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Economics of Geopolitic - Why US Senate Targeted Philippines and Other Countries

Economics / Global Economy Oct 02, 2019 - 12:19 PM GMT

By: Dan_Steinbock

Economics

The new Senate bill targeting the Philippines and some other countries – Turkey, Egypt, Saudi Arabia - is fueled by controversial political and economic agendas that have caused turmoil since the 1980s.

For some time, US Senators Richard Durbin (Dem, Illinois) and Patrick Leahy (Dem, Vermont) had pushed for an amendment in the 2020 state and foreign operations appropriations bill by the US Senate appropriations committee. Essentially, the amendment would deny entry of Philippine government officials involved in the detention of Philippine opposition Senator Leila de Lima.

Last week, the US Senate panel approved the amendment. Durbin considers De Lima’s detention a “politically motivated imprisonment.” According to Philippine government, De Lima was arrested and detained in 2017 for allegedly asking money from drug convicts to fund her senatorial campaign and for allowing the drug trade to continue in the national penitentiary while she was the justice secretary. Despite evidence, she claims the cases against her are “politically motivated.”



Reportedly, the Senate amendment also called for the same action against officials of the Egyptian government for the "wrongful detention" of a US citizen and government officials of Turkey, Egypt, or Saudi Arabia.

In the Philippines, the provision can be seen as part of the continuing political backlash following the 2016 Duterte election triumph, and the consequent meltdown of the Liberal Party (LP). Usually heavy losses trigger reassessment, which can rejuvenate a political party and renew its leadership. Yet, that did not happen. As LP failed to attract voters in the Philippines, some of its leaders began pressure campaigns in the US and EU, to raise their diminished political capital at home.

In the past year, these campaigns have included frequent-flyer visits to Washington. In April, they resulted in the condemnation of human rights violations in the Philippines by senator Durbin, along with senators Edward Markey (Dem, Massachusetts), Marco Rubio (Rep, Florida), Marsha Blackburn (Rep, Tennessee) and Chris Coons (Dem, Delaware). The same resolution also called on the Philippine government to drop all charges against [CEO] Maria Ressa and [her online publication] Rappler."

What’s behind the stated concerns for human rights and democracy?

Politics of campaign finance

LP figures appeal to Senators. Senators rely on campaign finance. The senators behind the Philippines amendment, in particular, get their political money mainly from lobbyists, defense contractors, finance, and especially large individual donors, according to congressional research.

In turn, the financial heavy-weights that drive US politics – Soros and his Open Society Foundations, Koch brothers, Adelsons, Mercers, Steyer, Singer and others – have their own economic agenda, which has geopolitical implications.

With an estimated net worth of $1.5 to $3 million, Richard Durbin is the influential Senate Democratic Whip, who has been haunted by allegations of conflicts of interest. Leahy is a senior senator, who was first elected already in 1974, while Ed Markey is a senior Democratic senator, who has been challenged by Joe Kennedy III for the Senate seat. Both Leahy and Markey have a net worth of $2 to $4 million. Former beauty pageant, Marsha Blackburn is a junior senator and ultra-conservative Tea Party Republican, who vice-chaired Trump’s presidential transition team and nominated him for a Nobel Peace Prize for talks with North Korea. Democratic junior senator Chris Coons has a net worth of $8 to $12 million.

The ultra-conservative Marco Rubio has claimed that De Lima has been in prison on “bogus charges.” Former Senator Trillanes, who began his political career with a failed coup d'etat attempt in 2003, met with Rubio already in fall 2017. Having previously criticized President Duterte’s war on drugs, Rubio said the two also discussed corruption, human rights, and particularly the US-Philippine alliance.

After the failed 2016 campaign, Rubio has recently profiled himself as a conservative human rights defender and democracy promoter. He is for regime change in Venezuela, Hong Kong and China, Iran and Russia. His financial debacles are notorious. With net worth less than $500,000 but outsized political ambitions, critics claim he is dependent on and thus useful to ultra-rich donors, particularly his key funder - the notorious Paul Singer.

There are no free lunches. What kind of economic returns do these funders expect from their political investments?

Vulture capitalists

With a net worth of $3.5 billion, Paul Singer sees himself as a philanthropist, who promotes the rule of law, democracy and LGBTQ rights. His hedge fund Elliott Management Corporation (EMC) specializes in distressed debt acquisitions. As a pioneer “vulture capitalist,” he buys up sovereign bonds on the cheap and then goes after countries for unpaid debts.

After the ‘70s energy crises, many fragile economies borrowed far more than they could repay. In the 1980s, that led some 50 economies to default or to restructure their debt. In Latin America, it caused a lost decade, but it also penalized Poland, South Africa and parts of Southeast Asia, such as Vietnam and the Philippines.

In vulture capitalists’ business, such crises are considered great opportunities, despite the great economic losses and human tragedies in the target countries.

In the mid-1990s, Singer purchased sovereign debt from nations in or near default, such as Peru and Argentina, and Congo-Brazzaville. Next the International Monetary Fund (IMF) rushed in to “help” imposing budget cuts and heavy austerity measures, forcing the governments to renegotiate what they owed.   

In the past, Singer has targeted countries mainly in Latin America and sub-Saharan Africa. As prosperity levels are rising in Asia, Singer seems to be looking at targets in the East.

Distressing implications

In the Philippines, many see the senators’ bill as the net effect of the US visits by a slate of opposition leaders who no longer enjoy significant support in the Philippines and thus lean onto Washington to boost their deflated political capital in Manila.

Second, the Senate provision is a part of a larger package that calls for same action against officials of Turkey, Egypt, or Saudi Arabia over "wrongful detention of locally employed staff of a US diplomatic mission or a US citizen or national." The provision protects US citizens and dual citizens, such as Ressa and some other key figures. The implication seems to be that the sovereignty of other countries is secondary.

Third, according to US Senator Lindsey Graham, chair of the Senate state and foreign operations appropriations subcommittee, the bill seeks to fund "diplomatic and development efforts worldwide, provide security assistance for our allies around the globe." Projecting US power across the globe, the bill would seem to go far beyond US sovereignty.

In the process, the accumulated evidence against De Lima’s violations, Ressa’s tax challenges and abuses in other cases has been shunned, critics argue.

One net effect is that the ongoing political moves may be paving new ways for controversial financial interests to exploit rising Asian prosperity.

Dr. Dan Steinbock is the founder of Difference Group and has served at the India, China and America Institute (US), Shanghai Institute for International Studies (China) and the EU Center (Singapore). For more, see http://www.differencegroup.net/  

© 2019 Copyright Dan Steinbock - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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