The Multinational Monitor


G L O B A L   S I G H T I N G S

Marcos' Economic Pain

Despite domestic criticism and harsh words from the World Bank, Philippines martial-law president Ferdinand Marcos is moving forward with a new development program centered around 1I large-scale industrial projects. While officials at the lending agency warn the plan may exacerbate 25 percent inflation and further mortgage the country to private international banks, the new Marcos strategy promises substantial financial benefits for a number of major multinationals.

While most of the projects are in the early stages of negotiation, two of the I 1 are on the brink of implementation. Marubeni Corporation, a major Japanese trading firm, recently won a contract to install a $250 million copper smelter with an annual capacity of 150,000 tons.

Reynolds Metals, a major U.S. aluminum producer, also stands to gain from Marcos' plans. The multinational is about to complete negotiations with the government over construction of an aluminum smelter with an annual capacity of between 70,000 and 140,000 tons. Company officials indicate Reynolds will gain a 50 percent equity stake, while the government will control the remaining 50 percent.

An as yet unpublished World Bank report is sharply critical of the general direction of the development program, concluding that the $6 billion cost of the capital and energy-intensive projects-to be shared by public and private investors-would force drastic reductions in government spending on rural infrastructure. While a geothermal field would supply the copper and aluminum smelters with 500 megawatts of power each year, for example, 90 percent of rural Filipinos would continue to subsist with no access to electricity. To minimize the strategy's impact on rural expenditures, the bank is pushing Marcos to limit government participation in the projects, and allow foreign firms a primary role. Critics of the bank's recommendations claim they address only the symptoms, rather than the root of the problem-the nature of resource deployment in the Philippines.

All in all, the biggest losers in the new development strategy may be the Filipino people. Since Marcos' declaration of martial law in 1972, real wages in the rural sector have dropped by 30 percent. The government's plans to disregard agricultural development may spell further hardship for millions of Filipinos. Coming in the wake of obviously rigged elections in which Marcos' New Society Movement faced strong opposition in a number of regions, the impact of the new "development" plan on the rural population may heighten popular discontent with Marcos' 15-year reign.

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