Malampaya fund used to buy ‘expensive, discarded’ Coast Guard boats from US

“Don’t our officials feel betrayed? We are being bullied by China, we go to the US for help. In return, they sold us junk materials at a very high price, only to find out that US is also talking to China about possible mutual defense arrangements.” – Bayan Muna Rep.

By MARYA SALAMAT
Bulatlat.com

MANILA – Weeks before the scheduled visit here of US President Barack Obama and the likely signing of the Framework Agreement on Increased Rotational Presence, progressive legislators questioned during last Thursday’s budget hearing the Defense department’s purchase of “very expensive, obsolete military equipment” from the United States. Increased US troop presence, whether “rotational” or via wargames, is one way in which the US increases sale of its junk hardware as well as new war materials and equipment.

In this week’s budget hearing, it was revealed that the first and latest two Hamilton-class cutters acquired by the Philippine Navy from the US military were “very expensive” despite having come from the US military junkyard, and a supposed treaty partner.

Bayan Muna Representative Carlos Isagani Zarate questioned the government’s acquisition of a $15.6 million, 45-year old (at the time of acquisition) Hamilton-class cutter, now renamed as BRP Ramon Alcaraz. It was decommissioned by the US Coast Guard and stripped off of arms and other implements before it was sold to the Department of National Defense (DND) under the “modernization program” of the Armed Forces of the Philippines (AFP). It was the second Hamilton-class cutter bought under President Benigno “Noynoy” Aquino III. The first Hamilton-class cutter he bought had also seen 45 years of operations under the US Coast Guard, decommissioned by 2011 and bought from the US military junkyard by the Philippine Navy in 2011, reportedly at the cost of $10.7 million. The US Coast Guard started replacing its 12 Hamilton-class cutters with National Security class cutter in 2011.

During last Thursday’s budget hearing, even the lawmaker supporting the Defense department’s proposed budget, Rep. Zenaida Angping, admitted that the acquisition of US cutters had indeed been “expensive.”

Worse, the money the government used to pay for it came from discretionary funds or pork barrel. And it was paid using Malampaya funds. These funds, which came from the royalty payments for the exploitation of the country’s huge natural oil and gas reserves off Palawan are supposed to be earmarked only for energy projects.

But at this week’s budget deliberation on the proposed Defense department’s 2014 budget, the representatives of the AFP admitted that the purchased price for the cutter was sourced from the controversial Malampaya Fund, an off-budget special account under the sole discretion of the Office of the President.

Bayan Muna Rep. Neri Colmenares has filed House Bill 2993 seeking to amend a presidential decree that created an energy board and allocated to it the funds from the Malampaya gas and oil project. The proposed bill seeks to put an end to the “the misuse and abuse of the revenues collected from this contentious and highly profitable Malampaya contract.” The Makabayan bloc is seeking to remove from the president the power to dispose of this huge fund.

Over the past years, only a negligible percentage of these funds (just over one percent) were earmarked for energy projects. Instead, Bayan Muna noted that it became the Philippine president’s discretionary source of funds for, say, buying the US Coast Guard Cutter Hamilton (P423 million or $10 million from Malampaya in 2011), disbursements to the AFP-DND (about P5 billion or $114.3 million in 2011); and payment for the transfer, dry-docking and hull maintenance costs of the Coast Guard Cutter ship (P881 million or more than $20 million in 2011). Note that the transfer and maintenance cost of the antiquated cutter in 2011 alone cost twice its acquisition.

Gains from Philippine resources being diverted to overpriced US war supplies?

“We are now becoming the laughing stock of other countries. We bought two very expensive 46-year old decommissioned cutters that defense experts say can be destroyed even by a single torpedo fired by a Chinese warship. It seems that the AFP is not modernizing at all. It’s engaged in collecting expensive American junk,” said Bayan Muna’s Zarate.

In the same budget hearing, the Armed Forces of the Philippines justified its expensive acquisition as an “immediate short-term solution” for the country’s external defense, particularly with the current volatile situation in the West Philippine Sea that is also being claimed by other countries, including China and Vietnam. In fact, at the time the said cutters were individually being eyed and then bought, the Aquino government was engaging China in a word war and egging on tension in South China Sea, renamed as the West Philippine Sea.

The state military’s aim to “build a minimum credible defense posture” is repeatedly being cited to justify the defense budget and the separate huge budget for modernizing the Philippine armed forces.

But according to Bayan Muna, the huge budget allocations since 1995 for modernizing the country’s forces, amounting to a total of P26.27 billion ($606 million), still proved “a dismal and epic failure” when the modernization program ended in 2010.

Two years later, under President Aquino, the government began another, a revised 15-year AFP Modernization program requiring an additional P331 billion ($7.63 billion) for its completion.

