The Accra Action Agenda (AAA) endorsed by ministers at the 3rd High Level Forum on Aid Effectiveness inAccra , Ghana makes little real progress towards making aid more developmental.

The AAA fails to address the most essential concerns with the greatest impact on development in the Third World : democratic ownership of aid, policy conditionalities, tied aid and the foreign debt burden. The AAA instead gives undue attention to technical procedures in aid delivery and management to divert from its glaring inattention to the development issues that matter the most.

The Paris Declaration of 2005 raised the promise of improving the global aid regime. However the AAA supposedly aimed at deepening implementation of the declaration underscores the deep-seated resistance of donors to genuine reforms in the aid system. Donors have effectively still reserved the right to set conditionalities. They have not committed to eliminating tied aid. They have avoided making concrete, measurable and time-bound commitments to building democratic ownership of aid and development policies. Donors have completely avoided the vital issue of crushing debt burdens.

Yet “free market” policy conditionalities have gravely harmed Third World agriculture, stifled industrial progress, and worsened poverty and unemployment. Tied aid has assured donor country benefits at the expense of local needs. Ownership has been claimed more by donors and recipient country elites than grassroots communities. And debt service by the Third World is many times the amount they receive in official development assistance (ODA)

It is an opportunity that the AAA has been compelled to at least acknowledge these issues and it is welcome that civil society organizations (CSOs) have an increased presence compared to previous years. However this opportunity will be meaningless and the CSO presence will be mere tokenism if there are no clearly defined and effective reforms in the aid system.

AidWatch Philippines and IBON Foundation are among the CSOs participating in the 3rd High Level Forum that demand clearly defined and time-bound commitments to accomplish various targets by 2010. At the minimum this includes: 1) a broad but clear definition of ownership such that citizens, CSOs and elected officials are central to the aid process at all levels; 2) measurable commitments on the predictability of aid flows by 2010; 3) elimination of tied aid by 2010, with food aid and technical assistance no longer donor-defined; 4) development and implementation of new standards for transparency by 2009 including making information available to the public; and 5) an end to policy conditionality.

ODA clearly remains donor-driven with the main objective of serving donor foreign and economic policy interests. Developmental outcomes, if any, are oftentimes just incidental and only to the extent that donor commercial, political and diplomatic interests are not threatened. In Accra for instance, the United States used its clout to dilute language on ownership and conditionalities while Japan opposed proposals to untie aid. Recipient governments in turn comply rather than jeopardize aid flows and possibly important resources for development.

The challenge remains for the people and governments of underdeveloped countries to reject false aid that does not genuinely reduce poverty, advance gender equality, uphold human rights and promote environmental sustainability. Aid must also not be a matter of charity from rich to poor countries but of people achieving their right to development with all the resources at the world’s disposal.

AidWatch Philippines is a national network of grassroots-based non-government groups working on ODA issues in the country. It has over 150 members in more than 50 provinces nationwide, including 10 national networks, and regional formations.

AidWatch Philippines aims to deepen relationships and develop various levels of collaboration between NGOs on aid-related issues and concerns. It also looks forward to constructive engagement with official government and donor agencies on the basis of fundamental development principles.


Independent think-tank IBON Foundation estimates that as much as P31 per liter of the pump price of oil products may be windfall profits of transnational oil firms. This is based on IBON’s estimate of the real cost of oil at only US$31-US$32 per barrel, consisting of exploration cost, production cost and royalties to the Organization of Petroleum Exporting Countries (OPEC). Subtracting this from the May 2008 average Dubai spot price of US$117 per barrel means that the oil firms may have already earned windfall profits of US$86-US$87 per barrel of crude oil. Applying this figure to local pump prices (at 159 liters per barrel and an exchange rate of P43: US$1) and prevailing prices as of June 14 would reveal that for every liter of unleaded gasoline, P26-P31 goes to total windfall profits. For diesel, P23-P27 per liter goes to profits. This means that oil firms’ profits account for 47% to 54% of the retail price. The total windfall figures were obtained by combining profits from crude oil price, applying the US energy department’s data that crude oil accounts for 48% to 58% of the local pump price, and that 12% of the retail price goes to profits (which includes 3% that used to make up oil tariffs). This profiteering only proves that oil prices are artificially bloated at international and local levels because of the dominance of transnational oil firms over the industry, which gives them the upper hand to practice monopoly pricing and speculation. But although the government cannot control the activities of oil firms at the global level, it could minimize the impact of their profiteering and control excessive oil prices by implementing strict regulation of the domestic market.


The government only tries to divert from its failure to negotiate a better deal when it says that the Philippines will be a big loser in the region if it does not ratify the JPEPA.

By Sonny Africa

IBON Features— Time and again, the country’s economic managers and apologists for the Japan-Philippines Economic Partnership Agreement (JPEPA) would invoke the scenario of the country being left out in the region if it does not ratify the bilateral deal.

However, this line of “fear of exclusion” is a flimsy reason for ratifying the JPEPA. The Senate hearings have established the deal’s unconstitutionality and exposed its supposed gains as largely unfounded hype. The long-term consequences of lost policy sovereignty are also grave and will cement Philippine backwardness.

