Sep 202014
 

http://wikileaks.org/cable/2006/12/06MANILA4972.html#

Reference ID Created Released Classification Origin
06MANILA4972 2006-12-13 06:28 2011-08-30 01:44 CONFIDENTIAL Embassy Manila
VZCZCXRO3544
OO RUEHCHI RUEHDT RUEHHM
DE RUEHML #4972/01 3470628
ZNY CCCCC ZZH
O 130628Z DEC 06
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4245
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS IMMEDIATE
RUEHBJ/AMEMBASSY BEIJING IMMEDIATE 5931
RUEKJCS/JOINT STAFF WASHINGTON DC IMMEDIATE
RUEKJCS/SECDEF WASHDC IMMEDIATE
RHHMUNA/CDRUSPACOM HONOLULU HI IMMEDIATE
C O N F I D E N T I A L SECTION 01 OF 02 MANILA 004972

SIPDIS

SIPDIS

STATE FOR EAP/MTS AND EAP/CM
USPACOM ALSO FOR FPA HUSO AND J5
SECDEF/OSD/ISA/AP (TOOLAN/BAILEY)
JOINT STAFF/J5 (WILKES/ROBINSON/CLEMMONS)

E.O. 12958: DECL: 12/08/2016
TAGS: PREL ELTN EAID CH RP
SUBJECT: NORTHRAIL PROJECT SYMBOLIZES LARGER PRC ROLE IN PHILIPPINES

Classified By: Pol/C Scott Bellard, reasons 1.4 (b) and (d)

¶1. (U) Summary: The PRC and the Philippines have launched a
major “Northrail Project” that will ultimately span between
Manila and key points in northern Luzon, including the former
U.S. base at Clark and perhaps onward to Subic Bay. China
provided a concessionary loan worth about $421 million for
the completion of the first 32 kilometer section, as well as
for rolling stock. The China National Machinery Industry
Corporation has provided engineering and technical planning.
The Northrail project marks a significant upgrade in China’s
economic presence in the Philippines. End Summary.

——–
New Line
——–

¶2. (U) In an elaborate ceremony on October 20 featuring
Philippine Vice President Noli De Castro and PRC Ambassador
Li Jinjun, the Philippines and the PRC launched the first
phase of the Northrail Project in Caloocan City in
Metro-Manila on October 20. Philippine Speaker of the House
of Representatives Jose De Venecia, who was also present,
called it “unprecedented in the history of Philippine-Chinese
relations.”

¶3. (U) A major multi-phase endeavor, the rail line will
ultimately span between Manila and key points in northern
Luzon. Section 1 of Phase 1 includes a 32 kilometer track
connecting Caloocan City to Malolos City in the province of
Bulacan. Section 2 of Phase 1 will connect Malolos to the
former Clark airbase in Pampanga province. Officials
envisage an eventual rail connection from Clark to the Subic
Freeport Zone in Zambales and then north to San Fernando/Poro
Point in La Union province. Officials hope to complete
Section 2 of Phase 1 within three years, as a “present” to
President Arroyo before she leaves office. At present,
workers are performing excavation work and soil treatment.

¶3. (SBU) The North Luzon Railway Corporation (Northrail), a
state-owned subsidiary of the Philippine Bases Conversion
Development Authority, will operate and manage the rail
system. The China National Machinery Industry Corporation
(CNMIC) is providing engineering and technical planning and
will supervise work. According to Corporate Secretary and
Counsel for the Northrail Corporation Benjamin Palomique,
China provided a $421 million buyer’s credit loan agreement
from the Export Import Bank of China to the Philippine
Department of Finance. It is a tied loan at a concessionary
rate of 4% interest, with repayment over 20 years. China
will also provide the rolling stock and the locomotive
“shells.” Palomique added that CNMIC officials are
negotiating with U.S. firms GE and Caterpillar for
American-made locomotive engines.

—————-
Squatter problem
—————-

¶4. (C) Northrail will essentially follow the path of an 1888
railroad line that has been out of use for over 25 years.
Since then, the right-of-way had become congested with about
20,000 families of “informal settlers” or squatters, rural
poor who have migrated to the urban centers along the line
and have constructed make-shift neighborhoods. According to
Jose Sarasola, General Manager of Philippine National
Railways (which owns the railroad right-of-way), President
Arroyo was determined that the Northrail Project succeed,
despite the political difficulty of removing the squatters.
She “had guts to push this,” he commented. Sarasola observed
that Vice President De Castro was the ideal point-man to
carry out the relocation program, because he is a popular and
“folksy” politician. The Vice President, in his speech at
the Northrail launching ceremony, claimed victory in
relocating all families as of December 2005, noting that the
vast majority “gave way without a fight.”

——-
Comment
——-

¶5. (C) The Northrail Project has already become a symbol
here of China’s increased economic presence. Unlike

MANILA 00004972 002 OF 002

assistance programs in far-away Mindanao, this project should
bring direct and quick benefits to Manila-area residents (and
politicians). Improving transportation infrastructure in
Luzon will allow more efficient transportation of people,
goods, and resources in Northern Luzon.

Visit Embassy Manila’s Classified website:
http://www.state.sgov.gov/p/eap/manila/index. cfm
KENNEY

   

 

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