The Aquino government has a long shopping wish list of war equipment and supplies. Based on its arms deals with the US, Italy, Poland as of 2012, it will reportedly have brought the following by 2016:

– surface attack jets and trainer aircraft,
– a long- range patrol plane,
– one air defense radar,
– a special mission airplane,
– eight helicopters,
– seven attack helicopters,
– a C-130 cargo plane,
-18 basic trainer planes,
– three multi-purpose attack aircraft,
– equipment for coast watch stations, and
– 33 multipurpose rocket launchers for the PSG.

Reports also said the Aquino government would likely buy from the US 12 F-16 fighter jets, which dovetails the US military’s looming decision to reduce the number of its fleet due to its budget cuts, without necessarily crimping its military capability.

A business intelligence website maintained by members from business management and active military intelligence doing “rigorous research and analysis working both in national defense and private practice” reported that Aquino’s most recently signed deals are slated to bring to the Philippines undetermined number of fighter jets, frigates, destroyers, and UAVs (drones). The report said, “The true impact of the upgrades lies with how it bolsters logistics capabilities of the country especially when dealing with disasters, at the same time the acquired drones, planes and ships can be useful against armed insurgents that persist in far-flung areas.”

But these expensive, unaudited shopping for war equipment does not sit well with various progressive and patriotic peoples organizations and human rights groups.

Not only are the equipment being bought “very expensive,” and considered as “junk,” these are being used to violate human rights, and trample on the country’s sovereignty. Human rights group Karapatan said the US-instigated Oplan Bayanihan, Aquino’s anti-insurgency program, is the reason why cases of human rights violations in the country continue to mount.

Bayan Muna Rep. Zarate linked the supposed state troops’ modernization to the Aquino government’s welcoming of US troops’ unlimited access to the Philippine seas and territories. “The Aquino administration is now allowing the American troops expanded and permanent presence and basing rights in our country,” said Rep. Zarate, referring to the so-called “increased rotational presence” of US forces in the country the agreement for which is now under negotiation by the Philippines and the US.

“Don’t our officials feel betrayed? We are being bullied by China, we go to the US for help. In return, they sold us junk materials at a very high price, only to find out that US is also talking to China about possible mutual defense arrangements,” Zarate said.

“The US is not our ally in our territorial dispute with China,” Zarate said, adding that “The US government is only using our country as a base for its Asian pivot. But as a US military base for its Asian pivot, the Philippines seems to be being forced to pay or spend for part of upkeep of the ‘visiting troops.’”

Zarate noted that while the US is “pressuring” the Philippines to sign the framework agreement on the increased rotational presence – an agreement feared to be a new military basing agreement more in keeping with current US military thrust for “lean and mean” power projection – the US is reducing its military aid to the Philippines. No less than Foreign Affairs Secretary Albert Del Rosario admitted that the US military aid has been decreasing, citing the $15 million the Armed Forces of the Philippines received in 2012 as compared to the $30 million it received a decade ago during the height of the so-called war against terrorism.

Except for the first year perhaps following the signing of increased rotational presence, where there would likely be numerous construction of US troops’ facilities, this trend of reduced US military aid would likely continue, and may eat up bigger chunks of the country’s budget, because the US military is set to undergo a deep and across-the-board budget cut in the next 10 years. Yet, according to US defense officials, it plans to continue its pivot to Asia-Pacific, and at the same time retain its global superpower status. ()

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  1. Mr. Zarate,
    Please research more because the 2 Hamilton class Cutters were actually given to the Philippines as a grant and is still being funded by the US government for its repairs to this day. Whatever figure you think was paid is actually the amount of money deducted to the Foreign Military Fund that the US government allocated for the Philippines. In other words, the Philippines never bought the ships.

  2. HOY, ZARATE- ANG PINAKAMABUTING GAWIN MO NGAYON AY ITIKOM MO ANG IYONG BIBIG! NAGHAHANAP KA NG BUTAS para SIRAAN ANG GOBYERNO NI AQUINO! BINIBILOG MO ANG ULO NG MGA FILIPINO! !!!AONG GUSTO MONG GAWIN hindi NA BIBILI NG KAGAMITAN NA PANGDEPENSA PRA MALAYANG MAKAPASOK ANG china sa PILIPINAS! PATI ANG MATG KAPATID MONG MGA CPP NPA!!!!PLASTIC KA -TRAYDOR AT AHAS SA PILIPINAS!!!!LUMAYAS KA NA LNG AT PUMUNTA KA SA KOMUNISTANG BANSA!!!PURO NEGATIVE ANG PUNA MO eh ALAM NMN NG MARAMING PILIPINO KUNG ANONG KULAY mo! KULAY PULANG KOMUNISTA!!!! WALA KQANG KARAPATAN MANUNGKULAN SA ANO MQANG SANGAY NG GOBYERNO SA PILIPINAS!!!!TRAYDORRRR!!!

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