Lorenzana wants Australia exempted from Duterte's foreign loan ban

MANILA, Philippines – The Department of National Defense (DND) will ask President Rodrigo Duterte to exempt Australia from his order to ban new loans and grants from countries that voted in favor of a United Nations Human Rights Council (UNHRC) resolution to investigate the administration’s war on drugs.

Defense Secretary Delfin Lorenzana said the DND is in talks with the Australian government for a loan agreement to finance the procurement of 6 offshore patrol vessels (OPV) for the Philippine Navy as part of the Armed Forces of the Philippines (AFP) Modernization Program.

“We will comply with the memo, but I will ask for some exemption if there is a need to do it, and I would like maybe to make it clear now that we would like an exemption for Australia,” Lorenzana said during a Senate committee hearing on the DND’s proposed budget for 2020.

The Australia-based shipbuilder Austal has proposed to build the 6 OPVs for P30 billion, and the DND is looking to secure a soft loan from the Australian government to finance the purchase.

If Australia agrees, the Philippine government will only have to pay an initial 10% of the price and “amortize” the rest over several years, Lorenzana said.

Making the case for Austal, Lorenzana said the company’s unit in Cebu is 95% staffed by Filipino workers, and enlisting it to build the Navy’s OPVs would generate jobs for even more Filipinos.

Asked by Senate Minority Leader Franklin Drilon whether he had taken the matter up with Duterte, Lorenzana said he would do so “soon."

“We are still talking with the Australians. I have just written them a letter [saying] that we would like to avail of financing from the government of Australia and they have not yet replied to me. Once I get that reply, then I will ask for an exemption from the President,” the defense chief said.

Drilon asked Lorenzana whether he thought the President would agree.

“I am almost certain that he will…because it will benefit our people,” the defense chief said.

In a memorandum dated August 27, the Office of the President ordered all government agencies to suspend negotiations for loans and grants with the 19 countries that favored the UNHRC resolution, including Iceland, which proposed it.

The other 18 countries are: Argentina, Australia, Austria, Bahamas, Bulgaria, Croatia, Czech Republic, Denmark, Fiji, Italy, Mexico, Peru, Slovakia, Spain, Ukraine, the United Kingdom, and Uruguay.

The resolution asked UN human rights chief Michelle Bachelet to present a comprehensive report on the situation in the Philippines, and urged the Philippine government to "take all necessary measures to prevent extrajudicial killings and enforced disappearances, to carry out impartial investigations and to hold perpetrators accountable, in accordance with international norms and standards, including on due process and the rule of law.”

Duterte bristled at the proposal, and threatened to cut diplomatic ties with Iceland.

After initially denying the memorandum’s existence, Presidential Spokesperson Salvador Panelo said Duterte forgot about it for a while and then remembered it after he was shown a copy.

Foreign Affairs Secretary Teodoro Locsin Jr called the ban a “good idea,” saying the forgone loans and grants were “small time.”

Offshore patrol vessels are small ships designed to monitor the country’s coastal and territorial waters. The vessels would be a much-needed addition to the Navy’s fleet as it attempts to fend off security threats in the Philippines’ maritime domain, such as incursions by foreign vessels and the entry of terrorists through the “porous border” in the Sulu Sea, Lorenzana said. – Rappler.com

JC Gotinga

JC Gotinga often reports about the West Philippine Sea, the communist insurgency, and terrorism as he covers national defense and security for Rappler. He enjoys telling stories about his hometown, Pasig City. JC has worked with Al Jazeera, CNN Philippines, News5, and CBN Asia.