A sustainable, whole-nation, “Kobayashi Maru” solution to China’s aggression

[adroth]

Latest discussion spurred on by SND Lorenzana's hinting at a review of the US-PH MDT

Merry Christmas to you and your loved ones,
 
h.

Happy New Year to you and yours.

Let me re-order my responses so to communicate the message better.

If you feel it's not bad timing on PH's part (note I didn't say "If you feel it's GREAT timing", since
THAT would be straw), then we'll just have to disagree.

I would actually argue that the SND’s statements are not meant for the US alone (see further below), and is actually coupled with backend discussions that already put these statements into context.

Kim is not Goldberg, and Lorenzana’s ties run deep.

While I recognize that these are . . . interesting . . . post-WWII times for the US, if the goal is to completely avoid waves then there will never be a good time for anything significant.

'Naku ha, those are motherhood statements. 
"Complete subservience" is furthermore pure straw.
There's a gulf between mature disagreement, and the childish level of scorn towards both the
US and the PH-US MDT itself, that we've seen from the highest level of PH.gov.

Comments about subservience and mendicancy are related. See further below.

The sooner the US gets accustomed to a Philippines that is willing to go its way on occasion the sooner the relationship matures. The better it will actually be for both countries.

More motherhood statements and straw? 
The Philippines HAS been going its own way on occasion since the Clark and Subic boot-out, but
again, never with the childish level of scorn towards both the US and the PH-US MDT itself, that
we've seen from the highest level of PH.gov.

You are partly correct in saying that Philippines went its way with the bases boot-out. But it was a half-arsed departure from precedent because it was only the Senate that went its way. To the very end, Manglapus was pushing for an extension of the US bases treaty, and it was the Senate that rejected it.

The Executive department never wrapped its head around what that boot-out really meant. Which is why the government continued to fund the AFP conservatively, as though it still had full access to the Pentagon's coffers.

That, along with the organizational excesses that came with not having to worry about where funding came from, is what led to the force-deficiencies that modernization has been trying to patch for the past 20 years.

It also gave China the opening it needed in Mischief Reef, and the rest is history.

Furthermore, the sooner the Filipino people break out of a mendicant mindset that expects the US to everything for us, that is actually needs to weigh options instead of just "going along", sooner it will actually appreciate the "why" behind the importance of such relationships.

To achieve that goal, sometimes we need to bend the relationship in ways it was never bend before. Think the PMA bamboo analogy.

"Mendicancy" and a total reliance on the US ...are more motherhood and straw, adroth.
At best they are generalities that are only borderline related to the thread-topic, which is that
PH DND Sec wants to try to get a US commitment to include KIG under MDT coverage.

As you noted, the EU is willing to make its own army. Israel gets away with spying on the US, and so on. Yet . . . they remain allies.

Malacanang’s message has three audiences directed at three partly-intertwined problems.

The first problem is with the Filipino psyche. In US-PH relations, this problem manifest itself in the following schools-of-thought:

“The US cares about us and will never abandon us”
“The US is obligated to protect us”
“We must go along with everything the US says because we don’t want them to abandon us”
“The US abandoned us. How dare they”

The common denominator is treatment of the US as a foreign-policy crutch. Attitudes towards this crutch range from mendicant-acceptance to resentful dependence. Consider the following survey on Filipino impressions about the US.

Filipinos like the US even more than Americans do – Pew Research
Data from the Pew Research Center's Global Attitudes Project show Filipino respondents have positive views on the US, Americans, and US Presidents – even better than Americans themselves
Rappler.com
Published 6:26 PM, April 22, 2014
Updated 12:56 AM, April 23, 2014
https://www.rappler.com/nation/56085-philippines-usa-pew-research

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Data from the Pew Research Center's Global Attitudes Project show a higher percentage of Filipinos surveyed – 85% to be exact – having a more "favorable" view of the American people. Americans come second in the survey, with 84% saying they have a "favorable" view of themselves.

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74% of Filipinos surveyed, meanwhile, expressed confidence that China "will never replace the US as the world's leading superpower."

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Not surprisingly, 81% of Filipinos surveyed saw the US as a "partner" of the Philippines.

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This dependence doesn’t just manifest itself in normal common-tao discourse, it runs deep even in the AFP, where JUSMAG and FMS are still looked upon as substitutes for development of a proper procurement service. Easier to be told what you need, rather than doing the hard work to actually figure things out yourself . . . AND actually living with the choices that you made.

Beyond big ticket items, long-time service Timawans even lament how JUSMAG assistance is sought for things as mundane as per-diem for officers who go on overseas training . . . instead of properly funding such travel in-house through proper fiscal planning and responsibility.

How do you turn something from a crutch, into something is simply viewed as an advantageous arrangement? You make it optional. That’s what where the PMA bamboo analogy comes in.

