Cheaper

Fuel prices drop significantly today. This could be the beginning of a trend.

Donald Trump claims some sort of deal with Iran will be signed imminently. Tehran has yet to confirm it will sign a “memorandum of understanding” prepared through third-party channels. Details of this memo have been leaked over the past few days.

Trump commits to lifting the US blockade off the Omani coast. Tehran has yet to clearly announce the same for its blockade of the Strait of Hormuz. The waters of that narrow channel have been declared territorial waters of both Iran and Oman. Tehran reserves the tight to collect a toll to cover the cost of managing the strait.

Short of any unforeseen action by other players in the Middle East, the market seems hopeful that a working arrangement could soon be reached. This is the reason oil prices have been trending downwards the past few days.

A working agreement between Iran and the US could not be more timely. Since the outbreak of hostilities more than three months ago, the major economies have been drawing on their strategic petroleum stockpiles to soften the impact of the crisis on oil prices.

Those reserves have now hit rock-bottom. Some stockpiles have reached their operational minimum. Beyond this, they can only yield sludge. Analysts have predicted the oil prices could spike to $150 per barrel from thereon. At that price level, the global economy will be pushed over the ledge.

Trump is desperate to reach an agreement that will normalize flow through Hormuz. He wants to walk away from this war as soon as he can, claiming victory no matter how incredible this might be. But Tehran is not about to grant him an easy way out and is holding out for the unfreezing of billions in Iranian assets frozen abroad. They know that in his desperation, Trump is at his most vulnerable point.

We will know in a few days if a workable deal is indeed done. The world needs this deal. But everyone also needs more certainty about the sustainability of peace in the Middle East. We cannot go through another traumatic event such as what we went through every few years.

Israel has been resisting a ceasefire deal, escalating its bombing of Lebanon every time a deal becomes imminent. Tel Aviv want Iran permanently crippled and in the same internal turmoil as Iraq and Libya. Turkey threatens to attack Israel if it persists on destabilizing the region.

It will be hard to bring down oil price levels to about $70 per barrel – the price point pertaining before Tel Aviv convinced the naive Trump to attack Iran. But oil in the range of $85 per barrel is certainly tolerable.

Hellish deal

One might call this a deal from hell.

When the controversial German technology firm Dermalog needed a local partner with enough capital to win a multibillion-peso government deal, they offered a local construction firm Verzontal Builders Inc. (Verzontal) a joint venture agreement. When the time came to share the profits, Dermalog removed Verzontal from the partnership.

Not only did Verzontal lose its 25 percent share of the operating profit, the Filipino firm claims it is unable to reimburse the P165 million spent building the LTMS Data Center facility at the LTO Central Office. This event certainly requires a thorough review of policies covering foreign firms bidding for government projects. It was too easy for the German firm to dump its Filipino partner after winning the deal.

The Dermalog deal involves building the Land Transportation Management System (LTMS). It has been controversial from the start because of undue delays and cost overruns. Despite close congressional scrutiny of this deal, the entire package remains incomplete and Dermalog holds on to the source code for the system. This means the project is beyond government control even as the contract price has been paid.

Verzontal did go to court to recover its investments. Without effective policy protecting Filipino firms entering into joint venture agreements with foreign firms pursuing government contracts, however, Verzontal lost its case in court. An emboldened Dermalog continues to keep control of the information system long after it was supposed to turn over the project to government.

Verzontal decided it was no longer worth its while to continue pursuing its claims in court. The whole effort involves expenses the local firm could barely afford. The lack of clarity in policy does not give the company enough assurance justice is within reach. Verzontal confirms it will no longer seek judicial remedy. Another Filipino firm falls victim to the lack of protection in existing policy.

Meanwhile, Dermalog continues to rule the roost. The German firm continues to demand extension after extension, billing government additional costs beyond the original contract price. The LTMS continues existing beyond the control of the LTO. The word “impunity” will be deserved in describing Dermalog’s behavior here.

We have, by every measure, a weak state. Probably also a failed government. The work to be done in ensuring adequate protection for Filipino firms is not being done.

The costs suffered by Verzontal in its ill-fated joint venture with Dermalog are not small. But the doors tor recovering them appear to have been closed.

There are important lessons to be learned here. But even assiduous congressional oversight seems unable to grasp the lessons that need to be learned.