November 15, 2022

By Greg Rushford

Manila, Philippines — It’s past time to sound some national security alarm bells. The Philippines, America’s oldest treaty ally in the Pacific, has been facing economic and military pressures from China. Beijing’s bullying has been intensifying gradually for more than thirty years. The hard truth is that the Chinese are winning.

The PLA Navy — clearly contrary to international law, as determined by an international tribunal in The Hague in 2016 — has been preventing Philippine fishers from casting their nets in the South China Sea. Chinese predatory fishing in Philippine waters has been devastating to corals and other marine life, while also causing Philippine fish stocks to drop more than 60 percent. And now, adding insult to injury, China has been exporting Philippine fish it has stolen — back to the Philippines.

The same PLA Navy has been preventing the Philippines from developing much-needed oil and gas resources in Philippine waters — notably including Reed Bank, which is within the Philippines’ continental shelf and is believed to have the energy resources needed to keep the country’s electricity grids running. Xi Jinping, the general secretary of the Communist Party of China, has given his coast guard permission to shoot to kill any Philippine exploration vessels that interfere with China’s ambitions to develop Reed Bank’s resources. Former Philippine Supreme Court Justice Antonio Carpio observes that Xi’s bullying “clearly violates international law.”

Xi is essentially demanding that Philippine President Ferdinand Marcos Jr. negotiate away his country’s energy independence — at gunpoint. As Eduardo Mañalac told me, because of the political risk associated with the Chinese military intimidation around Philippine oil-exploration fields, no major western market-oriented oil company will touch the Philippines. Xi is basically asking Marcos to agree to negotiate only with Chinese state-owned drilling concerns which do not pretend to adhere to international standards of financial transparency.

Mañalac is a respected former president of the Philippine National Oil Company, and a former senior official in the Philippines’ energy department. His concerns over the corrosive effects of Chinese corruption are well-taken in leading international energy circles. And in Manila’s legal circles, the scent of scandal is in the air, fueled by pending civil litigation alleging high-level governmental cronyism, and also criminal complaints alleging graft.

If Xi Jinping succeeds in intimidating the new Philippine president, who has only been in office since June, China will develop and control a key part of the Philippine energy sector. The Philippines will have been shamed — and residents of cities like Manila will have Xi to thank, every time they turn their lights on.

It’s worth looking back briefly at how one of America’s most important security allies has landed in such a predicament. Last month, I spent two intense weeks of mostly off-the-record talks with the usual journalistic sources, ranging from ordinary citizens who chafe at Chinese bullying to the higher echelons from the worlds of national security, diplomacy, politics, law, and business. The gist of what I picked up points to one bottom line: a lack of necessary political will at the presidential levels in both Washington and Manila, dating to the early 1990s.

What Happens when the Yankees Really Do Go Home

In 1991, the United States Air Force and Navy evacuated the large U.S. bases at Clark Field and Subic Bay. Volcanic eruptions from nearby Mt. Pinatubo that covered both bases in ash were the immediate impetus for the pullout. But the real reason involved insular-looking Philippine domestic politics. That, plus American stubbornness during endless negotiations over the usual suspect: money.

Then-President Corazon Aquino and some of her aides who wore anti-American chips on their shoulders had made it plain that Uncle Sam just wasn’t welcome anymore. And the Yankees, fed up with years of negotiations over basing rights that went nowhere, were happy to go home.

While over the years, the Philippines has succeeded commendably in turning the former U.S. bases into one of the most thriving hubs of economic growth in Southeast Asia. But watchful military eyes in Beijing soon perceived that the Philippines was left defenseless.

In 1995, the Philippines discovered that the Chinese navy had seized Mischief Reef, a tiny speck in the South China Sea that is part of the Philippines’ continental shelf. Chinese officials insisted that that they were just erecting fishing shelters. Manila and its neighbors in ASEAN fussed for awhile, but basically shrugged.

