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Pernia on EU funding cut: It's just Duterte's temporary unhappiness

Ernesto Pernia, the socioeconomic secretary, said that the Philippine government's decision to end its funding agreement with the European Union was not a permanent policy. Philstar.com/Efigenio Toledo IV

MANILA, Philippines — Economic Planning Secretary Ernesto Pernia reiterated on Friday that the decision of the Philippines to turn down millions of European Union funding was not a permanent policy shift on its part as the budget secretary explained that the refused money would not hit specific projects, in clear contradiction to the statement of the bloc’s ambassador to Manila.

In an interview with Philstar.com at the sidelines of the BusinessWorld Economic Forum 2017, Pernia, the director general of the National Economic and Development Authority, said that yesterday’s decision to cut at least 250 million euros of European funding was impermanent and spawned only by the “temporary” unhappiness of President Rodrigo Duterte with the 28-member group.

“No, no, no. It will not be a policy, not a permanent policy. It’s a temporary (policy), temporary unhappiness,” Pernia answered when asked if this was a signal of a permanent change in government official policy.

Benjamin Diokno, the Philippine budget secretary, defended the decision of the government to turn down EU funding carrying conditions. He said that no major projects would be affected by the move since EU money usually financed institution strengthening initiatives.

“Wala yun kasi yung EU funding usually mga institutional strengthening yun e mga ganun. Like sa DBM nun yung assistance to LGUs ganun, assistance to health projects pero bihira yung infra,” the budget secretary told reporters after he gave a presentation on how the government planned to finance its infrastructure projects.

Diokno’s assertion was contrary to the statement of Franz Jessen, the EU ambassador to Manila on Thursday.

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Jessen said that cutting EU aid would translate to a loss of about 250 million euros or US$278.73 million worth of grants.

“The amount possibly concerned by the new decision is 250 million euro plus. For this year the amount affected could be 100 million euro,” Jessen was quoted as saying on Thursday.

Diokno also explained that the policy was meant only to discourage foreign governments from attaching funding to conditions that would interfere in the internal affairs of the Philippines.

“Ang ayaw lang naman ni Digong yung nakikialam ka,” Diokno said. “Ang policy lang naman yung ongoing we’ll continue. Ngayon if you have a grant walang conditionality. Huwag kang makikialam sa ginagawa namin. Hindi pu-pwedeng stop mo na yung EJK na yun.”

Diokno said that the money lost through this decision, which he described as measly, could easily be recovered through borrowing since the country was already given an investment grade.

“Pero huwag mong konti-konti na nga lang yung pera nila na yun e. Alam mo yung pinagmamalaki nilang US$300 million over six years pa nga yun e. So it doesn’t matter. We can borrow money anytime kasi investment grade na tayo e,” he said, adding that attaching conditions to grants was applicable only to third world countries which are failed states.

Pernia meanwhile could not say if the economic managers were consulted by the president in making this decision, saying he was away when it was made.

“Well I was away, so I didn’t know about [it]. That’s all I can say,” he said, a stark contrast to his statement Thursday when he directly said that the economic team was not consulted on the matter.

For Diokno, whether the economic managers were consulted or not did not matter. He said that such view had always been that stand of the president on foreign grants.

“It doesn’t matter kung kinonsult kami o hindi. Matagal na niyang policy yan e. Porke nagbigay ka ng US$50 million makikialam ka na sa amin,” he said.

Diokno also clarified that the decision should not strain the relationship of the Philippines with the EU as he could not directly answer if this position would also apply to the grants given by individual European countries.

On Thursday, the Philippine government announced that it would end its funding agreement with the EU to “prevent them from interfering with our internal affairs,” according to Salvador Medialdea, the executive secretary.

“The President has approved the recommendation of the Department of Finance not to accept grants from the EU that may allow it to interfere with internal policies of the Philippines,” Ernesto Abella, the presidential spokesperson, said.

Duterte and the EU have had a very testy relationship since the bloc warned the Philippines that it risked losing tariff-free exports to Europe because of mounting deaths in the government’s campaign against illegal drugs and Manila’s efforts to revive the death penalty.

RELATED: Rejection of EU funding could affect Mindanao peace projects

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