Philippines and China – rather than geo-political competition, a partnership in regional geo-economic cooperation?

The Spratly archipelago disputes currently faces two developments that are intended to help manage the conflict situation while at the same time allow economic activities to carry on. These two activities, now focused between Philippines and China, have their beginnings well before the disputes reached The Permanent Court of Arbitration in The Hague in a compulsory unilateral arbitration case under the United Nations Convention on the Law of the Sea, or UNCLOS, which in January 2013 the Philippines brought against China. On 12 July 2016, The Hague PCA rendered its ruling in favor of the Philippines in what was highly anticipated to be the harbinger of peaceful resolution of the South China Sea disputes under a rule of law.
 
Fourteen (14) months thereafter, the ruling has had no constructive influence on the conflict situation; it has instead hardened positions and heightened tensions. What is shaping up by this time is a reactivation of the two-pronged but unrelated approaches towards helping manage or resolve the conflict situation. The first and early approach is the development of a Code of Conduct Among Parties in the South China Sea, or Code of Conduct. This was initiated under the ASEAN in the latter part of the nineteen-nineties. In 2002, however, a Declaration of Conduct was signed between ASEAN and China which, aside from a prescribed conduct among the Parties to the Spratly archipelago conflict, also provided for the continued development of the Code of Conduct. Last August, ASEAN-China Senior Officials agreed on a “framework” around which shall be constructed an “enforceable” Code of Conduct which however shall take effect only after there has been a “full implementation” of the Declaration of Conduct. The ASEAN-China track on the development of a Declaration/Code of Conduct has now taken almost two decades with no conclusion in sight despite the recent agreement on a “framework”, and lingering doubts on enforceability. In the meantime, the disputes situation continues to percolate and escalate, with extra-regional interventions.

Although considered an ASEAN-China concern, the principal antagonists are the five (5) claimant countries bordering the South China Sea which are China, Philippines, Vietnam, Malaysia and Brunei. In 2004, three countries among them, China, Philippines and Vietnam, entered into a joint cooperation/development arrangement for energy resources in the contested areas in the Spratly archipelago. This was the Joint Marine Seismic Undertaking (JMSU) with successful and completed results on the exploration aspect (i.e. seismic survey) and was on the verge of graduating towards the joint exploitation stage when it was suddenly suspended unilaterally by the Philippines. The reason for the suspension was the increasing local agitation against the joint project as being unconstitutional and, at the same time, a corruption scandal surfaced in the local media related to commercial dealings with oil companies involved in the exploitation aspect.

In the meantime, the government administration of President Benigno S. Aquino III came into power which altogether scrapped the JMSU while pursuing the unilateral compulsory arbitration case against China before The Hague PCA. The suspension of the JMSU by the Arroyo administration and its scrapping by the Benigno S. Aquino III administration have further hardened the local situation in the Philippines when The Hague PCA handed down its ruling on 12 July 2016 in which the Philippines won with an “overwhelming” and “clean sweep” victory. The ruling carries the implication that the Philippines has no need to resort to joint cooperation/development with China to exploit energy resources in the maritime areas whose jurisdiction the ruling has vested in the Philippines.

China and Philippines are now in discussions over joint exploration/development activities in the Reed Bank for energy resources. In this bilateral initiative, the main concern is on the Philippines side because domestic opposition groups claim that joint exploration or development in the Reed Bank would necessarily disadvantage the Philippines on two counts. Firstly, such arrangements would contravene the Constitution of the Philippines in regard to the exploitation of the country’s natural resources (including energy resources), as such activity is reserved exclusively for Filipino citizens. The argument posits that the Reed Bank is not a contested area as confirmed by The Hague PCA ruling, and hence it is not joint exploration/joint development that is under consideration but simply a partnership arrangement with foreign companies including Chinese companies. Secondly, a big issue for the Philippines presumes and anticipates that China, in a joint exploration development would never accept less than 50-50 share in the resulting commercial arrangement; whereas a Philippines-registered corporation as majority stakeholder in a partnership arrangement would require more than 50% shareholding.
 
The disputes situation in the Spratlys archipelago therefore remains at a virtual stalemate, both on the ASEAN-China Code of Conduct, and on the aspect of joint cooperation/development even on the bilateral context between China and the Philippines.  What might be urgently needed is to go around the deadlock and introduce an alternative narrative and approach that is in regard to regional ocean governance cooperation  around which Joint Cooperation/Development of shared resources would be pursued. In other words, the ocean governance narrative which is about the conservation and sustainable management of the marine environment, resources and biodiversity, and even transboundary marine pollution, would encompass the exploration and exploitation of marine and seabed resources such as fisheries and energy. This would be a rules-based proposition under the UNCLOS in regard to collective ocean governance cooperation among States bordering enclosed/semi-enclosed seas that transcends maritime jurisdictions and disputes situations.

This alternative ocean governance narrative is a strategy, initially between Philippines and China, to defuse the political tensions caused by the Spratly archipelago disputes. At the same time it will expectedly help shift the political tensions into a more benign atmosphere of collective regional geo-economic cooperation expanded to the Central Indo-Pacific, as dictated by characteristic regional features in this virtual archipelagic continent pursuant to the UNCLOS. This strategic shift could usher in a more permanent resolution of the disputes situation not only in the Spratly archipelago but addressing maritime related disputes endemic elsewhere in the Central Indo-Pacific region albeit in lesser degrees as mostly geo-economic concerns. There is nothing new in this alternative approach as it is already provided for in the UNCLOS at Part IX thereof, in its legal and scientific framework.

Geo-politics or geo-economics? The ASEAN is an economic grouping in maritime Asia and thus maritime geo-economics is a regional core interest. It can take a truly appropriate leadership role in this direction that would conduce towards a peaceful management and resolution of the Spratly archipelago disputes situation contributory in a significant way to a wider regional economic/political integration built upon AEC 2015.  This initiative must be fully supported by China as an important component element to the One Belt One Road (OBOR) maritime infrastructure project, as well as the Regional Comprehensive Economic Partnership (RCEP) led by China, which in both aspects about geo-economics.

For the Philippines, on whether to pursue a geo-political or geo-economic approach to the Spratly archipelago disputes situation with China, Senator Ralph Recto, the Senate President Pro-Tempore, urged the Secretary of Foreign Affairs Alan Peter S. Cayetano in regard to the Reed Bank joint development with China, to find a “constitutionally-compliant win-win arrangement” to secure the country’s energy future. This is because the country’s Malampaya oil field that provides power to 45 per cent of Luzon’s electricity grid and within close proximity to the Recto Bank, is expected to run out of natural gas by 2024. This does not seem to be a very complicated formula, and with good faith and goodwill, a mutually favorable arrangement should be within easy grasp between Philippines and China.

And besides, the Philippines may really have no other workable/credible options other than the geo-economic route. Since birth, the Philippines has been a differently-abled State when it comes to national defense, completely deluded by a promised protective umbrella of an extra-regional super-Power treaty ally.
​
                                                                          *   *   *   *  *   *   *