Arroyo ‘stops’ deal with ZTE; China prexy accepts decision

President Gloria Macapagal Arroyo on Tuesday informed Chinese President Hu Jintao that the Philippine government has decided to "stop" the $329.48-million National Broadband Network (NBN) project with Zhong Xing Telecommunications Equipment (ZTE) Corp. A statement released by Malacañang Tuesday night quoted Press Secretary Ignacio Bunye as saying that President Arroyo “clearly presented her decision to President Hu who understood and accepted the judgment of the Chief Executive." "The President explained the difficult decision not to continue with the NBN contract and the President counted on the good relations between our two countries for understanding," Bunye said. He added: "We are gratified that President Hu offered understanding when he said that our relationship is in very good shape and the Philippines has been a great ally." On September 22, Mrs Arroyo ordered the indefinite suspension of the NBN project with ZTE, along with the $460-million Cyber Education Project. Both projects were supposed to be funded by loans from the Chinese government. Bunye said before Mrs Arroyo told Hu of the decision, the Philippine President described the good relationship between the Philippines and China "based on respect, consultation and mutual benefit." President Arroyo afterwards "ably presented the large picture of the NBN issue much to the satisfaction of President Hu," Bunye said. "And the Chinese President offered understanding for the decision taken by President Arroyo," he added. Bunye said Hu's understanding of Mrs Arroyo's decision substantiated the earlier pronouncement of Philippine Consul General to Shanghai Maria Rowena Mendoza Sanchez that the issue of the NBN project was not a major concern among Chinese businessmen who are still upbeat on investing in the Philippines. Bunye said Hu thanked President Arroyo for accepting his invitation to attend Tuesday night's opening of the Special Olympics in China for intellectually disadvantaged children. Mrs Arroyo greeted Hu on the 58th anniversary of the National Day of China, which the Chinese people started celebrating on Monday. President Arroyo described China as the "fastest-growing country in the region and in the world and the Philippines sees China's rise as a significant opportunity for the Philippines," Bunye said. "At this point, the President reiterated the strict adherence of the Philippines to the One-China Policy and this was very much appreciated by President Hu," he said. Bunye said the two leaders discussed trade relations, including the bright prospects for Chinese businessmen investing in mining and other sunrise industries in the Philippines. 'Unusual diplomatic practice' It’s “unusual" diplomatic practice, but possibly proof of close, personal ties President Arroyo has with China. At worse, an international law professor said it could be a case of “an ambassador dictating on the President," or “the President giving the impression that she is inferior" and could receive direct requests from an ambassador. President Arroyo herself had been requested by then China’s Ambassador to Manila Li Jinjun in a letter to “extend personal attention to coordinate" the resolution of an overlap between the National Broadband Network (NBN) project and the Cyber Education Project. The Chinese ambassador wrote the President to explain that separating the two projects was also the preference of ZTE Corporation and Tsinghua Tongfang Nuctech, Beijing’s designated contractors. As well, the envoy advised Mrs Arroyo that China would rather limit Manila’s loan requests to at most $250 million per project. Mrs Arroyo is a founding and lifetime member since 1972, and co-chairperson since 2002, of the Association for Philippines-China Understanding (APCU). In a letter to Mrs Arroyo on March 26, 2007 and stamped “URGENT," Ambassador Li said China and its designator contractors would prefer to separate the NBN and CyberEd for both funding and implementation. ‘Unusual, not normal’ Lawyer Harry Roque, director of the University of the Philippines International Legal Studies, said Ambassador Li’s letter to Mrs Arroyo “violates international law, which is founded on the principle of equality." Two Philippine diplomats, in separate interviews with GMA News, said Li’s letter to Mrs Arroyo was “unusual" and “not normal." However, the first diplomat said that while Li’s letter to Mrs Arroyo is “not normal diplomatic practice… nothing could stop an ambassador from writing directly to the President." The second diplomat explained that “there are established channels, communication should pass through the Department of Foreign Affairs." Nonetheless, because ambassadors are accredited by the President, “they can do that, depending on the issue or the urgency of the issue, or upon clear instructions from their home office to directly communicate to the President." Philippine diplomats seek an audience with foreign heads of state, to seek pardon for overseas Filipinos with criminal cases, the second diplomat said. In Roque’s opinion, “this very, very seldom happens." In fact, “usually, it’s the President who summons an ambassador, when there is a serious issue." “The communication should happen between heads of state. What happened was beyond protocol," Roque added. “It’s more than an issue of being nice. She poses for signing of contracts, with some lowly bureaucrats. The President should not be seen as being dictated upon by a mere ambassador." Ambassador Li’s letter to Mrs Arroyo stated that China and its designated contractors desire that the NBN and CyberEd projects be treated as “mutually independent" projects. Despite this virtual conditionality, the NBN was approved three days later on March 29, 2007, by the National Economic and Development Authority (NEDA) board chaired by Mrs Arroyo. Conditionality? Three days earlier, on March, then NEDA Director General Romulo Neri, noting China’s communication, had expressed concern that the overlap