Probe International Calls It An “Odious Debt”

The debt-ridden Philippine government has decided to dismantle and sell the assets of the Bataan nuclear plant. The $2.3-billion (U.S. dollars throughout) plant, a painful reminder of the Ferdinand Marcos regime, costs Filipino taxpayers more than $170,000 a day in interest and accounts for more than 5 per cent of the country’s total debt. Since construction began in 1975, the government has spent $1.2 billion servicing the plant’s debts to its creditors, including the U.S. Export-Import Bank. The national treasurer estimates taxpayers will have to shoulder a further $282 million until the loans are settled in 2018.

Despite this expenditure, the plant has never produced a single watt of electricity and was declared unsafe and inoperable by a team of international inspectors after Marcos’ downfall in 1986. The ill-conceived plant stands just 100 kilometres from the sprawling capital of Manila, near several earthquake fault lines and at the foot of a dormant volcano.

The project, which cost three times the price of a comparable plant in South Korea, was plagued by allegations of corruption. According to a 1986 New York Times investigation, Marcos allegedly received $80 million in commissions, through a crony, from Westinghouse, whose winning bid was much more expensive than the General Electric proposal recommended by the head of the Philippine National Power Corporation. The Filipino Secretary of Industry wrote angrily to Marcos that he had bought “one reactor for the price of two.” The Marcos crony, Herminio Disini, who arranged the deal and was awarded several lucrative contracts associated with the plant, went on to live in a castle near Vienna, Westinghouse acknowledges paying a commission to a Marcos associate, but says “allegations of illicitly inflated costs at its nuclear power plant in the Philippines are completely without merit.”

Probe International calls the Bataan nuclear plant debt “odious,” a concept articulated by Alexander Sack, a Russian law professor, in the 1920s. Sack explained that if a despotic power incurs a debt not for the needs or in the interest of the state, but to strengthen its despotic regime, to repress the population that fights against it, or for purposes that “serve interests manifestly personal,” this debt is odious for the population of the state. “This debt is not an obligation for the nation; it is a regime’s debt, a ‘personal’ debt of the power that has incurred it, consequently it fails with the fall of this power.”

Given that large payments allegedly went to Marcos and his cronies, that the Filipino people never benefited from the plant, and that the plant was unsafe, Probe International says the Philippine government should declare the outstanding Bataan plant debt odious and send it to international arbitration.

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CONTACT: PATRICIA ADAMS, Executive Director of Probe International,
(416) 964 9223 ext. 227 or e-mail PatriciaAdams@nextcity.com

Probe International is a Toronto-based environmental and economic think-tank. Patricia Adams is the author of Odious Debts: Loose Lending, Corruption, and the Third World’s Environmental Legacy (Earthscan 1991), and Executive Director of Probe International.