You can’t straighten crooked piece of bamboo just by bending it to its preferred. If you did it will just bend back to its crooked state. You bend it beyond the preferred state, so that when it bends back, it springs to the intended shape.
Malacanang’s statements are hyperbolic at best and “childish” at worst. But at the end of the day, it is a “bamboo” solution for the domestic audience. You need, at the very least, to question the default assumptions of US-PH relations.

Uproar over the anti-US rhetoric is to be expected because it is unfamiliar, almost sacrilegious, in its content. But if we are to “move the needle” on this matter, something other than business-as-usual is called for.

Enter activities like exercises with Russia. No JUSMAG to provide guard rails, to remind the PN to make sure that these activities are actually logistically supportable. Mistakes will be made (e.g., BRP Davao del Sur reportedly ran into engineering issues coming back from Vladivostok). Lessons will have to be learned.

Integral to success is belief in our ability to succeed. At some point, an adolescent – even an overaged one -- has to ride the bike without training wheels . . . dive into the deep end of the pool before he/she is completely ready.

Second audience is China. Keep them off guard . . . and wondering about what our intentions really are. Buy time to shore up our positions. How? See here.

Third is the US. This is discussed further in the next section below. But the important bit to note for now is as follows:

If the out-of-left-field pronouncements of one administration is enough to damage US-PH relations, then the “special relationship” was never as strong as advertised in the first place.

The US now has a better ambassador than in early 2016, and knows how to take the administration’s statements in stride and ascertain commander’s intent.

The US is not as “evil” as its critics claim. Nothing ever is because there are ALWAYS two sides to everything. It is also not the charitable institution that many of its admirers believe. If there is an over abundance in admirers, there is a need to overplay the negative to move the needle towards a more balanced view of the real state of affairs

...and as you noted, the US-NATO treaty is tighter than US-PH. Hence Euro NATO members (as
"the EU") have a lot more rope to play with.

Not so PH, which has furthermore been careless
with its shorter cordage.

One can't upslope a weaker PH position to the durability of NATO.
One can, however, downslope the negative effects of US politics even on NATO, onto the much
weaker position of PH.

Israel? US backing for Israel is rather arguably stronger than even for NATO, and has been for
decades (Simple test lang: how many Israeli citizens in US Congress and Senate? Ask that for,
say, Belgians or any other European country? How about for Filipinos?) Upslope, downslope.

I am under no illusions about the Philippines having even remotely the same leverage as either NATO or Israel, or enjoys the same perception of value.

Past Philippine behavior hasn’t helped that perception one bit. We have been inept in multiple spheres. Not the least of which is how we live up to our defense obligations. No country has had a better front-row-seat to AFP fiascos than the US. Understandably, the AFP has had to contend with US stereotypes.

The US has its own assessments about where it believes the Philippines should direct its resources. Consequently, the assistance and advice it provides is geared towards specific shared concerns, and little else. See JUSMAG.

Our history has also shown that our compliance with the assessments has been predictably favorable. Our decisions have remained within loosely defined – or implied -- US-centric boundaries. As a Timawan in the DND once lamented during the Aquino administration . . . we were painfully hesitant to ask for anything meaningful. We were a known-quantity, that would take what was given.

Anything beyond this . . . the Philippines is on its own.

If it wants anything more, such as firmer assurances with regard to China, it needs to refresh the relationship. It needs to prompt a reassessment of existing pre-conceived notions and calculations. The first step in that is to actually ask for it.

Reception to such overtures can be shaped by how the stage is set. “Antics” that serve to implement the bamboo solution for domestic politics, simultaneously serve to signal a need for a rethink. It is an effort to shape perceptions of value. By signaling that we are willing to go it alone, we are, not only signaling our own house to get its own act together, we are also giving the US reason to refresh its assumptions.

It is, by the way, worth noting that the Philippines is very careful not to alienate our other local partners. This is a "drama" aimed at the one ally that know better than to think that we really want to cut ties.

[adroth]

One must wonder how much of China’s internal debt woes can be attributed to the billions spent on building, and then maintaining, its artificial islands in the WPS. More ammo for the #4thoption #kobayashimaru and the threat of economic retaliation.

Forget the Trade War. China Is Already in Crisis

Even if the second-largest economy resolves the current slowdown, it will remain mired in a debt-driven slump.
By Michael Schuman

https://www.bloomberg.com/news/articles/2019-01-17/forget-the-trade-war-china-is-already-in-crisis?utm_campaign=news&utm_medium=bd&utm_source=applenews

Once again, the world’s investors are turning their worried gaze toward China. And for good reason. Economic growth in the third quarter sank to 6.5 percent, the slowest pace since the depths of the global financial crisis in 2009.

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Tariffs on Chinese exports to the U.S. imposed by President Donald Trump are starting to pinch the country’s factories. A steep and unexpected plunge in imports in December signaled just how sharply the economy is decelerating. That’s led Beijing to turn the volume down on its bravado and negotiate with Washington to defuse the conflict.

