The FREEDOM fora

DIE HARD III
Herman Tiu Laurel
11/23/2005



Gloria Macapagal-Arroyo ordered the pre-payment of some of the country’s debt using alleged “savings” from the Peso appreciation. I wish she could but she can’t. First of all, the appreciation is a temporary situation brought about by both seasonal OFW flows and the eightfold increase in portfolio investments this year which has started going out already. By late January to February the Peso will fall harder. Whatever “savings” Gloria claims will be eaten up and more by next quarter. Secondly, we borrow to pay principal, which is growing, so there’s no end to it until drastic steps are taken.

There are several options to the debt problem of the country, the root of all other problems here. One model that many have been studying is Argentina’s default in 2002, a subject our friend Hiro Vaswani (who’s now in the U.S. as a financial consultant to several companies) highlights in e-mailing to us an article entitled, “A Victory by Default…. The successful restructuring of Argentina’s debts has set a painful new benchmark for creditors”. It narrates how Argentina got off with a $ 0.35 to the Dollar deal on its over a $ 100-B debt.

In the nine page article is a section entitled “To Default is Natural”, quoting Andrew Haldane of the Bank of England and Mark Kruger of the Bank of Canada. They argue that “default is a natural feature of the market mechanism”, and furthermore “Default and debt go together like risk and return. Argentine bonds offer higher yields than American Treasuries precisely because their promise to repay was not as secure…” Again, like love and marriage, risk and return are inseparable; and when you lend usuriously and make people suffer unjustly be prepared by a revolt.

A period of “exile” from the capital markets is the price for default, but many others have defaulted in the past – yes, even Russia – but they have survived and rebounded much stronger. There’s a short period of pain, but what process of disease, repair and healing does not involve some pain? President Estrada’s formula, however, would want to avoid this pain and instead take a “wholistic” approach to the problem; that is, by negotiated debt moratorium of a year or more, to postpone payment of interest so the huge P 350-B can be used for economic and social recovery.

That is what President Estrada is advocating in accepting the broad guidelines of the Blueprint for a Viable Philippines, a plan for rebuilding the devastated Philippines, written by a group of U.P. academicians led by Dr. Dodong Nemenzo. Debt moratorium is one of the main “broadstrokes” offered for the problem of the debt, but it is preceded by a call for a “debt audit”, that is a review of all the debt to separate the just and the unjust. I am for debt default, but since there is a proposal for a moratorium I am willing to listen to what its terms could be for the country.

President Joseph E. Estrada has initiated the printing of tens of thousands of copies of the “Blueprint” for distribution to the various sectors of society, giving emphasis to the middle class and the intelligentsia. Despite his limited mobility, to say the least, President Estrada is still taking the initiative to lead the country in concepts and ideas sorely needed to lift the country out of the morass it is in. The Pwersa ng Masang Pilipino, the President’s party, has taken the cue and brought these issues to the grassroots for discussion and debate.

Yesterday afternoon, the Pwersa ng Masang Pilipino raised the discussion to a higher level, so to speak, and staged the first FREEDOM Forum in a “town meeting” at the Sanctuario de San Antonio, Forbes Park. The discussion would not be limited to any particular issue, its just to begin the democratic discussion on the issues vital to the country. The Forum comes at a very opportune time when the Pulse Asia survey reaffirms the strength of President Estrada as the only leader capable and with the constitutional mandate to lead the country.

FREEDOM, we’d like to reiterate the spelling out of the acronym, is Free and Restore Erap Estrada for Democracy, Order and Meritocracy. I mistakenly used “movement” for meritocracy in my previous column. Let me also reiterate the main problems we must be freed from to give us HOPE: hunger, oppression, political persecution and economic bondage. The debt issue is part of the economic bondage, the political killings that has claimed live of journalists, social activists and Estrada’s incarceration is part of oppression and political persecution. Hunger we all know stalks the land.

FREEDOM forums will be staged in more and more “town meetings”, and just before the end of the month a FREEDOM CARAVAN to go all over the country will be launched to bring the call for Erap’s freedom and restoration to all corners of the Philippines. One day after my column already we are getting calls from the provinces when the FREEDOM movement will come to their town, the latest caller was from Iloilo newsmen. If Gloria wishes her eventual fall to be a soft landing we must appeal to her to heed the call of justice and free Erap, free this nation.

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