ACCEPTING Russia’s offer to export cheap oil to the Philippines is a “complicated” move that could cause more problems than the desired blunting of inflation’s impact, according to Sen. Francis Tolentino.
While conceding that Russian oil is priced lower than most others in the world market that has seen steady spikes —driven by the Ukraine-Russia conflict since February—Tolentino said the incoming administration of Ferdinand Marcos Jr. would do well to study thoroughly the possible fallout from buying from Moscow.
Among others, it would unsettle the Philippines’s standing among the hundreds of countries that signed the UN resolution condemning Russia’s February 24 invasion of Ukraine and urging it to pull out its forces.
Tolentino added that China and India, which continue to buy Russian oil, did not sign the resolution and thus would not have that dilemma.
The senator noted that the Philippines also buys oil and a host of other products from many of the countries that signed the UN resolution, and breaking the spirit of the resolution by importing oil from Russia could impact Manila’s trade relations with these countries.
Moreover, he noted, the Philippines exports workers to most of the signatory countries, and its move to deal with Russia—thus weakening the resolution that it signed – could also impact the standing of the OFWs. Signatory countries might take offense with Manila’s breaking the oil exports ban on Russia and tighten rules on OFWs they host.
“Tignan natin ang epekto naman kung bibili tayo ng langis sa kanila. Halot lahat ng pumirma sa resolution hindi bumibili [ng langis] sa Russia [Let’s look at the consequence of buying Russian oil. Almost all who signed the resolution are not buying from them],” Tolentino said in a radio interview Sunday morning.
Moreover, he said, Russia has been expelled from the SWIFT system used by banks around the world to transact. “Hindi na tayo puedeng mag trade sa dollars” because Russia was for its invasion of Ukraine, a move that Moscow calls a special operation, not an invasion.
This, he said, means the Philippines must find another way to pay for oil imports should it accept Russian oil, noting, “wala naman tayong [we don’t have] Russian rubles.”
He said there is a huge underlying message in Manila’s signing the UN resolution, noting in Filipino,“the UN community made a big demand of Russia—that it withdraw its forces before relations between them can return to normal.”
The senator underscored that Russian oil is cheaper “because no one is buying from them.”
However tempting their offer of oil exports may seem, the situation is “masalimuot [complicated],” the senator stressed.
Asked if, given the risks of buying Russian oil, whether the Philippines should consider internal fiscal options like temporarily suspending excise tax and VAT on oil products, Tolentino agreed that is worth reviewing.
The new administration, he said in Filipino, “can check our revenue collection. How much is the impact on revenue if we temporarily remove excise tax and VAT from the equation?”
It is also important to study “what will be lost. What happens to the spending power of government?” The impact on plans for pursuing further the Build Build Build and badly needed social services should be studied well in reviewing the forgone revenue option, he added.
The immediate priority, he concluded, is to deal with “the impact of inflation—the weakening purchasing power of our people.”