A trade pact, if it happens, may soothe investors, and perhaps even juice economic growth—at least temporarily. But it won’t bring an end to China’s woes.

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What goes widely unnoticed is that China is already in crisis. No, it’s not the sort of hold-on-for-dear-life collapse the U.S. had in 2008 or the surprising, ferocious meltdowns the Asian Tiger economies experienced in 1997. Nonetheless, it’s a crisis, complete with gutted banks, bankrupt companies, and state bailouts. Since the Chinese distinguish their model of state capitalism as “socialism with Chinese characteristics,” let’s call this a “financial crisis with Chinese attributes.”

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What would likely have laid other emerging markets low was just another day’s work for China’s powerful mandarins. The government organized a stock bailout and clamped down on capital outflows. Crisis averted.

That approach is representative of Beijing’s overall strategy toward its debt problem. The government—obsessed with social stability—isn’t allowing the debt bomb to detonate. But the financial crisis with Chinese attributes is inflicting the same damage on the economy anyway.

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China is dealing with another feature of a financial crisis: capital flight. Because of strict controls, money can’t gush out as it probably would under a less restrictive regime.

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[adroth]

Heydarian's latest piece actually lends support to the following section of the thesis that puts the spotlight on the points to ponder about the PH-US MDT

Evaluating the "3rd option": MDT

How Washington’s ambiguity in South China Sea puts the Philippine-US alliance at a crossroads

Richard Heydarian writes that the Philippines could ‘downgrade’ its long-standing association with the US if Washington remains unclear on its commitments in disputed waters

PUBLISHED : Thursday, 31 January, 2019, 3:23am
UPDATED : Thursday, 31 January, 2019, 10:31pm

https://www.scmp.com/news/china/diplomacy/article/2184390/how-washingtons-ambiguity-south-china-sea-puts-philippine-us?fbclid=IwAR3ofg4R13hmvmBn4PPvu2mVGzJ6lN7v5lkEkZ-X7OfpW8P0Zlm2EOQrUAg

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The Philippine defence chief openly lamented Washington’s “ambivalent” position on the exact coordinates of its commitments to the Philippines, especially in light of the South China Sea disputes. He explicitly questioned whether the Mutual Defence Treaty is “still relevant to our security” instead of just serving “the interest of other nations”, namely the US.

The first problem with the alliance is the very text of the treaty. According to Article V of the MDT, “an armed attack on either of the Parties is deemed to include an armed attack on the metropolitan territory of either of the Parties, or on the island territories under its jurisdiction in the Pacific or on its armed forces, public vessels or aircraft in the Pacific.”

Yet, Washington has equivocated on what exactly it considers to be part of “metropolitan” Philippines and the “island territories under its jurisdiction”.

To the Philippines’ horror, its ally largely stood by when China occupied Philippine-claimed Mischief Reef in 1994 as well as during the months-long Philippine-China naval stand-off over the Scarborough Shoal in 2012.

The US has repeatedly refused to clarify whether its treaty commitments apply in the South China Sea, where the Philippines is at loggerheads with several other claimant states.

Moreover, there are doubts whether the treaty provides expedient military help in the event of conflict between the Philippines and any hostile third party. According to Article IV of the treaty, each party “would act to meet the common dangers [in their area of jurisdiction] in accordance with its constitutional processes”.

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By calling for a formal review, the Philippine defence establishment likely hopes to compel the US to revisit both the text and its interpretation of the MDT in ways that are more mutually satisfactory. In exchange, Manila may grant US troops expanded access to its military bases, particularly the Bautista and Basa airbases bordering the South China Sea.

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[adroth]

The Philippines is not afraid of Chinese ‘debt trap’ — Teddy Locsin Jr.
Janvic Mateo (The Philippine Star) - February 17, 2019 - 12:00am

https://www.philstar.com/headlines/2019/02/17/1894367/philippines-not-afraid-chinese-debt-trap-teddy-locsin-jr?fbclid=IwAR2TTJhFt0IR2iTaejZ0HUGhBfGqOHoO4gSTJq6WEOefVs2SPKCyLhp2jO8

MANILA, Philippines — The Philippines is not afraid of the so-called debt trap strategy of the Chinese government, according to Foreign Affairs Secretary Teodoro Locsin Jr.

Speaking at the Hungarian Institute of Foreign Affairs and Trade during his official visit to Hungary on Thursday, Locsin said the Philippines has experienced worse in the past under the Western financial system.

“The West went into paroxysms of ecstasy over our people power revolution, which was a rebuke to communism as a way forward,” he said, referring to the 1986 People Power Revolt that toppled the Marcos dictatorship.

“Still the West threatened our new democracy with financial destruction if it did not pay back every dollar lent by Western banks to the dictatorship which stole every cent of it. Democratic victory was good for a pat on the back, but not good enough for debt forgiveness,” he added.

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In his lecture, Locsin also said the Philippines under the Duterte administration was able to manage its disagreements with China over territories in the South China Sea.

