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

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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.

--- Quote from: adroth on January 10, 2020, 08:33:32 AM ---Duterte gives go-signal to release new water deal
By Ruth Abbey Gita-Carlos  January 8, 2020, 8:50 pm

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)

--- End quote ---

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

--- Quote from: adroth on May 25, 2020, 11:46:40 PM ---Photos c/o a resident of the municipality.

--- End quote ---

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

--- Quote from: adroth on August 05, 2018, 04:28:42 AM ---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.

--- End quote ---

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

Railway sector

--- Quote from: adroth on January 17, 2021, 04:21:56 PM ---

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.

--- End quote ---

--- Quote from: adroth on January 07, 2021, 04:03:22 PM ---
--- Quote from: adroth on January 07, 2021, 12:46:31 PM ---The agreement

--- End quote ---

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”)

< Edited >

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     3,606,293,592.522     2021 - 2022    99,333,958.50     5,264,699,800.513     2023 - 2024    39,341,504.56     2,085,099,741.764     2025 - end    13,057,504.24     692,047,724.72
--- End quote ---

Oil exploration

--- Quote from: adroth on May 20, 2018, 04:37:02 PM ---Duterte opens Cebu oil field today
Updated May 20, 2018, 7:26 AM

By Minerva BC Newman

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.

< Edited >

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.

< Edited >

--- End quote ---


--- Quote from: adroth on January 23, 2021, 11:34:54 AM ---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 2019Subic-Clark Railway     940,000,000.00     15 January 2021             Bridges                        Samal Island to Davao City Connector     401,960,714.40     14 January 2021Davao River Bridge     60,000,000.00     9 December 2020Binondo - Intramuros Bridge     70,530,371.75     17 July 2018Estrella–Pantaleon Bridge     30,583,966.51     17 July 2018             Dam                        Chico River Irrigation Project     55,550,469.79     16 November 2017Kaliwa Dam     211,214,646.54     20 November 2018             TOTAL     1,989,616,411.62     
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