Siling Labuyo: Rainbow after the Rain

December 6, 2018

 

President Rodrigo Duterte recently hosted China’s X- Jinping during a 2-day state visit. The visit was heralded by many as a very successful one given the 29 bilateral agreements signed. Duterte was so smitten that he lavishly praised the Chinese leader. President Xi returned the love with a romantic praise, “Our relations have now seen a rainbow after the rain.”

 

Xi was alluding to the hostile relationship under President Benigno Simeon Aquino III when the Philippines challenged and got a favorable ruling from a UN body against China’s 9-dash territorial claim annexing islands belonging to or contested by the Philippines. Duterte’s rapprochement to China may seem to be paying off with these signed bilateral deals but whether the money actually shows up is another matter. As Supreme Court Justice Antonio Carpio keeps bringing up, Duterte’s song and dance could actually be harmful to the Philippines in the long term.

 

One issue being raised now in the Philippine Senate is the presence of illegal Chinese workers in the country. According to published reports, there could be as many as 50,000 Chinese illegally working in the Philippines right now. Add to that the number of Chinese legally working in the country, it dwarfs the number of Filipino overseas workers in China which is about 15,000. Some Philippine officials don’t see anything wrong with the large influx Chinese workers in the Philippines citing, much like their boss Duterte, the economic gains by the country.

 

In truth, much of these Chinese workers are tied to the gambling industry or worse, are involved in the illegal drug trade. As the country entices more high rollers from Hong Kong and China, more Mandarin speaking Chinese are needed to support a lucrative business mainly in Manila where more casino developments have sprouted. Similarly, with corruption still being very much entrenched in the bureaucracy particularly in the Bureau of Customs, the illegal drug trade continues to flourish.

 

Some Chinese workers are brought in as a condition of a Chinese loan. Duterte’s “Build, build, build” infra projects are good examples. As more and more Chinese monies are infused to Duterte’s premier infra project, the more he is drawn to the Chinese. But the country is torn between two lovers: the old suitor (U.S.) and the sweet-talking Valentino (China). Soon, some of these awkward relationship will unravel.

 

First, the U.S. relationship will become an impediment to carrying out a full-blown relations with China. Duterte’s childish tantrums earlier in his term were often ignored by the Americans. For good reasons, the Americans wanted Duterte to be able to pursue an “independent” foreign policy that allows its administration bilateral relationships particularly among ASEAN countries. But, America has its own national interest in the Philippines and thus at some point, will reassert it. Despite harsh rhetoric from Duterte, Americans are content working and assisting in the background.

 

Examples of continued cooperation between the United States and the Philippines are the continuing joint naval and amphibious exercises and training as well as tactical support in the country’s anti-terrorism efforts like the siege in Marawi. America’s gambit here is to keep the leash close while giving some room for Duterte to maneuver like declaring no war games during President Xi’s visit.

 

But, China’s aggressive posturing in the South China Sea has its limits. Despite Duterte’s lack of resolve to enforce the UNCLOS ancestral ruling, the US Navy along with other western navies continue to enforce the ruling through Freedom of Navigation deployments near the contested areas. Lately, the US has demanded that China remove its missiles from the occupied islands. Warning, among others, of severe consequences.

 

China and the US are currently engaged in a bitter tariff war involving substantial amounts of covered products. Both economies are suffering but there are no signs of backing down from either side. China clearly holds the economic advantage here by squeezing the US elsewhere but the US has military superiority.

 

Duterte is gravely mistaken if he truly believes that the US will just go home and stay away from his public insults and posturing to please China. The potential oil deposit and strategic location of these islands make it a possible flashpoint for these powers, regardless of whether the Philippines stays neutral. It’s inevitable that the Philippines will be dragged into it.

 

As part of President Barack Obama’s pivot in 2015, 60% of America’s naval and other military assets are homeported in the Asia-Pacific: Japan, South Korea, Philippines, Australia, and Guam serving as the strategic hub for B-2 bombers, F-22 and F-35 stealth fighters, P-8a Poseidon maritime patrol aircrafts, V-22 Ospreys, and the newest surface warfare vessels. Not to mention, the submarines, aircraft carriers and Predator drones deployed in the area.

 

What the Chinese could not do to challenge the US militarily, is offset through China’s Belt and Road Initiative where Chinese loans are made to countries in the region for their infra projects at disproportionate agreements where the borrowing country will find itself deeply indebted to the Chinese. China does this through bilateral agreements like those recently signed by Duterte and Xi, to allow China access to the country’s natural resources.

 

Oil, industrial metals, and fish are three biggest resources that China is after. Oil and fish are both badly needed back in China where the population of over a billion can no longer rely on local resources. Oil exports are big drains on the economy and becoming difficult to obtain due to American and European sanctions or supply disruptions due regional instability like what happened in Libya. Chinese waters are overfished and could no longer sustain local needs. The South China Sea offers new fishing grounds. Despite good intentions, the Chinese will continue to deny Filipino fishermen of these resources mainly for practical reasons.

 

Mining is another area where the Philippines will be exploited by China. China wants to dominate the renewable energy (solar panels, electric cars), manufacturing, and electronics and weapons industries and will need resources to sustain its competitiveness in these areas. Lead, aluminum, copper, zinc, nickel and lithium are among the industrial metals that are in demand. China has the monopoly and produces about 95% of all rare earth and precious materials that are vital in these industries.

 

The Philippines has rich mineral resources that can supplement and support China’s needs for these industrial metals. The recently signed bilateral agreements including one for oil and mining development and exploration not only in the disputed islands but in other parts of the Philippines. Not that the Chinese needed one because Chinese mining companies are already operating in the Philippines that was granted under President Gloria Arroyo. Imagine, the Philippines has an estimated over a trillion US dollars in untapped mineral resources according to Mines and Geoscience reputable sources that China covets.

 

So the next time a Filipino buys a gold necklace in Hong Kong, the material could have come illegally from the Philippines. These precious metals are harvested by these Chinese companies and shipped out without paying the proper dues or taxes through its own vessels that are supposedly carrying scrap metals. Chinese mining firms in Zambales not only harvested these metals, they also leveled an entire mountain and used the soil to build the man-made islands in the South China Sea where China has now place military structures.

 

So, the Philippines should be wary of the fortune cookie wisdom from President Xi about a rainbow after the rain. Yes, that is possible when the light comes through but with the rain comes clouds and China’s promises at this point and the lack of transparency regarding these agreements remain nothing but overcast clouds that are yet to let the sunshine through.

 

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