He said the government was able to do so “without retreating an inch from our rightful and inalienable ownership of everything within the widest extent of our sovereign reach in history and international law.”

Locsin did not discuss recent activities of China in the disputed region, including the construction of various facilities in features within the Philippines’ exclusive economic zone.

< Edited >

Locsin, however, reiterated the so-called “independent foreign policy” pursued by President Duterte since assuming office in 2016.

“When I first addressed our foreign ministry on my assumption of office, I told them how a truly independent foreign policy should be pursued,” recalled the foreign affairs secretary, the third to serve under the present administration.

“It is not independent foreign policy if you simply switch the master before whom you are kneeling. You are still on your knees before another master. An independent foreign policy means getting off your knees and on your feet – and standing up for your country. That is true independence,” he noted.

And while the Philippine Constitution renounces war as an instrument of national policy, Locsin said it only refers to offensive war and never to national defense.


Read more at https://www.philstar.com/headlines/2019/02/17/1894367/philippines-not-afraid-chinese-debt-trap-teddy-locsin-jr?fbclid=IwAR2TTJhFt0IR2iTaejZ0HUGhBfGqOHoO4gSTJq6WEOefVs2SPKCyLhp2jO8#Q2BhIc48sYjthGWK.99

[adroth]

Now available in PDF format. Turns out the thing is actually 92 pages long.

http://defenseph.net/bootcamp/wp-content/uploads/2019/11/A_sustainable_whole_nation_Kobayashi_Maru_solution_to_Chinese_aggression.pdf

[adroth]

Now available on Reddit

https://www.reddit.com/r/Philippines/comments/dxzp0n/a_sustainable_wholenation_kobayashi_maru_solution/

[adroth]

An example of what economic retaliation against China would look like can actually be found in what Manila Water and Maynilad are currently facing in light of their tightening the screws on the Filipino people.

Duterte gives go-signal to release new water deal
By Ruth Abbey Gita-Carlos  January 8, 2020, 8:50 pm

https://www.pna.gov.ph/articles/1090386

MANILA -- President Rodrigo Duterte said on Wednesday he has ordered the government's lawyers to transmit the new water concession contracts to two water concessionaires Manila Water and Maynilad.

Speaking before the new presidential appointees, Duterte said he is giving the water companies the options to either accept the fresh deal or just let the government take over the water distribution system.

"You know, we are facing problems in and out of our country. Great problems. Locally, it’s the water issue. And I have given the go-signal to our lawyers to present it to the concessionaires," the President said in a speech delivered at Palace's Rizal Hall.

"And so I gave them the choice, not an ultimatum. We do not do that because we do not own government. At sinabi ko sa kanila (And I am telling them), ‘sign the new contract because if you don’t, I will nationalize, take over the operations and I’ll send you to jail.’ I have two years to do that and I can do it," he added.

Duterte's tirades against the two water firms started when the Permanent Court of Arbitration in Singapore, in its separate rulings, ordered the Philippine government to pay PHP3.4 billion and PHP7.39 billion to Maynilad and Manila Water, respectively.

The Singapore court made the ruling following the losses the two water firms allegedly suffered due to non-implementation of increases in water rates.

The President insisted that the existing deals with Manila Water and Maynilad that contain "onerous" provisions are "null and void" from the very start.

He also maintained that the present water contracts violate Republic Act 3019 or the Anti-Graft and Practices Act.

"But having been a prosecutor for so many years, my instinct really was, you know, to me and to the lawyers here, if you read the contract, you just use your two eyes, you will notice that right at the beginning it is already null and void. Iyon ang mahirap (That's the problem). And if I go against one, I will go against all," Duterte said.

"It was really at that time a conspiracy to defraud government. You'll see, if you place the two documents: Republic Act 3019, that’s the Anti-Graft and Corrupt Practices and you place them face-to-face with the contract of the consumers, distributors, you would notice that all of the prohibited transactions in the Anti-Graft Law are really in the document itself," he added.

In a chance interview on the sidelines of the mass oath-taking of presidential appointees, Panelo said the new water deal is still being "fixed" because there are "mechanics" that still need to be settled.

"'Yung mechanics noon, kailangan pa nilang mag-konsulta sa development bank, 'yung mga expert doon sa financing. May mga financing aspects 'yun eh. Hindi ganoon kasimple 'yun (We have to consult the development bank, the financing experts with regard to the mechanics. There are financing aspects there. It's not that simple)," he said.

No assurance to drop raps vs. water firms

Earlier, the President also ordered the filing of appropriate criminal, civil, and administrative charges against the owners and legal counsels of Manila Water and Maynilad, as well as the agents and lawyers of the governments involved in the crafting of the water concession deals.

Duterte, in his latest speech, said he could not guarantee that his plan to file cases against the two water firms and other responsible individuals would be dropped.

