More than meets the eye in Manila, Tokyo, and Beijing

Dindo Manhit, President of the Stratbase-Albert del Rosario Institute (ADRi) for Strategic and International Studies

President Duterte has had an eventful series of weeks, filled with comments on his foreign policy and on developments in Philippine relations with other countries. A good amount of ink has been spent now on the Duterte’s ties with Beijing and Tokyo; more ink than we would have expected in May this year. However, while it is tempting to read the Philippines’ foreign affairs as being solely influenced by the President’s personal sentiments, credit or criticism for the state of bilateral ties goes equally to the other country.

COURTESY AND DIPLOMACY GO A LONG WAY IN TOKYO

Duterte’s trip to Japan was an excellent example of how credit can and should be given to the other side. Of course, the President’s delegation brought home positive news, as both countries are committed to strengthening the relationship. As with the President’s trip to Beijing, there were big-ticket investment promises from the Japanese private sector and, very productively, agreements on continuing Tokyo’s support to the coast guard and the AFP. Yet, the highlight of the visit was not economic, but personal: a photograph of Prime Minister Shinzo Abe raising his fist in the signature Duterte style.

Such gestures, though simple, are meaningful.

In Prime Minister Abe’s case, he was able to underline the comfortable relations between the Philippines and Japan while also showing Tokyo’s support for this administration. If not for Japan’s careful diplomacy over the past few months, its relationship with the Philippines could very well have faltered. Japan and China disagree on the ownership of islands in the East China Sea and Japan and the United States are treaty allies; given Duterte’s willingness to warm up relations with Beijing and his obvious dislike of Washington, it would have been simple for him to paint Tokyo with the same brush. That such a successful trip could occur is a testament to Japan’s diplomacy with the new administration and Abe’s courtesy.

SPRINGTIME IN BEIJING

President Duterte is an important figure in the “springtime” of the Philippines-China relationship, but Beijing gets equal credit. China’s new opening into the Philippines represents that country’s latest success in a concerted effort to connect key transport lines emanating from or around China and to simultaneously support Chinese state-owned infrastructure firms. Whether its called One Belt One Road, the 21st Century Maritime Silk Road, or another similar term, the bottom line is the same: China is rebuilding itself at the center of the world’s trading lanes.

With that end in mind, the pillars of China’s economic strategy are the twofold offer of loans for infrastructure development and, typically, the proviso that China’s firm be contracted for the projects. China’s major construction firms are largely state-owned enterprises, ensuring that a large slice of what China lends a country returns to the Chinese government. The receiving country borrows the money to pay for infrastructure that would benefit its residents and spur enough growth in the economy to pay off the investment. Thus, when President Duterte returned from China with $9 billion in new credit facilities, the expectation is that some of that available credit will be tapped for investments in infrastructure.

This method of cooperation is not unique to China, but typical of the Philippines’ dealings with international organizations or other countries that provide low-interest loans. Traditionally, when it needs to, the Philippines borrows money mainly from the World Bank, the Asian Development Bank, or Japan for large investments. According to ADB, developing countries in Asia will require $8 trillion in infrastructure investment between 2012 and 2020 — an amount that far outstrips the $125.6 billion that was on offer in 2012. For this reason, the World Bank and the ADB welcomed China’s establishment of the Asia Infrastructure Investment Bank (AIIB) in 2015, which the banks believe could help meet the shortfall in loans available internationally.

CAREFUL MIXING OF BUSINESS AND POLITICS

Beyond commercial diligence, however, the Philippines should keep its eyes open to the political opportunities and pitfalls of its economic relationships. Just this year, it was discouraging for the Philippines to witness the constraints that some of its Southeast Asian neighbors faced in voicing their opposition to important politico-military developments in the region. At this year’s ASEAN meeting in Laos, Cambodia’s willingness to block messages from the important joint statement has been attributed to their reliance on China’s funding; Cambodia announced that was receiving $600 million in new Chinese aid just days after the diplomats tussled in Laos. In pursuing his independent foreign policy, President Duterte should be careful to ensure he does not inadvertently tie the country’s hands in defending the national interest.

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