No South China Sea trade-off for economic gains, Philippines says

Manila pursues twin track with Beijing, separating maritime disputes from finance and trade ties

PUBLISHED : Saturday, 05 August, 2017, 11:34pm
UPDATED : Saturday, 05 August, 2017, 11:34pm

Manila is unlikely to compromise on its maritime sovereignty despite Beijing’s chequebook diplomacy and economic inducements, according to the Philippines’ finance chief.

In an exclusive interview with the South China Morning Post, Philippine Secretary of Finance Carlos Dominguez said Manila was trying to protect its interests by separating maritime disputes from its efforts to woo Chinese investment.

Once locked in a tense stand-off over the Scarborough Shoal, or Huangyan Island, Beijing and Manila have worked to ease strains in the relationship since Philippine President Rodrigo Duterte visited Beijing in October. Economic officials from the two countries have met every two months and China has reopened its huge market to Philippine exports of tropical fruit.

Beijing has also pledged to provide US$9 billion as financial assistance as well as commercial loans to Manila for a range of projects. That includes financing for two bridges, an irrigation project in the northern Philippines and a US$268 million dam project to expand water supplies for Metro Manila.

South China Sea, North Korea tensions top the agenda at Asean forum in Manila

Discussions are also under way for a US$3 billion railway project to connect Manila to Bicol, one of the poorest areas in the country’s south. The Philippine government hopes that once completed the railway can help to create more jobs and connect more people to the capital.

“These projects will be funded by the Chinese government, and we are negotiating terms of the funding, but they are really attractive terms,” Dominguez said late on Friday.

The cordial relationship with Manila, a major territorial claimant in the South China Sea, has been widely seen as a strategic victory for Beijing, which has significantly stepped up its efforts to draw in Southeast Asian states by deepening economic ties through investment and trade.

At the same time, Beijing has continued its reclamation and militarisation efforts in the disputed waters, building ports, airstrips and even radar installations, triggering widespread concerns that ­Duterte’s embrace of Beijing will eventually jeopardise the interests of other countries in the region.

Dominguez said the Philippines was not giving up its claims but seeking a way to become a peaceful neighbour with China.

Duterte’s joint energy plan for South China Sea may test Asean’s unity

The regional concerns surfaced on Friday night in informal talks in Manila ahead of a meeting of foreign ministers from the Association of Southeast Asian Nations (Asean). Vietnam sought to insert tough language against Chinese expansionism in the waters in an Asean statement that was due to be released after the ministers wrapped up their meetings.

According to a copy of a draft obtained by Agence France-Presse, Vietnam lobbied for Asean to express serious concern over “construction” in the sea, in reference to China’s ramped up building of artificial islands in the disputed waters in recent years.

Vietnam also wanted Asean to insist in the statement that a planned code of conduct for the sea with China be “legally binding”, which Beijing opposes.

A framework of a code of conduct in the South China Sea, drafted in May between China and Asean, is expected to be endorsed in a meeting on Sunday between the bloc and representatives from Beijing.

Asean’s claimant members – Brunei, Malaysia, the Philippines and Vietnam – have said that they favour a legal binding code of ­conduct.

Dominguez said a legally binding code of conduct would benefit not only Asean, but also China. “What is the point of having rules if you cannot enforce [them]?” he said.

But the finance chief said Asean nations might need to have some patience before Beijing came around.

“In the beginning China doesn’t want the WTO, and what were they doing in the end?” he said. “Did they agree? Yes, because it made sense.”

Additional reporting by Agence France-Presse