"If you sign the contract sans the onerous provisions, but I do not give you a guarantee that no charges will be filed. For all that I can really say about this, I am not the only Filipino who is interested in the prosecution of crimes," he said.

"That contract was never shown to the public. It was kept out, and suddenly we have a liability. You rob as blind in front," he added.

On Dec. 12, 2019, Duterte threatened to order a military takeover of the operations of the two water concessionaires, in case the government fails to make amends with Manila Water and Maynilad. (PNA)

[adroth]

The following update has been added to the main thesis itself.

The beaching ramp has already been competed by the DND. Phase 1 of the Sheltered Port has been completed by the Department of Transportation

Photos c/o a resident of the municipality.

[adroth]

Time for an update on this build-up of the PH's economic retaliatory capability.

Step 2 established mechanisms designed to acclimatize China to observing Philippine law. Activities in this stage range from establishing hotlines between Chinese and Philippine agencies, to leveraging Department of Energy Service Contracts to open commercial activity with Chinese companies.

Theoretically, Chinese investment in ventures that required a measure of stability in CN-PH relations would create financial incentives for the Chinese government to "behave" in it its dealings with Philippines. Financial self-interest on part of the Chinese -- not the threat of war -- was the administration's preferred approach for de-escalation of tensions, and for achieving the previously stated goal of getting China to accept the Philippine point-of-view.

Step 3 builds upon whatever progress the previous steps achieved. This would require even greater commercial engagement with China. So much so that it would actually compel China to respect Philippine law and Philippine claims, to avoid jeopardizing these investments. Therefore, instead merely fearing Chinese embargoes on Philippine goods as things stand today, Duterte's desired end-state would have China experience "economic pain" should it choose to violate Philippine interests.

Of the three steps, this is arguably the most challenging, and the one that must be handled with the most care. In an ideal world, this step would not even be undertaken till after achieving national-buy-in to the "4th option". But with the 2 of the 6 years of the administration already part of history and much more that to be done in the same unconventional manner as in previous steps -- Duterte has little choice but to forge ahead with his existing mandate.

Time for an inventory of the the potential pain thus far amassed.

Railway sector

https://www.facebook.com/AmbHuangXilian/posts/118154730161040

Commercial Contract Signed for the Highest-Funded G2G China-Philippines Project so far

Our cooperation continues! China and the Philippines just signed the commercial contract for the Subic-Clark railway project. This is so far the highest funded G2G project between the two countries valued at approx. $940 million and is the flagship project under the administration's "Build, Build, Build" program. The 71-km single-track railway will be located in south-central Luzon, connecting Subic Bay Freeport Zone and Clark International Airport and linking the DOTr’s North Railway Project.

The construction period is estimated to last 42 months. Once completed, the railway will build resilient linkages between the commercial zones along the Subic-Clark corridor. Glad to see the improvement in logistic efficiency and other economic activities in the region.

The agreement

https://www.dof.gov.ph/download/project-management-consultancy-of-the-pnr-south-long-haul-project/?wpdmdl=24582&refresh=5ff6922d9b2f71609994797

THIS PREFERRENTIAL BUYER’S CREDIT LOAN AGREEMENT (hereinafter referred to as this “Agreement”) is made on the 29th day of August 2019 between:

THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES, acting by and through the Department of Finance (DOF) (hereinafter referred to as the “Borrower”) . . .; and

THE EXPORT-IMPORT BANK OF CHINA (hereinafter referred to as the “Lender”)

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Article 2 Conditions and Utilization of the Facility

2.1 Amount. Subject to the terms of conditions of this Agreement, the Lender hereby agrees to make available to the Borrower a loan facility (hereinafter referred to as the "Facility") in an aggregate principal amount not exceeding Two Hundred Nineteen Million, Seven Hundred Seventy-Six Thousand, Two Hundred Forty-Two and Sixty Three Cents US Dollar (US$ 219,776,242.63).

2.2 Interest rate. The rate of interest applicable to the Loan shall be two percent (2%) per annum.

2.3 Maturity Period. The Maturity Period for the Facility shall be twenty (2) years commending from the Effective Date, wherein the Grace Period shall be seven (7) years and the Repayment Period shall be thirteen (13) years.

2.4 Purpose. The entire proceeds of the Facility shall be applied by the Borrower for the sole purpose of the payment up to eighty-one percent (81%) of the Consultancy Contract Amount, and not be used for payment of brokerage fees, agency fees or commission.

2.5 Management Fee. The rate applicable to the Management Fee shall be zero point three percent (0.3%). The Borrower shall pay to the Lender a Management Fee in the aggregate amount of the Facility equal to US Dollars Six Hundred Fifty-Nine Thousand Three Hundred Twenty-Eight and Seventy-Three cents (US$659,328.73) in one lump within thirty (3) days after the Effective Date but not later than the date of the first disbursement. The Management Fee shall be paid to the account designated in Article 4.4.

