Perilous factors face the economic future

On Feb. 25, 1986, the country was extremely split between two irreconcilable political forces. We faced a grim choice and what took place was the unique event we call the EDSA People Power revolution.

All political changes are predicated on instilling hope to improve the nation’s future. Political change succeeds when the nation’s directions make it possible to achieve that betterment.

Missed growth aspirations. Looking back from the year 2020, there is much to ponder about the consequences of EDSA. We tripped before EDSA, but we tripped even more after EDSA.

We should have achieved the status of being a middle income nation before the close of 2000, which our neighbors in the ASEAN had started with us in the journey of development.

In 1983, we were on that threshold of change. The 1983 political assassination that aggravated the nation’s economic position and made possible the build up to People Power at EDSA interrupted that journey.

We have now recovered, and this year, we look toward a middle income status as a developing nation.

Danger points to the national future today. Instead of looking back, we can look forward. The path to our future could be tripped by unexpected events and by happenings that are the consequences of collective actions that our leaders take.

We face some perilous situations today. Some of these conditions are events to which we can only react to. We have no control over how they come about and we can do little to change them except to undertake defensive actions.

(A). Public health crisis: a threatening recession? When the coronavirus was first detected, there was caution that it could be contained. But today, it is more threatening.

The coronavirus has now broken out in other places. A major infection has spread to Italy and South Korea where multiple cases are being observed. It has reached other countries, even us. For the first time, in recent days, the threat of a wider epidemic is worrisome.

Public health authorities are concerned. A pandemic could potentially cause major disruptions in the world economy. The supply chain links in production that is a feature of today’s globalized economy could be seriously disrupted. China is at the center of this present link and some of that disorder would cause a reorganization that could be beneficial to some countries. Yet, major economic pain would be felt around

Recent drops in stock market prices is a signal that the virus could foretell that economic pain. In fact, the world economy is already being threatened by looming economic downturn which is the effect of other factors.

Important countries in Europe are facing the potential consequences of Brexit in the region. In Asia, Japan has been dealing with a serious economic downturn caused by long-drawn-out stagnation. The complication of the virus problem could threaten such major events as the forthcoming summer Olympics for which Tokyo has been preparing half a year away.

Indeed, the international tourist travel industry could be affected by fear of contamination. The widespread quarantining virus agents around the world has is an indication of the international alarm. Some major athletic, business fairs and events (where large crowds of people are involved) have been cancelled in some countries because of the threat of human transmission of the virus.

If science and public health administrators in many countries fail to deal with the current coronavirus, a major recession involving the world travel industry is inevitable.

(B) Visiting Forces Agreement (VFA). The VFA with the US is a cornerstone of our military alliance with the United States, which has a long history.

Action on this agreement depends on the steps we take. For we have to own the consequences. The recent notice of termination of this agreement with the United States made by the Philippine government has a sense of finality to it.

President Duterte’s action apparently stems from US criticisms of his drug war policy. It is asserted that ending the agreement would help strengthen the country’s effort to rely on its own for military and defense posture. Any move along this line implies a major rise in the country’s expenditure on the military. This however could compete with the important need for resources to devote to economic and social expenditures.

The consequences of our action could also have an impact on the geopolitical map. The China-US balance of power could tilt in favor of China and it could have long term implications on the issue of shipping lanes and in the strategic routes of trade in our region.

Another consequence could be the emboldening of the forces that undermine our national security. Separatist and disruptive elements could be animated, especially in Mindanao. In this, think of the breakaway Muslim groups from the Bangsamoro model of regional autonomy, or even the communist insurgents in the hills.

Such untoward outcomes could enlarge the nation’s security and defense spending for internal war. But also, they help blacken our image and deter important investments which are the rewards of a peaceful economy.

(C) The sanctity of contracts and politics. Previous political administrations have missed out by neglecting the expansion of water catchment capacity to serve the nation’s needs, especially that of Metro Manila.

Investment in such facilities was a major feature of the program of water resources development during the 1970s.

When heavy drought conditions aggravated the lack of water facilities and caught Manila by surprise, the government was faced with angry residents who were out for scapegoats. The water service contractors to the Manila Water Sewerage Authority (MWSA) received the brunt of anger and blame.

Yet, these privatized water service providers have been responsible for improving the deteriorated water system service delivery of previous years.

After much drama, threats and blames, the private service contractors retreated and faced political realities. One of them sold off to a more politically savvy operator, who could convince the government of the forward remedial measures.

If we are back to the politics of the past, we would have a major problem in seeing through many of the current public-private cooperative projects embodied in Build Build Build infrastructure programs.

My email is: [email protected]. For archives of previous Crossroads essays, go to: https://www.philstar.com/authors/1336383/gerardo-p-sicat. Visit this site for more information, feedback and commentary: http://econ.upd.edu.p h/gpsicat/