Rappler Talk: Will PH and China improve ties in 2016?

MANILA, Philippines – Rappler’s Ayee Macaraig talked to Victor Andres “Dindo” Manhit, president of the think tank Albert del Rosario Institute. 

Construction and arbitration in the South China Sea, a pivotal election, and a China-led development bank – how will these affect Philippine-China ties in 2016? (READ: Philippines and China: Rivals at sea, allies in trade?) 

The Philippines’ tense relationship with China appeared to thaw in late 2015, with Manila’s last-minute decision to join China’s Asian Infrastructure Investment Bank (AIIB). A bold effort to expand China’s financial clout, the AIIB is widely seen as a rival to the US-led World Bank and the Japan-dominated Asian Development Bank.

After months of hedging, the Philippines signed on to Beijing’s major economic and foreign policy initiative to source badly needed funds for infrastructure. Philippine officials want to secure loans for mass transit and telecommunication projects to replace the country’s creaking infrastructure, and to sustain its stellar economic growth.

Yet the South China Sea dispute put Philippine-Sino relations off to a rocky start in 2016. China’s test flights on Fiery Cross Reef in the Spratly Islands drew sharp condemnation from Manila and Hanoi. The Philippines warns against an air zone in the South China Sea, and rising tensions due to China’s construction activities in artificial islands.

In mid-2016, a ruling on Manila’s historic arbitration case against Beijing, and Philippine presidential elections will add another dynamic to the complex relationship between the Southeast Asian nation and the Asian superpower.

Watch as we discuss how the Philippines should balance its trade and security interests with China, relations with ASEAN and the United States, and the changing regional and global order.

Here is the full transcript: 

Let’s start with the South China Sea. On January 2, China landed test flights on Fiery Cross Reef in the Spratlys. The Philippines and Vietnam immediately protested. What do these flights mean? 

We have to go a few months back. We’ve seen through different sources, the [Asia Maritime Transparency Initiative] of the [Center for Strategic and International Studies] of the US has shown us how some of these reefs have been transformed into possible military facilities, landing areas and suddenly we start the year, a civilian plane landed. For me, all this reclamation is about China’s expansion of its maritime footprint in the South China Sea.

What does it tell us? When you build and transform these reefs into ports with military facilities, communication facilities, landing areas not only for civilian but even for military aircraft. It threatens freedom of navigation, and freedom of overflight in the South China Sea. Those areas could be or would be controlled by China.

Philippine foreign secretary Albert del Rosario warned that China is establishing an air defense identification zone in the South China Sea. Do you see this scenario playing out? 

That is the greatest risk. It’s not only a problem for the Philippines but for our own neighboring countries. It’s a main trade route, shipping but also a main airline route. Can you imagine all commercial flights passing through this area and asking permission from China? And they will have that capacity as they transform some of these reclaimed areas to these type of facilities. It’s a danger to the free movement of people and commerce in the region. 

What can the Philippines, Vietnam and other claimants do beyond filing protests?

We have done what we can do as a nation that really has very limited defense capabilities, and given the reality of our own geography, we are an archipelago. The South China Sea or the West Philippine Sea needs really a lot of investment in terms of Armed Forces of the Philippines capabilities, capabilities for external defense. It takes time for us to build what the military calls the minimum credible defense. 

We really need to strengthen our own alliances with key nations who are interested in the free movement of people, commerce in the South China Sea. I’m referring not only to the US but also Japan, and even Australia, and even our own ASEAN. It’s time for ASEAN to realize that this is not an issue between Philippines, Vietnam, those claimants but this is an issue that might affect trade of ASEAN.

As we enter this new ASEAN economic zone, South China Sea is a key trade route for all of us. Imagine if it will be controlled by one country, and we need to ask for permission. It would basically alter how trade has been happening in our country.

There have been proposals for the Philippines to also upgrade its airstrip on Pagasa Island, and build military facilities. What do you think of this idea? 

The moment the Philippines reacts that way, let’s build our own, let’s rehabilitate our own facilities then what you’ll have is a situation where all claimant countries: Vietnam and others will start building facilities, then what will you have? You militarize the zones. Suddenly the South China Sea  becomes a very militarized area. That’s what I fear. 

We live in an economic situation whereby people are saying it’s the East Asian Century. Not only the Chinese Century. ASEAN will play an important role. China is there. Japan and Korea will play a role. And suddenly our main trade route, our main airline route becomes a militarized zone because claimant countries, especially with China, given the reclamation in a few of these reefs, turned into now islands can really change the relationship between people, and the fear that one single accident can trigger some big conflicts. 

I fear that because we should live in a more peaceful, rule-driven, because that’s what the community of nations is telling us: the importance of international law, respect for certain international agreements we are part of about economic zones, respecting sovereignty of countries, these are things we should be looking at. 

You talk about the Enhanced Defense Cooperation Agreement, the Philippine military deal with the US. Would you say that these test flights highlight the urgency of implementing EDCA, which remains pending before the Philippine Supreme Court? 

