July 14, 2016

The South China Sea Decision and Perfecto Yasay's Face

Let ThinkingPinoy explain the face that launched a thousand tweets.

A few days ago, the arbitration courts finally released its decision regarding the Philippines' claim in the South China Sea, or what we Filipinos stubbornly call the West Philippine Sea. First brought up in 2013, the favorable 2016 decision essentially invalidated China's Nine-dash Line claim [FT].

Filipinos rejoiced at this development and even I, ThinkingPinoy, was part of the revelry.

Sabi ni DFA Sec. Yasay, nanalo daw tayo sa Permanent Court of Arbitration kaya #CHexit na. Guysssss, ano na plano?
Posted by Thinking Pinoy on Tuesday, July 12, 2016
But in the middle of what appeared to be a national jubilation, there was our Foreign Affairs Secretary Perfecto Yasay, sporting a somber face.

Parang natalo sa tong-its. Kaya ang tanong, bakit?

After arbitration, what's next?

After the smoke has cleared, it's time to take a more sober approach and evaluate the situation in a more objective light. That is, let's ask the questions:
Do we really understand what's going on? 
After all, I am a firm believe of what Gloria Steinem said decades ago:
The truth will set you free. But first, it will piss you off.
The objective of this article is to give you, the reader, a working understanding of the situation in the South China Sea. Note that the operative word is "working understanding", as I undoubtedly expect some smart-ass PolSci major who'll claim that this article paints an incomplete picture.

So let's go.

Why China wants the South China Sea

China is a country that has experienced and is still experiencing intergalactic economic growth since the 1980s. Further growth, however, requires an important resource: energy.

And that's what the South China Sea dispute is about. Screw national pride, screw sovereignty. The Philippines-China sea dispute is all about oil and natural gas.

Just look at the table below to see how badly China needs energy:

The table above was taken from a 2014 report by the China Energy Group of the United States Lawrence Berkeley National Laboratory [LBL.gov].

Over the past decade, it's clear that China's need for energy has been growing at an exponential rate. China has one of the largest coal reserves on the planet, and it's appetite for energy led it to become the not only the biggest coal consumer, but also the biggest coal producer in the planet today [WEC].

China depends on coal for roughly 75 percent of its energy needs, according to the same report.

China's coal, however, has its limits. Moreover, coal creates the greatest amount of pollution per unit of energy created [EIA.gov], and China's breakneck economic progress has made this a pressing issue.

Downtown Shanghai on a sunny day.
Even if China wanted to divorce itself from coal, it cannot do it right away because oil and natural gas, which are relatively "cleaner" than coal, are expensive and are derived from politically unstable sources.

The same LBL report includes the following:

Okay, let's list down some of the countries where China imports energy from:
  • Coal: Indonesia 25%;  Australia 25%; Vietnam 9%
  • Oil: Saudi Arabia 20%; UAE 8%; Libya 7%; Brazil 6%; Australia 4%; Yemen 4%
  • Natural Gas: Qatar 34%; Australia 24%; Indonesia 16%; Yemen 4%

Now, here lies the problem:
  1. Saudi Arabia, UAE, Qatar, and Australia are very close US allies.
  2. Indonesia and Vietnam are not very fond of China.
  3. Yemen, Libya, and to a certain extent, Brazil, suffer serious political instability.
  4. Imports from Saudi, UAE, Yemen, and Libya, all pass through the Indian Ocean, and India is not in the best terms with China.

We can now see that a considerable chunk of China's energy needs are sourced from either US allies or from politically unstable sources. Now, what if a war breaks out or if one of those politically unstable countries go into economic depression?

The bottom line: China needs a secure and dependable source of energy, and the South China Sea is a very promising solution.

Filipinos want exactly the same thing, hence the dispute.

Now that we have a working understanding as to WHY this sea dispute exists, it's now time to briefly discuss HOW this dispute evolved throughout the years.

A Short History Lesson

Various areas of the South China Sea have been embroiled in disputes in as far back as 1876, when China claimed the Paracel Islands [Chang 1991], despite Vietnam having built a pagoda somewhere in the island group in 1835 [US 1974]. However, that is not exactly what we're concerned about, as our claim to the South China Sea is limited to the exclusive economic zone (EEZ) of Palawan's coast.