between the NBN and CyberEd projects could cost the Philippines from P4 billion to P5 billion. GMANews.TV obtained copies of the letter and other documents submitted to the Senate Blue Ribbon Committee by executive agencies. On Monday, China’s new ambassador to Manila, Song Tao, met with Mrs Arroyo behind closed doors. The ambassador’s letter was sent on the same day that a special joint meeting of the NEDA-Investment Coordination Committee, Cabinet Committee, and Technical Board on the NBN project was held. The letter stated: “I would like to convey to Your Excellency, that it would be easier for Chinese government to approve if the single project is (sic) amounted to only 200 to 250 million US dollars." Copies of Li’s two-page letter of Li were also sent to Secretary Neri, Transportation and Communication Secretary Leandro Mendoza and Trade and Industry Secretary Peter Favila. It appeared from Li’s letter that he and Mrs Arroyo had kept closely in touch on the ZTE and Cybered projects. “At the request of Your Excellency, when meeting with the delegation from Tsinghua University with regard to the overlap issue of the two projects, I held an urgent coordination meeting with the representatives from ZTE Corporation and Tsinghua Tongfang Nuctech last Friday." March 26, the date of Li’s letter, was a Monday so he probably meant he met with the two firms’ representatives on March 23, a Friday. ‘Mutually independent’ “Given both projects are top priorities of your government and have great bearings on the future social and economic development of the Philippines, the Chinese government will fully support the two projects as committed to the best of our capacity," Li wrote. However, Li added that, “The two projects are mutually independent and cannot be combined as one since they are totally different in terms of technology." The ambassador explained why the two projects differ, from China’s perspective. “The Distance Learning project is viewed as an interactive Broadcast/Multicast solution which is primarily for social development, with the purpose of providing access to public schools, especially in the remote areas so as to uplift the overall quality of education in the Philippines," Li wrote. In contrast, Li said, “the National Broadband Network is aimed at provision of an integrated broadband network for the Philippine government and will support key programs of the government on health, security, internet access, election, and other applications under the Medium Term Development Plan of the Philippines, with no reference to the distance education for the moment." Li said that “regarding the technical overlap of the two projects, which Your Excellency is greatly concerned (about), both ZTE and Tsinghua Tongfang Nuctech expressed their willingness to make joint efforts to resolve it and are ready to show flexibility should the DEPED and DOTC teach consensus." Personal attention Still, Li exhorted Mrs Arroyo: “Therefore, it would be very helpful and necessary if Your Excellency could extend personal attention to coordinate." The advisory, coming from an ambassador to the head of state and government, seemed out of bounds by foreignservice protocol. Li’s letter was particularly unusual because it discussed commercial, not diplomatic, matters, and a copy was not even furnished to the Department of Foreign Affairs. Protocol stipulates that ambassadors and foreign representatives should relay their communication to the Department of Foreign Affairs, which will in turn course the same to the appropriate agency. Other big projects Li’s letter went on to cite that China loans would be crucial as well for other “big projects" in the Philippines. “We are aware," Li wrote, “that there are a number of important big projects being discussed by the two sides like Laiban Dam, Manila Skyway and the above-mentioned two projects, etc, which we will support due to their importance to the development of the Philippines." In parting, Li informed Mrs Arroyo that, “the Chinese government is looking forward to your attending the Boao Asian Forum and visit to Chong Qing, Shanghai and other cities of China." Three weeks later on April 21, 2007, Mrs Arroyo went on a 12-hour to the Boao Forum in China. On the same day, DOTC Secretary Mendoza, DepEd Secretary Lapus and DTI Secretary Favila signed five project contracts with ZTE, Tsinghua Tongfang, and other Chinese contractors on as many projects to be funded by China loans. Like her late father, President Diosdado Macapagal, Mrs Arroyo is a founding and lifetime member and co-chairperson of the Association for China-Philippines Understanding (APCU). She was introduced to APCU at its birth in 1972, together with her former spokesman and now Ambassador to Greece Rigoberto Tiglao, and Philippine Information Agency Director Rene Velasco. APCU had consisted largely of left to moderate intellectuals and Sinophiles or China scholars, including the late respected journalist, Armando J. Malay, father in law of Bayan Muna Congressman Satur Ocampo. Before formal ties In a speech on June 08, 2002, before the Filipino Chinese-Chamber of Commerce, Mrs Arroyo had recalled: “I am also very proud that as founding member, lifetime member and co-chairman of the Association for Philippines-China understanding or APCU, I was one of those – along with the in-laws of Congressman Ocampo, Roxy Lim and her husband, and Manny Dy – I was one of those who worked for the establishment of this diplomatic relations between our two countries." Mrs Arroyo added: “Together with many of you, my colleagues in APCU, we started working for closer Philippines-China relations during the early 70s, even before the establishment of formal relations between our two countries in June 1975." APCU is one of only four organizations Mrs Arroyo acknowledges membership in. The other three – Philippine Economics Society, Georgetown Club of the Philippines, and Concerned Women of the Philippines – are largely socio-civic clubs. – Malou Mangahas, GMANews.TV