OF SUBSTANCE AND SPIRIT
Let me share some excerpts from my most recent In Brief piece for GlobalSource Partners this week. I thought we need to do a deep dive into the latest twist in China’s bullying of the Philippines in the West Philippine Sea because of its economic underpinnings.
It should be clear to all that we don’t claim the whole South China Sea; we are simply asserting our territorial sovereignty over that portion called West Philippine Sea that lies within the country’s exclusive economic zone (EEZ) as mandated by the 1982 UNCLOS (United Nations Convention on the Law of the Sea).
The problem between the Philippines and China began with the latter’s claims and aggressive actions with respect to some groups of islands that are within the former’s EEZ and CS. We decided to submit this diplomatic rift for resolution by the Arbitral Tribunal which ruled that China’s allegations of “pre-existing historic rights no longer exist as they are not compatible with … UNCLOS.” China’s claim exceeded the geographic limits imposed by this law of the sea.
The Tribunal also ruled that China’s construction of installations and significant reclamation work cannot enhance a mere rock or “low-tide elevations” (LTE) to a fully entitled island. Rocks or LTEs do not give rights to resource exploitation beyond their territorial sea. Thus, Chinese activities in the areas of the South China Sea located within the Philippines’ EEZ and CS were found to be illegal.
There is a new twist to this maritime conflict.
To justify its actions, China has recently claimed that there is a secret arrangement between China and the Philippines. It is alleged that under this gentlemen’s agreement, the Philippines was supposed to keep the status quo in the disputed waters. Only basic supplies, and not building materials, would be sent to the BRP Sierra Madre, the old Philippine Navy ship that has served as the country’s sole military outpost in the Second Thomas or the Ayungin Shoal. Failure to maintain it could compromise our claim of sovereignty over the Shoal.
If this is true, the Philippines effectively waived its own sovereignty. The Philippine Constitution does not authorize any official to waive, even if temporarily, Philippine sovereignty or traditional fishing rights of Filipinos.
China’s diplomatic authorities have also begun to talk about a “new model” in managing the standoff. Defense Secretary Gilberto C. Teodoro, Jr. denounced it, calling it as China’s attempt “to advance another falsehood in order to divide our people and distract us from their unlawful presence and actions in our EEZ.”
Finally, despite the earlier ruling that China’s construction activities in the disputed territories are illegal, China has been reported to have continued to build those structures surreptitiously to make it appear that the high-tide elevation is naturally formed, rather than man-made. Man-made high-tide elevation is not entitled to a territorial sea.
Why is China dead serious about the South China Sea to the point of bullying the Philippines?
Strategic control of the trade route could be a paramount goal. It is estimated that 80 percent of world trade travels through the South China Sea with a value estimated at about $5.3 trillion, of which $1.2 trillion is attributable to trade with the US. Beyond this parameter, China with its aging population needs to exploit the area’s vast marine resources, crude oil and natural gas to support its aggressive economic goal to leapfrog and surpass everyone else.
The overall impact on the Philippines is hefty. With its sovereignty over its own territories ignored, it will require the Philippines to seriously consider strengthening its ability for self-defense. Higher portion of the national budget would have to be allocated to strengthen our military capability. While putting up joint patrols with friendly nations and greater alliance outside the region are necessary, it is crucial for the Philippines to rely principally on its own. We have to do our homework in judicious budget management including the complete elimination of wasteful insertions and special fund allocations. Corruption can cost our own survival.
The economic challenge is even more difficult. With the Malampaya natural gas field about to be exhausted probably in two to five years, some 40 percent of Luzon power requirements might be at risk unless the Reed Bank is explored, surveyed and drilled for natural gas and crude oil. The Reed Bank, or Recto Bank, is an underwater reef formation reported to contain huge deposits of oil and natural gas.
Several geological surveys estimated oil deposits at over 11 billion barrels of crude oil and 190 trillion cubic feet of natural gas in proved and probable reserves.
If China sustains its unfriendly behavior, the Reed Bank may never be exploited at all, and with Malampaya natural gas deposit nearly exhausted, the risk of power failure in the Philippines is a great probability. Business activities including manufacturing, services and banking would be impossible, with enormous hit on the country’s economic growth. With power failure, and the probability of rising cost of energy, the gut issue of domestic inflation could resurge. Unless this is prevented, President Marcos’ political survival is on the block.
While the Philippines could once again file for damages including the loss of livelihood of Filipino fishermen with the Arbitration Tribunal and win, the victory could be pyrrhic unless the judgment is enforced. Justice Carpio suggested that one option is to offset the country’s official loan obligations with China by the amount of the arbitral award.
Yes, it is best to settle this issue in accordance with international law anchored in upholding national sovereignty as well as regional peace and stability. Until the ruling is respected by both sides, China especially, the cloud of uncertainty in the economy is likely to remain.
The chance for peace is higher if the Philippines starts now to strengthen its capability for self-defense, cement joint patrol in the South China Sea and broaden alliances with friendly nations.