It is not even true that the country will “lose out” to its neighbors in the region without the deal. For one thing, the Philippines is extremely open to Japanese investment as it is with US$827 million in net foreign direct investment coming from Japan in 2007, accounting for 41% of total equity inflows for the year. This implies that Japanese investors are already benefiting greatly from the country’s labor, resources and market even without JPEPA.

For another, the deals sealed by the country’s neighbors in Southeast Asia do not even completely open them up to Japanese investors and make the Philippines appear relatively closed.

The countries most comparable to the Philippines in the region are Malaysia , Indonesia and Thailand , and they have all kept nationalist and protectionist measures in their respective economic partnership agreements (EPAs) that Philippine negotiators have recklessly given up.

Malaysia protects 38 items with tariffs and at least 17 investment sectors, aside from maintaining its nationalist pro-Malaysian Bumiputera economi c p olicy. It has also not yet forsaken performance requirements on investment and only committed to “entering into consultations at the earliest possible time”.

Indonesia protects 835 items and over 40 investment sectors, as well as reserves the right to demand technology transfer and impose the hiring of nationals.

Thailand has the most liberal terms and protects just ten items and one sector. However, it maintains performance requirements on technology transfer, hiring of nationals, appointing of officials, research and development, linking domestic sales to exports, location of regional headquarters and overseas supply conditions.

In contrast, Philippine negotiators maintain protection on just two items and five sectors, while relinquishing all performance requirements that might have enabled genuine benefits from any Japanese investment in the country.

Aside from those that Thailand maintains, these include obligations regarding domestic content, local purchases, export requirements and import-export ratios. These policy measures are vital for the medium- and long-term growth of competitive industries. Without them, Japanese corporations will just be one-sidedly benefiting from their investment in the country– which is the sort of investment that the Philippines can and should do without.

The JPEPA is a bad deal that is much worse than reached by the country’s neighbors. The government only tries to divert from its failure to negotiate a better deal when it says that the Philippines will be a big loser in the region if it doesn’t ratify the JPEPA. IBON Features


A significant factor of the growing poverty, despite the much-hyped 28 quarters of economic growth, is the poor quality of jobs created during the first six years of Arroyo’s term.

Data from the National Statistics Office Labor Force Survey showed that the most number of jobs created from 2001 to 2006 were in agriculture, wholesale and retail trade and private households with employed persons. “These are among the lowest paying and most insecure jobs in the country,” said IBON research head Sonny Africa.

For example, the informal sector of wholesale and retail trade created 1.02 million jobs during the period. The average daily wage for those working in the sector in 2006 was P228.72 even as the legislated minimum wage in Metro Manila as of July 2006 was P300.

Meanwhile, the agriculture, hunting and forestry sector created 681,000 jobs but were mainly unpaid family workers. Private households with employed persons or household help, accounted for 409,000 of the new jobs. Household help would be lucky to earn P2,500 to P3,500 a month, Africa pointed out.

Meanwhile, the growth of the agriculture and manufacturing sectors from 2001 to 2006 was tepid, averaging 3.6% and 4.3%, respectively, thus unable to create regular and productive jobs. The number of new manufacturing jobs from 2001 to 2006 was just 153,000 and the sector even lost 18,000 jobs in 2006.

This is significant given that these sectors constitute the base of any genuinely developing economy, he said.

The sectors with the biggest annual average growth over the period, and thus the biggest contribution to overall economic growth, were mining and quarrying, transportation, communication and storage, and finance. These sectors however have low and short-term job generating capacity.

Economic growth is valued not for its own sake but for the improvement in people’s livelihoods and welfare,” said Africa. “In this sense, Arroyo’s 28 continuous quarters of growth are worthless as tens of millions of Filipinos are as poor as ever.”


The trend of worsening poverty in the country noted by the FIES confirms how the majority of Filipinos in the country don’t benefit from economic growth. Independent think-tank IBON Foundation issued this statement in response to the paid advertisement published by Malacañang allies saying that the economy enjoyed 28 quarters of economic growth under the Arroyo administration.

According to IBON research head Sonny Africa, growth in gross domestic product (GDP) averaged 5.4% in the period 2003-2006, yet the number of poor Filipinos even increased by 3.8 million.

“In contrast to the government’s underestimated poverty levels, IBON notes that some 70%-80% of Filipinos try to live off around P100 or less every day,” said Africa.

The problem lies most of all in government neglect of the manufacturing and agricultural sectors, which are at their smallest shares of the economy since the 1950s, added Africa. This decline in the country’s economic foundations drove the unemployment rate to an average of 11.4% in the 2003-2006, which is the worst four-year period of unemployment in the country’s history. There were 11.6 million Filipinos jobless or otherwise underemployed and looking for additional income in 2006.

Backward industry and agriculture cannot create jobs and the labor force is being forced into low-paying, irregular and insecure jobs in the service sector.

For instance while the government hyped 2007 as seeing the fastest economic growth in three decades, the most jobs created last year were in the additional 142,000 working as domestic household help.