Let's start.
In 1978, President Marcos issued Presidential Decree 1599 [PD 1599] which states:
PD 1599 Sec. 1:
"There is hereby established a zone to be known as the exclusive economic zone of the Philippines. The exclusive economic zone shall extend to a distance of two hundred nautical miles beyond and from the baselines from which the territorial sea is measured..."
This Marcos decree is what basically included our nation in the South China Sea squabble, as it served as our first formal claim over the contested EEZ.
For the remainder of this article, whenever ThinkingPinoy says "South China Sea", "West Philippine Sea", or "contested territory", TP refers to the 200-mile EEZ as defined by PD 1599.
In 1984, the Philippines signed UNCLOS [UN], declaring itself an archipelagic state. Upon signature, the Philippines declared:
"(UNCLOS) shall not be construed as amending...  Presidential Decrees... of the... Philippines."
This declaration, considered a part of the UNCLOS document, essentially refers the 1978 decree mentioned above, i.e. we still insist that we own the 200-mile EEZ.

For over a decade, the Philippines and China remained relatively silent on the South China Sea issue, that is, until 1995.
In 1995, China occupied the Mischief Reef, which drew flak from the ASEAN. After negotiations, China agreed not to conduct further multilateral actions in the South China Sea [Economist].

In 1997, the Philippine Navy landed on Scarborough, blew up the territory monument that China had erected, and planted a flag of the Philippines on the island.China reacted by sending marine surveillance ships to the waters of the island, which faced a standoff with Philippine warships that did not ease until a few days later [MB].

In 1999, the Philippine Navy deliberately ran its landing craft BRP Sierre Madre aground at Ayungin Shoal, using hull leak repair as an excuse, and stayed there with regularly rotated soldiers, refusing to withdraw ever since [ABS].

In 2002, China and the ASEAN signed the Declaration on the Conduct of Parties in the South China Sea (DOC), probably in response to escalating tensions. The DOC essentially indicates:
ASEAN and China shall be respectful of legal evidence of claims and concerns, while seeking solutions that are based on the UNCLOS and international law. Outstanding disputes would be resolved through friendly negotiation both bilaterally and through negotiations with other "concerned parties" [Durham].
The PH-China dispute remained at a standstill for much of the 2000s until...

The United States butts in

Tensions rose again in 2009, as it was the UNCLOS deadline for claims on seabed hydrocarbons (READ: Oil and Natural Gas) in the South China Sea [Byrne 2012]. Let me state this more clearly: Per UNCLOS, countries who think they own oil and natural gas reserves in the South China Sea have until May 2009 to submit their claims.

China and the Philippines do not really care about those useless rocks in the middle of the sea. Instead, they want what lies below.

In March 2009, two months before the deadline, the United States reported that China harassed American surveillance vessels in the South China Sea [NYT]. The Americans say their vessels were just there for a routine exploratory mission. This served as the initial justification for American intervention in those waters.

TP thinks the question, however, is why they are there at that time. Why didn't they explore the area much earlier or much later? What assurance do we have the American surveillance ship is not doing a seismic survey?
BRIEF: Seismic surveys allow geophysicists to get a picture of underground rock formations [CEF].  
How can we know that the US wasn't doing this?
Besides, Alam mong na may away ang mga tambay sa kanto. Tapos, dadaan ka pa doon? Tapos, magrereklamo ka kung bakit ka nasapak? Tapos, sa kabila ng lahat, e wala ka namang direktang kinalaman sa away nila? Dalawa lang ang dahilan diyan: tanga ka, o interesado ka sa pinag-aawayan nila.

In July 2009, the US tacitly admitted their error. Testifying before the US Senate, the US Department of State's Scot Marcial said:
"(The US) would like to see a resolution (of the South China Sea dispute) in accordance with international law, including the UNCLOS. [Nordquist 2012, p. 302]"
Here's the United States telling China they want a UNCLOS-compliant dispute resolution when in fact, the US did not sign UNCLOS to begin with.

Regardless, the point here is the United States wants to have a major role to play in the South China Sea dispute, despite the fact they are not part of the UNCLOS, which is the basis of the dispute.

