -- except for a small number of Arroyo's henchmen and business cronies -- that the five bilateral 'agreements of cooperation' were loaded with anomalous transactions. In hindsight, I should have titled my article, "Dangerous Liaison and Masterful Plan." Arroyo didn't bring home the "bacon," she brought the "lechon" to Hu Jintao on a silver platter. And, as alleged by Rodolfo "Jun" Lozada and Dante Madriaga before the Senate Blue Ribbon Committee, there's dirty money -- millions of dollars -- that would change hands under the table.

Recently, an article by Barry Wain in the Far Eastern Economic Review stated that Arroyo "has made breathtaking concessions in agreeing to the area for study, including parts of its own continental shelf not even claimed by China and Vietnam. Through its actions, Manila has given a certain legitimacy to China's legally spurious 'historic claim' to most of the South China Sea."

"Continental shelf" is land under relatively shallow water that extends from the coast to a point where it drops to the bottom of the ocean. The Philippines has claimed the continental shelf around Palawan under the United Nations Convention on the Laws of the Seas. Thus, the Camago-Malampaya fields and the Kalayaan island group, which is part of the Spratly Islands, are integral parts of the continental shelf of Palawan.

In an attempt to ward off criticism against Arroyo, Justice Secretary Raul Gonzalez was reported to have said that "the undertaking will be conducted by private oil companies and not by the governments themselves." This was another example of Gonzalez's double-talk. Once again, Gonzalez has put his foot in his mouth with his outlandish claims. The original signatories to the Joint Marine Seismic Undertaking (JMSU) were Philippine National Oil company (PNOC) and China National Offshore Oil Exploration (CNOOC), both of which are state-owned. Since Arroyo was present when PNOC President and CEO Eduardo Mañalac signed the agreement in China, Mañalac obviously had Arroyo's official sanction.

On March 14, 2005, Vietnam -- after making a lot of noise -- was added to the JMSU agreement. The area covered by the tripartite JMSU included 24,000 square kilometers of undisputed Philippine territory. According to Gonzalez, three trillion cubic feet of oil have "already been found" in the area. That's 535 billion barrels of oil! By comparison, Saudi Arabia has proven oil reserves of 264 billion barrels. It is no wonder then that seven countries have claimed ownership of the Spratly Islands. China, Taiwan, and Vietnam claimed all the islands while the Philippines, Indonesia, Malaysia, and Brunei claimed parts of the islands.

One of the provisions of the PNOC-CNOOC agreement states: "PNOC shall assign all its rights and obligation under the Agreement to one of its affiliates (it is understood by the Parties that such affiliate shall be PNOC EC)." "PNOC EC" is PNOC Exploration Corporation, a subsidiary of PNOC. However, there is nothing in the agreement that would disallow PNOC EC to subcontract the work. As most people would know, government subcontracting is where "dirty money" or kickbacks are funneled through. It's interesting to note that, according to recent news report, Mañalac was "fired" in November 2006 by Arroyo for "'hurting' oil companies that had lines to First Gentleman Mike Arroyo and presidential brother Diosdado 'Buboy' Macapagal, Jr."

The details of the agreement were so secret that it took 3 ½ years before the anomalous agreement was exposed as a result of the Senate investigation on the ZTE-NBN deal. Malacanang justified the secrecy by saying that it couldn't disclose the details for reasons of national security and diplomatic relations. The lack of transparency led a lot of people to believe that Arroyo was hiding something. As Sterling Seagrave, in his book "Gold Warriors," said, "Secrecy is power. Power corrupts. Secret power corrupts secretly." Indeed, "secrecy" has become the trademark of Arroyo's presidency where she used "executive privilege" to shield her secret dealings with China from the scrutiny of Congress and, ultimately, the Filipino people.

Right after the JMSU was signed, China agreed to commit $2 billion in Official Development Assistance (ODA) loans each year from 2007 through 2010 for a total of $8 billion. Among the projects that would have been funded by Chinese ODA loans were the controversial $329-million National Broadband Network, $465-million Cyber Education, $500-million NorthRail, $932-million SouthRail, and the $4-billion Fuhua agricultural projects. Under the Fuhua agricultural agreement, one million hectares -- a tenth of the Philippines' agricultural land -- were to be leased to Fuhua. Legal experts believe that it is a violation of the Philippine constitution.

Arroyo's dangerous liaison with China and her "masterful plan" of allowing China to explore -- and ultimately exploit -- the Philippines' rich natural resources is a treasonable act. While corruption by itself is a very grave offense, selling out a piece of the country's territory is a betrayal of the people's trust and should -- nay, must -- not be condoned.