The trend of worsening poverty also exposes the folly of relying on overseas Filipino workers (OFWs) and remittances to support domestic household incomes. Poverty has increased despite ever-increasing number of OFWs going abroad and record remittances. By last year, nearly 3,000 Filipinos were going abroad to find work every day and the stock of some nine million overseas Filipinos remitted a record US$14.5 billion. Yet the government is continuing with this retrogressive cheap labor export policy.

The government also continues to promote economic activities that profit foreign corporations rather than benefit the domestic economy. It is promoting foreign investment-intensive call centers and business process outsourcing (BPO), mining, and manufacturing in export enclaves. Unfortunately these are sectors of weak job creation, little multiplier effect, no technological spillover, and poor contributions to the domestic capital stock. It is also pushing free trade policies such as the JPEPA and through ASEAN even if such trade and investment liberalization has been among the main factors that have undermined the domestic economy.

“Without fundamental changes in economic policies, the country’s joblessness and poverty situation can only get worse, and the so-called sustained growth will only benefit foreign and big local business,” said Africa.

Bishop urges new kind of people power

Lagdameo: It’s for truth and to end corruption By Beverly T. Natividad
Philippine Daily Inquirer

MANILA, Philippines — The head of an influential group of Roman Catholic bishops Tuesday raised the possibility of a new brand of “people power” that would spur people to bring out the truth and end corruption that had kept the country hostage to the “greed of power-holders.”

Archbishop Angel Lagdameo, president of the Catholic Bishops’ Conference of the Philippines, said that a “convergence of bearers of truths” could save the country.

Backed by the Church hierarchy, Jaime Cardinal Sin called on people power and hundreds of thousands of Filipinos responded and toppled strongman Ferdinand Marcos in 1986.

Lagdameo told reporters after meeting with about 50 civic, student and business groups that the massive anticorruption movement that ousted President Joseph Estrada in 2001 was a disappointment because it “installed a President who later on was judged by surveys as the most corrupt president.”

Lagdameo was apparently referring to Gloria Macapagal-Arroyo, who became President after Estrada was ousted.

“We went from one frying pan to a worse frying pan,” he said.

Referring to the recent CBCP call for “communal action,” Lagdameo said that if, by consensus, “the communal action is people power, it will have to be a different ‘brand.’ It will not be simply a repeat of the past … The movements of some groups for a national campaign against corruption may be a sign.”

At the meeting, civil society groups asked the Church leadership to guide and spearhead “communal actions.”

“They want clearer guidance and leadership. They want to see us with them,” said Lingayen-Dagupan Archbishop Oscar V. Cruz after he, Lagdameo and Caloocan Bishop Deogracias Iñiguez held a dialogue with various sectoral groups.

Cruz said the bishops listened in order to know the “what, how and when” of the planned communal actions.

Lagdameo made the comments amid mounting calls for Ms Arroyo to resign as a Senate inquiry looks into alleged bribery in the scrapped $329-million broadband deal with China’s ZTE Corp.

Priests and nuns have offered refuge to a key witness in the Senate investigation — a former consultant for the project, Rodolfo Lozada Jr. — amid threats to his life. They have also organized prayer protests and joined street rallies calling for Ms Arroyo’s resignation and a clean government.

Who’s who

Lagdameo called for a “brand new people power” and said a campaign against corruption in government may be a start.

Among those who attended the dialogue were representatives of the Black and White Movement, Bagong Alyansang Makabayan (Bayan), Makati Business Club, Integrated Bar of the Philippines, Kubol Pag-Asa, Gabriela, Muslim Legal Assistance Foundation, Bangon Pilipinas, National Council of Churches of the Philippines, United Church of Christ in the Philippines, Association of Major Religious Superiors of the Philippines, Solidarity Philippines and the La Salle Brothers.

But even Lagdameo’s presence at the meeting does not signify that the CBCP has already joined the movement against the Arroyo administration.

Lagdameo said he attended the meeting only as the archbishop of Jaro.

“That’s why I attended this meeting, because I will bring this message to my brother bishops,” he said.

On Monday, Lagdameo lauded the successful holding of “communal action” undertaken by civil society in response to the bishops’ call.

Apparently referring to Lozada, Lagdameo said in a statement: “Imagine, with just one courageous person willing to witness to the Truth, some good things are already starting to happen, like the exposition of other scams, lies, deceits, ‘moderate and immoderate greed’.

“We hope and encourage that other courageous and inspired persons will emerge to tell or expose or humbly face the truth, whose concealment had made our country captive to corruption and greed of power-holders.”

Lagdameo told reporters the challenge to Filipinos today was to find “how to express its new brand of people power.”

He said he was optimistic that the civil society groups he met may have already found some of the answers to this challenge.

Not just talking

Cruz said that no clear action had yet resulted from the meeting.

Both sides, he said, only committed themselves to a continuing dialogue but would come out with a more concrete agenda soon.

“This is not the end of this. Our agreement does not stop here. And this will not be just talking but definitely there will be doing and acting,” said Cruz.

He said the dialogue with civil society was gaining ground because more people were joining it. With a report from Associated Press