I think so. There is that urgency, and that urgency is as far back when it was signed, late April of 2014. Why is it urgent? We have to accept the reality of the Philippines. We have concentrated on our internal security. We have failed to build our capacity on external security: presidents after presidents. Because there was really no threat. Suddenly, the Scarborough Shoal really woke up our government. And you set certain objectives. In this case, a credible defense posture but it will take time, a lot of resources. 

I’m supportive of what the government did: build stronger relations with Japan. It’s very important how Japan is helping us build our Coast Guard capability. We went into a treaty with Australia in terms of Visiting Forces. But a step further is really this proposal that we accepted and signed with the US: the Enhanced Defense Cooperation Agreement (EDCA) that allows the US to rotate forces in the Philippines, Australia, Japan to help us build that minimum defense capability. 

A lot of people have asked: is the US with us? I find it funny that that question continues to be asked. The answer is they are with us because they offered us something: the EDCA. It’s us that’s causing that doubt: does the Philippines really want the US support because we signed an agreement. We’re ready to put some resources into it, to partner with the capability building program of the Philippines AFP but suddenly somebody files it in your court. The court has not decided on it. If you’re the person, are you really interested in help? 

The good thing is our government, in their statements, have said, that this is very important. At the end of the day, imagine the problem of the government defending massive spending in defense but in this case, we don’t need to spend because we can partner with some of our allies. 

There’s been criticism of the US response – the consistency and frequency of freedom of navigation patrols. How would you assess this?  

2015, we’ve seen some aggressiveness on their part, the middle part, June. Sending flights, ships. I think we have to accept also the reality that they can’t be that aggressive to cause some conflict. I think China is reading it well also. Nobody wants conflict in the South China Sea. But the US and even the actions of Australia when they sent a flight before the end of the year. 

We need nations with capabilities to prove there is really freedom of navigation. That means ships can travel. Nobody can stop them or we should continue to encourage flights to pass through these. There are existing standards, procedures on commercial flights passing, and China said they’re not really controlling the area. So I think we have to encourage everyone. 

Q: The Philippines decided in December 2015, at the last minute before the deadline, to join China’s Asian Infrastructure Investment Bank despite President Aquino’s hesitation. What do you think made him change his mind? 

I think the acceptance that the best way to improve our relationship with China is really to separate the trade, investment angle of our relationship with our territorial question or conflict. And our government’s decision to be part of the AIIB is a big step for us to tell not only China but the rest of the world that the Philippines has filed a complaint. We’re there in The Hague. We defended ourselves, gave all our arguments there.

But at the level of possible economic partnership, possible people-to-people improvement of relationship, the Philippines is here. We are respecting China and its initiative as something that would be helpful as long as it follows international corporate governance practices. That means it won’t be used by China to create, exert more influence on smaller, underdeveloped, developing countries. 

But we have to see this as an opportunity whereby a new facility for development financing especially in the area of infrastructure where the Philippines needs a lot of help is a positive step because it can help us address these needs. 

What are the concrete benefits from the AIIB? 

The details are not yet there. They need to convene. Member countries need to contribute their own share but the idea itself of an Asian financial development institution focusing on infrastructure which is normally the challenge to any developing country because it’s very expensive. It’s a big investment. It has a big effect on the national budget with regards to competing with social investments on one hand so here comes a facility that not only the Philippines can benefit but can allow other developing countries to benefit from, especially if it’s defined as somewhat with a sole objective of improving the infrastructure facilities, investment potential of countries.

At the end of the day, this kind of economic activity is the greatest foundation for me for national security. Imagine if you have more investments, more foreign investments, how can there be conflict when there are inter-country investment opportunities, trade. Positive, I think, but it remains to be seen. You just hope China will not use it to dictate on smaller countries. There are a lot of colatilla here and there. A big step but we must be wary, conscious of how it will be executed when they formally start the AIIB. 

There are fears China will use the bank as a political tool. The Philippines expressed concern about previous corruption-tainted deals like Northrail and the ZTE projects. 

Then it will not really become an important tool to any government. We know this government is in its last 6 months. Why will the next administration use it if it’s simply a tool to impose on the Philippines as a weak, smaller member? I’ve always believed that the president cannot single out China as a culprit to the corruption of Northrail and ZTE. I think it’s the other way around. 

My personal view there is it’s possible these were clean programs, projects that were seen as an opportunity for some individuals, these were the years of the Arroyo administration whereby there seems to be an openness to these kind of activities using development assistance, can you imagine, for your corrupt ways. I don’t blame China for that. Maybe they wanted to reach out to us. 

But it’s the way we manage it so it depends on the next government. When AIIB functions, I think we’ve seen these past 6 years that people demand more transparency and accountability. It depends also on us, the public, to see to it that a lot of these institutions that the government enters into, goes into agreement, are really transparency, accountable and will not be used by certain political leadership in our country for their own corrupt motives, and even because of that, allows China to dictate on us because that’s a possibility. 

I’m hoping that won’t happen because it defeats the purpose of what infrastructure and investments, the benefits. We have seen studies after studies that one of the weakest areas of the Philippines is infrastructure and infrastructure takes a lot of time to really have its effect. Can you imagine if you will suddenly waste it again on corrupt activities? If China allows these resources to be used for corrupt purposes? It will not only affect our relationship, nation-to-nation but also it will affect our own perception towards China that you created an institution that was meant to corrupt us. 