The South China sea feud was largely confined to spicy rhetoric from all sides for the next two years, until 2011...

MVP's Philex enters the picture

On 02 March 2011, two Chinese patrol boats aggressively approached the survey ship MV Veritas Voyager near Reed Bank. The chartered survey ship was supposed to conduct seismic studies in the Sampaguita gas field located inside Reed Bank. The Aquino administration immediately responded by sending patrol aircraft and escort vessels for the Veritas Voyager  [Storey 2011].

The Aquino administration took two additional courses of action in reaction to the Reed Bank incident [Storey 2011]: 
  1. Strengthening of AFP presence in the Spratlys, 
  2. The controversial UNCLOS case
MV Veritas Voyager was chartered by UK firm Forum Energy. Philex is the majority owner of Forum Energy [ABS]. Filipino businessman Manny V. Pangilinan (MVP) controls Philex [Inq].

The encircled area is Reed Bank.

MVP also controls the following companies:
  1. PLDT-Smart, part of the PH telecoms duopoly
  2. Meralco
  3. Maynilad
  4. Manila North Tollways (NLEx)
  5. SPi Global, a BPO company
  6. TV 5

"Okay, wait lang."

Let's stop for a second and evaluate what has happened so far.

Before 2011, China and the Philippines pursued a plan of non-action in the disputed waters. Yes, the dispute exists, but a relatively uneasy peace existed. Yes, military vessels ply the waters every now and then, but none of those actions involved the direct exploitation of wealth beneath the South China sea.

Then there we were, unilaterally deciding in 2011 to allow MVP's Philex Petroleum to operate in the South China Sea even if we have not settled the dispute yet.

If I were China, I would really be pissed off. Some will argue that the area is ours to begin with, but China will argue that it's theirs. But that's what the 2002 Declaration of Conduct (DOC) is for: to set the rules governing dispute resolution. But with Philex's moves, we appear to have thrown DOC out the window.

In response to Aquino's moves, which included an Administrative Order that renames the South China Sea as the West Philippine Sea [AO 29 s. 2012] that only served to anger China even more, China started land reclamation on Kagitingan Reef.
Chinese Land Reclamation in Kagitingan Reef
Let's take a look at how Kagitingan Reef (Fiery Cross Reef) changed throughout the past decade. SOURCE: Center for Strategic & International Studies
Posted by Thinking Pinoy on Wednesday, July 13, 2016

What's worse, it appears that the UNCLOS case was filed to protect the interests of Manny V. Pangilinan, arguably one of the country's most powerful oligarchs, and the Salim Group, MVP's Indonesian business partners [MT].

And by the way, guess which powerful politician owns Philex shares?

The disgraced presidential candidate and PNoy lackey Manuel "Mar" Roxas [TP: Mining].

Yes, this guy is a Philex shareholder, just so you know.
At this point, TP thinks it's fair to ask:
Is the UNCLOS arbitration case really a crusade for our country's sovereign rights, or was it lodged to protect the Philippines' rich?
After all, if the recently issued favorable decision somehow magically forces China to let us do what we want with the South China Sea, it's Manny V. Pangilinan who'll be the first to reap the benefits.
Alam niyo yung kasabihan na nag-uumpisa sa "Ang mayaman, lalong yumayaman."? O, itong UNCLOS case ang halimbawa noon.

But it's too late. The decision is already there, so what happens next?

It's time to shift the discussion to our country's options given the favorable decision.

Kasi, alam mo, parang desisyon lang yan ng isang regional trial court. It's one thing na meron nang desisyon, pero it's another thing na i-enforce ang decision na 'yon.

There are two ways to enforce the decision: Economic and Military.

Let's first discuss the military option.

Military Enforcement

Do you remember Aquino's two-fold strategy mentioned earlier? One of the strategies was the UNCLOS case, while the other was AFP modernization. The decision is already there, so let's talk about the latter.

China has been increasingly aggressive in the South China Sea since the 2011 MV Voyager Veritas incident. In response, the Philippines, which has no real credible navy and air force, spent Php 18.9 billion in acquiring 12 Korean FA-50 fighter jets [CNN].