The PLA Navy on the Move

Visiting Manila in 1998, I saw Philippine reconnaissance photos that showed that the Chinese had erected military features on Mischief Reef, gun turrets, and such. When those photos hit the Manila papers, there was a public outcry (at least involving ordinary Filipinos, if not so much business elites with their eyes on doing business with a rising China).

Meanwhile, officials in then-President Bill Clinton’s State Department were not much bothered. Don’t worry: China lacks the resources necessary to project real military power, I was told.

The Clinton White House was busy extending a helping hand to a mainland China that wanted to get back on its feet and join the market-oriented global economy, after decades of economic mismanagement by the Communist Party of China. Clinton saw a potential peaceable economic partner, not a strategic rival-in-waiting.

From 2001 to 2008, the drift continued. President George W. Bush, his hands full with Iraq and Afghanistan, never seemed to focus on the future dangers associated with Chinese mischief in the South China Sea.

As had his predecessor Clinton, Bush welcomed China into the World Trade Organization in 2001. Inside WTO headquarters in Geneva, China quickly assumed the mantle of a responsible participant in multilateral negotiations, including those aimed at persuading governments to slash subsidies to their fishing fleets that were engaged in illegal fishing. But on the high seas, the Chinese fishing fleets kept doing ever more environmental damage. By 2016, marine biologists were warning that the South China Sea’s fish stocks were heading toward collapse.

An American President Blinks

By the time President Barack Obama, who sat in the Oval Office from 2009-2016, completed his eight years in office, the PLA Navy had taken near-total control of the South China Sea.  

The PLA Navy, of course, had its eyes on much more than fish. The story is now as familiar as it is disconcerting: how the Chinese created artificial islands out of white sand and coral in Philippine Exclusive Economic Zone. What were once half-submerged specks in the sea are now modern Chinese naval and air bases. Mischief Reef, Fiery Cross, and Subi Reef have hardened runways for jet fighters, sophisticated radars, jamming equipment, lasers, anti-aircraft missile launchers, and more.

The United States Navy, which specializes in conventional surface warfare — but isn’t so adept at waging political warfare — watched America’s former military dominance of the South China Sea slip away. Beijing’s weapons of choice were a mixture of the usual sleight-of-hand: propaganda and disinformation proclaiming Chinese good intentions, sand dredgers, and coast guard ships that were accompanied by swarms of maritime militia “fishing” fleets. 

While all this was underway, Xi assured China’s neighbors that his military would not weaponize the South China Sea. That was, of course, a lie.  But the disinformation worked. As Seth Jones has written, China took the South China Sea “without firing a shot.”

Obama watched all this happen. He promised senior Philippine officials I’ve spoken with that America would not just stand idly by. But that’s what he did.

Washington Starts to Pay Attention

It wasn’t until 2020 that an American secretary of state, Michael Pompeo, working with David Stillwell, a respected Asian hand who headed State’s East Asian Affairs bureau, stated publicly that the United States recognized that the Chinese maritime aggression was in violation of international law. Last month in Manila, I was reminded several times how welcome that statement was. The State Department had signaled that America was starting to get serious about protecting its friends in the Pacific.

Indeed, in April 2020, the U.S. Navy helped Malaysia fend off Chinese Coast Guard and maritime militias, which were trying to bully the Malaysians out of exploring for oil and gas in Malaysia’s Exclusive Economic Zone.  This is still being talked about in Manila’s national security circles.

As Philippine investigative reporter and author Marites Vitug has noted approvingly, “three American warships and an Australian frigate conducted a joint exercise near the site” of Malaysia’s exploration activities. Vitug also pointed out that when faced with such resolve, the Chinese intruders backed off.

I still cannot report that America has yet put into operation what could be called a truly sophisticated political-military-diplomatic maritime strategy. But some steps in the right direction have continued on President Joe Biden’s watch.

Last month, to cite just one of several recent encouraging developments, U.S. Ambassador to the Philippines MaryKay Carlson announced that “the United States has now made available $100 million in foreign military financing in part for the Philippine military to use as it wishes.”