2.6. Commitment Fee. The rate applicable to the Commitment Fee shall be zero point three percent (0.3%) per annum. During the Availability Period, the Borrower shall pay semi-annually to the Lender a Commitment Fee respectively calculated on the undrawn and uncancelled balance of the current tranche then in effect (as provided in Article 3.1 below) under the Facility. The Commitment Fee shall accrue from and including the date falling thirty (30) days after the Effective Date and shall be calculated on the basis of the actual number of days elapsed and a 360-day year. The Commitment Fee shall accrue on a daily basis and be paid in arrears to the account designated in Article 4.4 on each Interest Payment Date.

Article 3 Disbursement of the Facility

3.1 The Facility id divided into four (4) tranches respectively in the amount and covering the years as provided in Appendix 1 [Schedule of Tranches]. The Borrower may revise the amount and/or the covered years of any tranche according with the progress of the Project and accordingly update the Disbursement Schedule with the Lender not later than 90 days before the year preceding to the scheduled effective date of that upcoming tranche, to accommodate the cashflow under the Consultancy Contract. Tranches two (2) to four (4) shall automatically take effect by January 1 of the first year within the period covered by that tranche per the Disbursement Schedule or as otherwise subsequently revised by the Borrower.

3.2 The first disbursement of the first tranche is subject to the satisfaction of the conditions precedent set out in Appendix 2 attached hereto (or unless any conditions precedent have been waived by the Lending in writing). In relation to each Disbursement after the first disbursement under the first tranche, and each Disbursement under the following tranches, besides the satisfaction of the conditions set forth in Article 3.2, such disbursement shall also be subject to the satisfaction of the conditions set out in Appendix 3 attached hereto.

3.3 The Availability Period may be extended, provided that a written application for such extension is submitted by the Borrower to the Lender thirty (30) days prior to the end of the Availability Period and such application is approved by the Lender. Any portion of the Facility undrawn at the end of the Availability Period or the extension thereof shall be automatically cancelled.

< Edited >

Appendix 1

Schedule of Tranches

Tranche		Year covered		USD		PHP equivalent
1		2019 - 2020		68,043,275.33		3,606,293,592.52
2		2021 - 2022		99,333,958.50		5,264,699,800.51
3		2023 - 2024		39,341,504.56		2,085,099,741.76
4		2025 - end		13,057,504.24		692,047,724.72

Oil exploration

Duterte opens Cebu oil field today
Updated May 20, 2018, 7:26 AM

By Minerva BC Newman

https://news.mb.com.ph/2018/05/19/duterte-opens-cebu-oil-field-today/

ALEGRIA, Cebu – President Duterteis expected to lead the will lead ceremonial commencement of oil and gas production of the Alegria Oil Fields.

< Edited >

Duterte is scheduled to open the ceremonial valve of the Polyard-3 Well site in Barangay Montpeller, Alegria town.

Engr. Saul Gonzales, Department of Energy-Region 7 (DOE-7) OIC regional director, said

Alegria town is an oil field of natural gas and crude petroleum deposits with commercial quantities and production may last until 2037.

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Gonzales said Energy Secretary Alfonso Cusi and China International Mining Petroleum Company Limited (CIMP Co.Ltd) Chairman Lam Nam signed the joint declaration of commerciality on March 14, 2018, in Taguig City to formalize the service contract of CIMP Co. Ltd over the AlegriaOil Fields.

Gonzales said exploration and drilling activities of CIMP Co. Ltd. on the oil field started in 2009.

< Edited >

Gonzales said CIMP Co. Ltd has now the option to sell or to produce power or electricity for domestic use by connecting to the distribution grid of CEBECO (Cebu Electric Cooperative) or to the transmission grid of the National Grid Corporation of the Philippines (NGCP).

When the CIMP Co. Ltd shall have produced the power, it gets 40 percent of the net sales, while the Philippine government gets 60 percent share based on Presidential Decree No. 87 (the Oil Exploration and Development Act of 1972).

Gonzales said the crude oil and gas in commercial quantity is expected to spur economic growth in Alegria, as well as the whole Cebu province and even the entire country.

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[adroth]

The fundamental premise of the Kobayashi Maru thesis is that friendly engagement with China would put the Philippines in a better position to create economic incentives for that would serve as a deterrent against further Chinese aggression towards Philippine interests.

Fear of the loss of profit, not the fear of military force, would compel China to behave. The larger the potential loss, the stronger the deterrent. Far stronger than whatever ordnance the Armed Forces of the Philippines could hope to muster, and more reliable than what military alliances could summon.

This article is a summary of the economic retaliatory capability that the Philippines has amassed as a result of this strategy of engagement.