Some government officials said this was a bad idea, causing a lot of public furor, with some groups saying that these naysayers don’t know what they’re talking about, and some saying that they fail to support Philippine interests with such statements.

But we all know that 12 jets won't make a difference.

China does not have a reliable aircraft carrier fleet, so it’s safe to say that in the event of a confrontation, the 12 FA-50s will go against whatever is already stationed on the reclaimed island, at least for the first couple or so hours.

However, China can quickly deploy their nuclear submarines from Yulin Naval Base in Hainan  [FAS] to supplement their existing ground and air forces.

Even with a quick and flawless initial PH blitzkrieg victory, China still has over 1,200 fighter aircraft left in its inventory. Hence, it’s unlikely that PAF will engage China on the reclaimed island, as PAF will easily be overpowered in no time.

Besides, the Chinese will already be there before we make our first move.

This graphic depicts the operational radii and ranges of each claimants' maritime surveillance aircraft, assuming each takes off from its Spratly Island airstrip. [AMTI]

Let TP state this grim reality more simply: If we attack China, we'll get crushed.
China's air power in the South China Sea
Dr. Mira Rapp-Hooper interviews Timothy Heath of the RAND Corporation on China's air power capabilities on its island bases in the South China Sea.

SOURCE: Center for Strategic & International Studies
Posted by Thinking Pinoy on Wednesday, July 13, 2016
Now, the logical next step would be to ask help from the United States, right?

The PH-US Mutual Defense Treaty

"Ayaw nilang umalis? Bobombahin yan ng Amerika, mga gagong 'yan!"

That's one of the most common reactions ThinkingPinoy hears from the public. Well, after all, we do have a 1954 Mutual Defense Treaty with the United States [Yale].

The problem, however, is that the idea of the US sending their forces to fight our war is met with at least five major obstacles.

Obstacle 1: A Democrat President vs. A Republican Congress

Recent developments suggest that US President Obama will be replaced by Hillary Clinton, another Democrat, as the Republican frontrunner, Donald Trump, is more of a seriously cruel joke than anything else [Reuters]. However, it’s stipulated that Congress will be Republican-dominated [WaPo]. Given the animosity between these two parties, it’s highly unlikely that Republicans will give the Democrat president an easy nod.

Thus, we have this equation:
A Democrat President + A Republican Congress = A Political Stalemate
Republicans historically love going to wars, but this equation makes everything unpredictable. Yes, the US can help us and No, the US cannot. What if we take a risk and allow China to bomb one of our ships then the US refuses to heed our call?  Are you willing to take the risk?

Obstacle 2: Legal Loophole, as US Congress never ratified UNCLOS

Assuming that the US Congress, for some reason, will be willing to hear out our request, our cause for invoking the MDT will be hinged on the ruling.

However, the United States did not ratify UNCLOS [Diplomat] to begin with: UNCLOS thus has no legal weight over there. Congress can easily dismiss our request on the ground that it’s unconstitutional, as UNCLOS is not part of their body of laws in the first place.
Countries in red, like the USA, did not ratify UNCLOS.

Obstacle 3: America is burnt out after Iraq and Afghanistan

The US has spent trillions of dollars in waging wars in Iraq and Afghanistan since the dawn of the millennium [Brown.edu]. The US economy is already in bad shape, with lukewarm unemployment figures [NYTimes] and many cities suffering urban decay [OSU]. Aside from the potential burnout that the US Government and the US Public already feels, the idea of spending trillions to start a potential World War III is simply a bad idea.

It's simply too expensive.

Obstacle 4: China is US’s biggest trading partner.

Waging a war with the one you do the most business with is not a great idea. The US economy is already sputtering and it may even be headed to another recession [ExpressUK]. Waging a war with China will send this already sputtering economy to a halt. Moreover, a war with China means the ban of cheap Chinese imports to mainland US, which will, in turn, cause a sharp rise in cost of living or worse, severe commodity shortages.

Moreover, in the event of a full-scale war, this trade embargo will be all-encompassing, similar to the US sanctions on Iran and the just-lifted sanctions on Cuba. This embargo will inevitably cover rare earth metals, as most of these come from China [Diplomat].

