Arroyo hit on Spratlys deal

MANILA, Philippines -- Former Senate President Franklin Drilon disclosed Thursday that Ombudsman Merceditas Gutierrez, then President Gloria Macapagal-Arroyo’s chief legal counsel, had said the deal might be in violation of the Constitution and could be grounds for her impeachment.

“I’m willing to state this under oath wherever they will call me,” Drilon told the Philippine Daily Inquirer (parent company of INQUIRER.net).

Drilon said Gutierrez sought his help regarding the planned agreement between the Philippines and China shortly before it was signed in September 2004.

“[She] approached me and asked for my help because, in her view, the agreement allowing China to explore our resources violated the Constitution,” Drilon said.

Last week, a highly placed source privy to the deal told the Inquirer that the Philippines gave up its natural resources when it signed the agreement allowing China to gather seismic data off Palawan province in an area mostly within Philippine territorial waters.
The source, who asked not to be named for security reasons, said the agreement might have been forged to provide a “political solution” to the long-standing struggle among six nations for ownership of the Spratly group of islands, which is said to be rich in gas and oil deposits, and which the Philippines is claiming in part.

But Barry Wain, in an article in the January-February 2008 issue of the Far Eastern Economic Review, quoted Mark Valencia, an independent expert on the South China Sea, as saying: “Some would say it was a sellout on the part of the Philippines.”

The Inquirer repeatedly tried to reach Gutierrez by phone, to no avail.

According to Ana Sanchez of the Office of the Ombudsman, Gutierrez was in the United States for an official briefing with USAID and was due back on Monday.

The Senate and the House of Representatives are poised to conduct separate investigations into the Spratlys deal, which was purportedly forged in exchange for the controversial China-funded loans for the scuttled National Broadband Network (NBN) deal and the Cyber Education, NorthRail and SouthRail projects.

DFA objections

Drilon, then the Senate President, said he could not recall the exact date Gutierrez met with him to discuss her concerns, only that the meeting was held before the agreement was signed.

“She told me it could expose the President to impeachment,” Drilon said.

He quoted Gutierrez as saying that the Department of Foreign Affairs had expressed a similar objection to the agreement and that “she was under pressure from JDV” -- referring to then House Speaker Jose de Venecia -- to endorse it.

Drilon said De Venecia had admitted to pushing for the purportedly overpriced NorthRail project.

Now a private citizen, Drilon said he was supporting the planned congressional inquiries into the Spratlys deal.

“This appears to be the root cause of all the dirty loans, such as [those involving the] NorthRail and NBN,” he said.

He added that he was willing to testify on his conversation with Gutierrez before a congressional hearing.

Drilon said he had asked Gutierrez to furnish him a copy of the agreement so that he or the Senate could give her proper advice, but “she never came back.”

He said he did not know whether the agreement that was eventually signed contained the same provisions over which Gutierrez had expressed reservations.

Gutierrez served as the President’s chief legal counsel from August 2004 to November 2005, after which she was appointed Ombudsman.

Terms, not title

Drilon said the Senate was not informed of the deal.

He said the agreement was originally called an “exploration agreement.” The term apparently rang alarm bells, and so it was modified into a “free exploration agreement,” and, later, what is now known as the Joint Marine Seismic Undertaking (JMSU) among China, the Philippines and Vietnam.

But he pointed out that it was the terms of the contract, and not the title, that would show whether the deal was unconstitutional.

Drilon said he shared Gutierrez’s view that allowing China or any other country to explore the Philippines’ territorial waters and resources was in violation of constitutional provisions governing the country’s national territory and patrimony.

But he said he did not believe that the agreement could make Ms Arroyo liable for treason, as some quarters had claimed.

“I haven’t explored the involvement of the President [in this deal], but definitely it’s not treason as defined in the Revised Penal Code,” he said.

Drilon said the deal could be a basis for impeaching Ms Arroyo, who has survived two impeachment complaints regarding allegations of cheating in the 2004 presidential election and corruption.

“That one is a possibility. If the agreement is a violation of the Constitution, it can be a basis [for impeachment],” he said.

Apart from the Philippines, China, Vietnam, Malaysia, Taiwan and Brunei claim the Spratlys either in whole or in part.

Except for Brunei, all the claimants had set up military installations on the islands they claimed.

‘Weak state’

The JMSU involves Philippine National Oil Co.’s Exploration Corp. (PNOC-EC), China National Offshore Oil Co. (CNOOC) and Vietnam Oil and Gas Corp. (PetroVietnam).

The source privy to the deal said the JMSU, although it includes Vietnam, could weaken the Philippines’ claim over the Spratlys because it was the Philippine government that first approached China.

“The Philippines seems to be the weakest link in the region, as far as the Spratly claims are concerned,” the source said. “It’s a weak state. It has inconsistent policies. No matter who’s the president, a weak state is always in danger of mismanaging its national interests.”

This was the source’s account of how the JMSU came to be:

In 2004, then PNOC-EC president Eduardo Mañalac and then Energy Secretary Vincent Perez met with Ms Arroyo to seek her approval for a bilateral agreement with CNOOC for data-gathering efforts over an area in the South China Sea, including the Spratlys.

Ms Arroyo gave her approval, paving the way for the signing of the Philippines-China deal that same year.

But Vietnam, which claims some of the islands included in the joint undertaking, vehemently objected to the agreement.

As a result, the JMSU was signed on March 14, 2005.

2nd phase

The three state oil firms are now in the second phase of the three-year agreement, which took effect in July 2005.

The JMSU covers 142,886 square kilometers in the South China Sea. (Barry Wain wrote: “The Philippines ... has made breathtaking concessions in agreeing to the area for study, including parts of its own continental shelf not even claimed by China and Vietnam.”)

It entails seismic acquisition, processing and interpretation, but does not include any form of actual exploration.

Depending on the results of the seismic data processing and interpretation, the three state oil firms may decide to negotiate other agreements beyond mere data-gathering.

Asked if the JMSU could be part of a bigger deal with China -- say a quid pro quo involving Chinese investments in Philippine projects in exchange for the advancement of China’s claim to the Spratlys -- the source said:

“It’s not clear. If there’s a quid pro quo, it’s more implied than expressed. China can promise to invest all that foreign exchange into the country, in exchange for moving its interests forward, like those in the South China Sea.

“The Chinese know their position. Their claims can’t be compromised. The Philippines, on the other hand, is flip-flopping on its policies. The problem is that its policies are not driven by technical people, but by opportunists and politicians.”

Safety net

The source said technical people in the Department of Energy and PNOC-EC had gone out of their way to set up a safety net.

“The DOE was very careful and very consistent, as far as protection of Philippine territory is concerned. It asked PNOC-EC to apply for a non-exclusive geophysical permit that had a limited validity,” the source said.

This would prevent any of the entities involved in the JMSU to lay exclusive claim to the covered area should any oil and gas resource be found there, the source said.

Nevertheless, the source admitted that the Philippines had reason to worry given China’s sheer size and military power.

“If oil or natural gas is actually found [in the area], how can you stop the neighborhood bully from wanting to get in?” the source said, adding:

“The approach should really have been to multilateralize it, instead of dealing with China on our own. We’ll have a stronger position if it’s multilateral. But that all changed when the bilateral deal was signed.

“There are really some people who are willing to sell out,” the source said.

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