Project		Amount (USD)		Date approved / construction started
Railway
PNR South Long-Haul		219,776,242.63		29 August 2019
Subic-Clark Railway		940,000,000.00		15 January 2021
Bridges
Samal Island to Davao City Connector		401,960,714.40		14 January 2021
Davao River Bridge		60,000,000.00		9 December 2020
Binondo - Intramuros Bridge		70,530,371.75		17 July 2018
Estrella–Pantaleon Bridge		30,583,966.51		17 July 2018
Dam
Chico River Irrigation Project		55,550,469.79		16 November 2017
Kaliwa Dam		211,214,646.54		20 November 2018
TOTAL		1,989,616,411.62

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Responding to Chinese aggression

The financial deterrent created by the 4th option only works if China values PH-CN relations, and fears the financial retribution that the loss of that relationship brings. China's financial self-interest becomes integral to the country's defense.

However, if China actually decided to test Philippine resolve and violate one of the "red lines" laid out by the Department of Foreign Affairs, how would the Philippines respond?

The following scenario presents a plausible answer to this question. For purposes of this thought exercise, the following parameters will be assumed:

- This events takes place in the near future, with a Presidential administration that continues Duterte's approach

- Key build-build-build projects are either already underway or have already been completed, with calibrated percentage of these projects paid for by Chinese loans . . . in accordance with the "4th option"

- At a minimum all Chinese-operated petroleum service contracts, in Alegria and Calamian are producing oil and generating income for the Philippines. Others Service Contracts, within Philippine territory, operated by other countries (e.g., Sulu) may also be operational.

- All facets of the "4th option" are operational

The scenario lays out a sequence of events that would follow a Chinese violation of the Ayungin red line, and presents one way that Malacanang could use its retaliatory options.

1. For reasons unknown, China takes over the BRP Sierra Madre in Ayungin Shoal

2. The PH uses the PH-CN bilateral communication mechanism to protest the action, but to no avail.

3. The Philippines protests Chinese actions to the UN security council, but experiences the power of China's veto power as a permanent member of the UN Security Council

4. Philippines announces a moratorium on loan payments to Chinese banks in retaliation the red line violation, resulting in billions of dollars of losses. Malacanang declares that the moratorium stays in place until Chinese troops release AFP personnel on the Ayungin garrison, withdraws, and compensates the Philippines for material losses resulting from the invasion.

5. Philippines nationalizes all Chinese-held oil rigs and assets in Philippine territory to ensure their continued operation. All Chinese consultants and workers at these facilities are arrested and expelled.

6. The AFP calls up Affiliated Reserve Units (ARU) who are qualified to replace the Chinese personnel to ensure continued operation of the nationalized facilities.

7. DND organizes Task Force Ayungin which:

--> Deploys both of the Philippine Navy's South Korean frigates to Ayungin. Frigate #1 is tasked with a line-of-sight show of force function both to express displeasure at Chinese actions, and to re-assure AFP personnel on Ayungin that they have not been forgotten. Frigate #2 is tasked with air, surface, and sub-surface over watch duty



--> One Tarlac class SSV is deployed to provide Underway Replenishment capability to the frigates, serve as a local command center, and to deploy amphibious assault assets that could be used for retaking Ayungin.

--> Deploy AW159s on either the Frigates or the the SSV for ASW protection

--> Deploy FA-50s for Combat Air Patrol over Ayungin garrison



8. The Philippines waits for the Chinese response.[/size]

In the scenario above China chose to impose a "new normal" upon the Philippines, and the Philippines decided to take stand, and even up the ante by resorting to the financial-retaliation options that the 4th option created. This leaves China with two courses of action:

Trade war (TW)
Military action (MA)

Both courses action will be discussed in their respective sub-sections, both of which could lead to the same positive outcome for the Philippines.

The PH's current response to renewed aggression. "Proportional response" is an art

Duterte to China: PH won’t withdraw ships from West Philippine Sea
By: Krissy Aguilar - Reporter / @KAguilarINQINQUIRER.net / 01:35 PM May 14, 2021


MANILA, Philippines — President Rodrigo Duterte has declared that the Philippines will not withdraw its assets from the disputed parts of the West Philippine Sea while also insisting he does not intend to quarrel with China due to the country’s “debt of gratitude” to them.

“We have a stand here and I want to state it here and now again. Na yung mga barko natin nandyan ngayon sa Pag-asa at saan pa, we will not move an inch backward,” Duterte said in the second part of his taped speech aired Friday.

< Edited >

Read more: https://globalnation.inquirer.net/196205/fwd-duterte-to-china-ph-wont-withdraw-ships-from-wps#ixzz6ux4kXmHl
Follow us: @inquirerdotnet on Twitter | inquirerdotnet on Facebook


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The text below was taken from this post by this author



https://www.facebook.com/cove58/posts/4166447550078143

Patriot or Traitor

A group of retired generals and colonels calling themselves Advocates of National Interest (ANI) published a declaration entitled “Let us Unite and Rally to our Flag in Assertion of our Rights in the West Philippine Sea”. This declaration has been going the rounds of the various online chat groups of active and retired PMA alumni for more than a month now. The Chairman and Members of ANI  are mostly PMA Alumni, some of whom were former AFP Chiefs of Staff, a National Police Chief, a Senator, some Congressmen including a Magdalo rebel, and many other senior military and police officers.