Does the Philippines’ being part of the original 57 AIIB members ease relations with China? Can the bank be an avenue to improve relations?  

It does, we basically open the year with that kind of avenue. I agree with where the government stands that after the Scarborough Shoal incident in 2012, the government needed to make a stand on sovereignty over some of these islands that have always been considered ours. But this opportunity of joining the AIIB tells China and the whole world that the Philippines is open to be friends with China, the territorial issue is separate, we can’t move backward. Cases were filed. We presented our evidence but can we now move forward in building a relationship and respecting each other’s views on territorial sovereignty. 

There are other major developments in 2016 like the arbitral ruling in the South China Sea case in mid-2016. How do you see this affecting ties? 

It’s a possibility this decision will come out when there’s a new government. It’s possible there’s a new leader, an incoming government already. We cannot really move backward and a new government cannot suddenly say, “Oh, that’s the decision of the previous government.” I think it will be a great injustice to the Filipino people. And we’ve seen the support of the Filipino people. I’ve seen studies that show that China is the least trusted among countries because of this South China Sea issue among Filipinos. I’ve seen studies that show that a great majority of Filipinos, more than 80-85% see that it was the right thing to do, to defend, to file a case.

I expect whoever that president is to continue that stance. But maybe after this, we’ve gone through the route of international law, rule of law, we win there, then maybe the AIIB, that we did at the end of 2015, is an opportunity to tell China, “Look, if I’m a new government. We cannot set aside what we’ve done, the previous government but now it’s time to improve our economic diplomacy. Let’s build more economic ties, more trade, investments.” If there are possible official development assistance as long as it conforms to very good governance standards, not as the way we’ve seen the ZTE national broadband deal or the Northrail then maybe we can see a better relationship between our nation and China. 

Do you see a shift in foreign policy on China? Vice President Binay and Senator Grace Poe have said they want stronger economic ties. 

I think the shift that we will see is that first shift is we cannot really, we have to accept that whoever that government is, Poe or Binay cannot suddenly change its path. But the shift is what’s wrong really with stronger economic ties with China, especially that even in this government, our own diplomacy, our own foreign policy, we’ve never really said that we are not for stronger ties with China. It’s China who has reacted negatively with the actions of our government but one thing I’d like to point out and I’ve noticed this.

I think this is the first time since 1946 that foreign policy might be part of the election debate. Why? Because candidates need to define themselves in front of the Filipino people on where they’d stand vis-a-vis China. Not because you are for economic ties, you might suddenly say, oh economic ties are more important than sovereignty. I think our Filipino voters will not treat that kind of position by any presidential candidate positively.

A strong support, following the path of this current government is something that might challenge some candidates, especially if they are playing with campaign words. What does it mean for economic ties, does it mean sacrificing our strong stand, claim on the sovereignty of some of these islands we’ve claimed for the past decades.

What would be your assessment of the 5 presidential candidates?

I’ve seen some of their positions evolve. Initially I never really doubted the VP. Because I saw his statements when he visited the US, CSIS. He delivered a speech. He had a clear stand on issues. I think we realize also that after that issue, it’s possible that there was an attempt to make him soften on that issue back to where he was. We have to defend what is ours also.

But again I think he even supports publicly EDCA. That’s not really for China but the minimum credible defense posture of our own country vis-a-vis not a specific country.

That statement of Senator Grace Poe. There was a time she was softening on things but when she came up with her 20-point agenda. She said she will defend what is ours. These are clear foreign policy postures. 

Surprisingly, somebody I haven’t heard come up with a strong statement is Secretary Mar Roxas. Maybe we’re just assuming he will continue but I have not heard or monitored a statement.

Mayor Duterte has not really focused on foreign policy issues. 

Senator Miriam it’s surprising she’s even putting a roadblock. She’s anti-EDCA. It has nothing to do with Philippines sovereignty. It’s really about strengthening our military capability using existing alliances. I’m surprised with that. 

But I think at the end of the day, these are candidates running for public office. How they perceive the public views this issue will shape where they stand. That’s the reality of Philippines politics. It’s not strong ideology. So at the end of the day, it depends on the Philippines voters defining where they stand. I wear a hat as a political scientist. We value studies and we’ve seen the Philippines is with this government.

If you look at the continuing relatively high rating of the President, trust and performance and satisfaction, I always tell people I think his strong stance vis-a-vis our sovereignty on these islands, he could have simply said, China is big, I surrender but no, he made a stand, I will defend what is ours. It has continued to put that positive view with the Filipino public with regard the president.

Where do you see Philippine-China relations headed in 2016?  

I hope it will be better. I hope China accepts the rule of law, international rule of law. As a small country, the only thing we can hang on, our great equalizer in this world driven by superpowers or great powers is international law so we’re holding onto that. I hope China respects that or as we move forward, we don’t see a deterioration of situations in the South China Sea that it can open up opportunities really for better economic diplomatic relations, people-to-people relations between China and the Philippines. – Rappler.com