Searching for Presidential Political Will in Manila

But how does one help an ally who lacks the political will to defend its own sovereignty? Former Philippine President Benigno Aquino, Jr. clearly had the necessary determination to stand up to Chinese bullying. In 2013, Aquino filed a challenge in The Hague, asserting that Chinese aggression in the South China Sea violated Beijing’s obligations as a signatory to the United Nations Convention on the Law of the Sea. And on July 12, 2016, Aquino’s move became a resounding success, when an UNCLOS tribunal ruled that China had acted illegally. It was “an overwhelming victory for the Philippines,” as Greg Poling noted in his recent, very well-received book, On Dangerous Ground.

“The judges agreed that China had illegally destroyed the marine environment through clam harvesting, intentionally created the risk of collision [with] foreign ships, and prevented the Philippines from accessing the resources of its EEZ and continental shelf,” Poling wrote.  Moreover, “they berated China for building artificial islands while the arbitration was underway.”

But there was one problem with the tribunal’s finding: it was issued twelve days after Rodrigo Duterte had succeeded Aquino as president. And it turned out that Duterte, a man who enjoyed projecting an image of a tough guy in the political arena, wasn’t so tough after all when it came to standing up to bullies in Beijing. The Philippine “strongman” refused to enforce his country’s legal victory — leaving Philippine fishing communities hanging, and potential oil and gas exploration, especially in Reed Bank, subject to the PLA Navy’s intimidation.

Just one 2018 press release issued by the historically weak Philippine Coast Guard showed the atmosphere of subservience that Duterte nourished.

Duterte and Xi Jinping had signed a maritime cooperation agreement, the release noted. So the Philippine Coast Guard had gotten busy making friends with China’s Coast Guard.  Translation:  that meant that the two coast guards bonded when they got together in Guangzhou.  Readers who have ever experienced Chinese hospitality will have already imagined the partying and entertainment.

Afterwards, the Philippine Coast Guard issued a press release that celebrated its fraternal ties with the same Chinese Coast Guard that had taken control of Philippine fishing grounds. “The two sides noted the positive outcomes of the bilateral relations and expressed their willingness to further deepen cooperation by conducting port visits, joint exercises, personnel exchange and training, and utilization of hotline communication,” the Philippine press release enthused. 

The Philippine Coast Guard now has new leadership said not to be subservient to China. Whether that’s true or not, a Coast Guard spokesman told me last month that he was not authorized to talk about Chinese maritime aggression.

Political Risk

Meanwhile, on Duterte’s watch, Philippine government officials close to him allegedly pressured two American oil majors, Shell and Chevron, to sell their shares in the Philippines’ Malampaya gas field to a crony of Duterte’s who has a reputation of being pro-Chinese. This was “extremely suspicious,” notes Eduardo Mañalac, the former president of the Philippine National Oil Company.

Malampaya is important for two reasons. It supplies perhaps 40 percent of Manila’s electric grid. And it is running out of gas reserves, which makes future exploration on Reed Bank, and elsewhere very important.

Mañalac is not the only reputable Philippine critic of the Malampaya sale. Reuben Torres, a well-regarded former executive secretary to former Philippine President Fidel Ramos, is pressing litigation that alleges that the transaction was of dubious legality. 

And the Philippines’ Office of the Ombudsman is reported to be looking into separate charges that the Malampaya transaction was criminal. 

Whatever the truth, the whiff of political risk is hanging in the political air that Ferdinand Marcos, Jr., the new Philippines president known better as “Bong Bong Marcos,” has inherited. The message to international oil majors is that Philippine energy sector is tilted in favor of Xi and the PLA Navy. Such a lack of a level playing field explains why only the Chinese government has expressed interest in exploring for oil in Chinese-controlled Philippine waters.

So how will this story end? The answer depends upon how Bong Bong Marcos responds to the bullies from Beijing.  As Greg Poling has observed, while the Chinese have been winning, they haven’t yet “won.”  

I believe that despite the previous years of mistakes in Washington, involving both Democratic and Republican presidents, the new Philippine leader will have America’s backing — if he genuinely wants it.

Stay tuned.