On the surface, the declaration appears just a simple patriotic call. However, upon close scrutiny, there are things in the declaration that more than meets the eye. So instead of forging unity, the declaration unwittingly fanned animosities and created divisions among the PMA alumni, especially those already retired.

What more than meets the eye?

The declaration is an indictment of President Duterte. He is a lackey of China and a traitor to his country for not implementing the PCA Arbitral ruling. The group advocates a hawkish and confrontational stance toward China in the West Philippine Sea issue instead of Mr Duterte's friendly relations with China. The group is composed of avowed patriots who had years of government and military service. However, they fail to realize or simply do not want to realize that the President’s rapprochement to China and his independent foreign policy is the better approach to national interest at this time, than the group's version of what is good for national interest.

Rapprochement is the establishment of harmonious relations for mutual national interest. It is NOT conceding one’s rights, such as our sovereign rights in the WPS and the PCA ruling, which President Duterte said many times, but which the political opposition see, exploit, and interpret differently for political purposes. The group believes that the President’s leaning towards China and his veering away from the US is unpatriotic. They do not understand that the President is engaging the two superpowers the way he does because that is what is best for our national interest at this time. Sure, we can confront China and use all our country’s available tools of national power, which is not much. However, confronting China at this time will only embolden it to occupy more islands (which no country, even the US and the UN can stop) as it did when the Philippines opted to go to the PCA instead of negotiating directly with China. It is a fact that China occupied the rocks and shoals in the WPS, which it claimed to own, and built islands which it weaponized, for its national survival, and that not even a nuclear war can make it leave the islands. While the President’s China policy is based on reality, the ANI proposal to assert the PCA ruling and antagonize China at this time is based on fantasy. UN support will not come because China, as a permanent Security Council member, will definitely veto any moves against it in the WPS. We can only raise our voices till kingdom come and hope that other countries will join us. These will be for naught however since these countries have their own problems with their national interests different from our own. We will ultimately be on our own and be left with nothing in the WPS if we adopt what ANI and the political opposition espouse.

The group intimated that the President must abandon his friendly stance with China and instead adopt the combative ways of his Cabinet Secretaries - Sec Locsin of DFA and Sec Lorenzana of DND. Again, this group of bright soldiers does not realize that these secretaries cannot do or say anything contrary to that of the President’s foreign policies. The secretaries would have been long gone if they did that. This means the combative stance of the secretaries has the imprimatur of the President. This approach is a modified version of the Good Guy/Bad Guy technique in negotiation. Unfortunately, the President is acting as the Bad Guy here and his Cabinet Secretaries as the Good Guys. If the ANI group does not understand these, then the more they cannot understand the President’s
Strategy of Deliberate Ambiguity, which he has been effectively using even before he became President.

The ANI declaration also generated controversy because of its purported use for partisan political purposes. The declaration was made public immediately after the organization of an opposition political party 1Sambayan, whose main platform is a replica of that of ANI - the combative assertion of our rights on the West Philippine Sea, particularly towards China. The declaration also coincided with the brouhaha on the withdrawal of support by retired military officers on President Duterte allegedly for his treasonous acts on the West Philippine Sea.

If not for its different approach to national interest and the politics involved, ANI's call for patriotism is actually good for the country, especially with the coming Independence Day. However, it is hard to believe that the ANI declaration is not tied to partisan politics. If the assertion of Philippine rights in the West Philippine Sea is the objective of the declaration, why single out China and exclude the other claimant countries who also occupied some of the islands in the WPS? If China is the issue, why raise only the violations of China in the WPS and exclude China’s control of our strategic national resources, among others. China, through the  State Grid Corporation of China (SGCC), controls the Philippine power grid through local company NGCP. The SGCC which, on paper, is only a minority shareholder of NGCP, can remotely shut down our grid anytime. It even blatantly denies Philippine government inspections of NGCP control stations and power facilities. Also, Huawei, a private Chinese company but effectively controlled by the China government, provides about 98% of the ICT equipment of our local Globe and Smart telecom service providers. It goes without saying that the Chinese government monitors vital Philippine communications - a critical concern without raising even a whimper from these patriotic advocates.

If the patriotic call was made as a convenient cover for partisan politics, then the call is lost and the callers worse than hypocrites. The ANI naturally denies engaging in partisan politics. However, the tenor of the declaration is a dead giveaway. If they deny engaging in politics in a declaration so laden with political innuendoes, then they are either naive or stupid. Since many of them are septuagenarians and octogenarians who spent long years in government, they must be naive rather than stupid. They lent their name and reputation and signed a document without them deeply analyzing its implications.  With this, I would say the declaration was not prepared by a former AFP Chief of Staff, but by a spurned rebel with a continuing tantrum.