This means two things: no more new advanced consumer electronics, and vastly limited capabilities on the part of the US to replenish their military equipment, as these rely heavily on computers and advanced electronics, which in turn require lots of rare earth metals to manufacture. And even if the war is short-lived, and assuming that the planet is not annihilated in the process, the economic embargo, at least in as far as rare earth metals, will probably stay in place.

Obstacle 5: If it’s war, it's gonna be nuclear.

China has the largest standing army on earth [Padmalingam 2002]. They can fight a protracted conventional war. The US, with its limited rare earth metal resources due to the embargo, will have no choice but to try to win a conventional war as quickly as they can. But what happens if years have passed, the war still ain’t over, and the US has run out scuds? They would have no other option but use their nuclear arsenal. This will force China to use it nukes too. And nobody wants that.

Or worse, one of the sides can choose to use their nuclear weapons at the onset.

No caption needed.
ThinkingPinoy believes that at this point, it's pretty clear that military action is off the table, so we are left with the second option to enforce our claims: economic pressure.

How about Economic Pressure?

If we can’t/won’t/don’t go to war, can we just force the international community to sanction China This is just fair to ask, right?  We have four options:

Option 1: UN Sanctions

The United Nations is the first place to go to if we want China to receive international sanctions [UN]. The problem, however, is that China is one of the five permanent members of UN Security Council [UN], which gives it the power to veto ANY PROPOSAL, including proposals to sanction itself. So no, that won't happen.

Option 2: Unilateral Sanctions from the US

The second option would be unilateral sanctions from the United States, but that will hurt the US more than China because of the fourth obstacle discussed in a previous paragraph (Obstacle 4). So no, that won't happen.

Option 3: ASEAN Sanctions

The third option would be economic sanctions coming from the ASEAN, if that’s even legally possible. However, Cambodia maintains extremely close and almost filial ties with China [Diplomat], and adding the fact that ASEAN decision-making is consensus-based [Aggarwal 2010], a simple “No” vote from one member – Cambodia in this case – will nullify any attempt. So no, that won't happen.

Option 4: Sanctions from somewhere else

Sanctions from other groups such as the EU or the UNASUR? Well, they have a negligible stake on the issue: the Spratly’s are too far away, and the threat of China invading them is close to zero. So basically, what do they care?

Yes, France is currently pushing for coordinated EU patrols in the South China Sea [Bloomberg], but the operative word there is "pushing", which means that it has not happened yet. With uncertainty stemming from the UK leaving EU (Brexit) [WSJ], EU's help has become more unreliable than it already is.

So no, that won't happen.

What else can we do?

Weeks before the decision, President Rodrigo Duterte challenged the United States.
Duterte asked the US Ambassador Philip Goldberg, "Are you with us or are you not with us? Because if I may decide based on the judgment, I will now start to claim there." 
"[UNCLOS] gives us the exclusive right over 200 [nautical miles]. If I go there using that privilege of mine, would that be an attack against China or an offense against China?," Duterte added.
No answer from the Americans.

AND EVEN IF the Americans are willing to fight alongside us, would you be willing to go to war ?No, I am not talking about the AFP, I mean you, the regular Filipino. Would you be willing to go the frontlines and risk your own life?

Nakikipagharutan ka nga lang nung CAT at ROTC, totoong giyera pa gusto mo?

There you go.

Now, do you understand Foreign Affairs Secretary Yasay's face after the South China Sea decision came out?

Let me translate his face into words.

With US military help out of the picture (at least for now)), we have no viable options to enforce our territorial claim. The least Yasay can do, being the face of Philippine foreign policy, is avoid showing too much excitement over the decision.

Why? Because it will just piss China even more, making it more difficult for us to bargain.

At the moment, our best shot is to strike a deal with China.

We got some, China gets some. Now, compare that to getting nothing.

I know we deserve a much better deal. But I also know that this is the best deal that we can get. (ThinkingPinoy)


BITIN BA? Heto pa isa!
Narito ang isang maikling Q&A na sinulat ng aking kaibigang si Sass Rogando Sasot tungkol sa desisyon sa West...
Posted by Thinking Pinoy on Wednesday, July 13, 2016

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