“It is possible that we may be tested,” he said, “and if we are tested, it is possible that everyone would need to make a sacrifice.”
Collapse of goodwill
Just a few years ago, China tried to make friends with the Philippines — and nearly succeeded. The reason it fell short indicates the limits of soft power — namely, aid and investment deals — at a time when China has made a priority of expanding its foreign influence.
Under the previous Philippine president, Gloria Macapagal Arroyo, Beijing showered Manila with more than $2 billion in loans. Some of the money was meant for railroad projects. An additional $330 million was designed to fund a broadband network that would connect 25,000 municipal offices. As the money was flowing, the Philippines signed off on what Arroyo called a “diplomatic breakthrough” — a tripartite deal that allowed China and Vietnam to survey contested maritime territory near Philippine shores, in the hope of joint oil and gas development.
The goodwill collapsed in short order. The broadband deal was laced with kickbacks for Philippine officials, as a congressional investigation revealed. The joint surveying deal came under even fiercer attack, as opposition politicians and many prominent Filipinos said Arroyo had violated the constitution by essentially giving away territory. Although the Joint Marine Seismic Undertaking (JMSU) was never described by Arroyo as a quid pro quo for economic cooperation, it was signed in 2005, when relations with Beijing were at their best.
“In my opinion, it was a sellout,” said Rommel Banlaoi, chairman of the Philippine Institute for Peace, Violence and Terrorism Research. “The terms of the JMSU were so biased. Only areas of the Philippines were allowed for exploration.”
Arroyo, under domestic pressure, allowed the initial three-year JMSU contract to lapse in 2008. But the collapse of the deal reopened a decades-long debate between the Philippines and China over the rights to seabed hydrocarbons. The Philippines worked out unilateral deals to prospect for oil and gas. And China, in turn, increased its surveillance of the waters, badgering Philippine vessels in places where they had previously gone unbothered.
None of the standoffs have turned violent, but in March 2011, Manila accused two Chinese coast guard boats of harassing a Philippines-commissioned oil exploration vessel near Reed Bank, a promising drilling site about 80 nautical miles off the coast of Palawan, the Philippines’ westernmost major island. The Philippines has since put the project on hold, citing political tensions.
That holdup has proved to be the most costly repercussion of the row with China. The Philippines had been exploring the Reed Bank for nearly four decades and considered it crucial to the energy security of a nation that imports most of its fossil fuels from the Middle East.
“This site could be earning $1 billion per year for the Philippines,” said Ismael Ocampo, assistant director at the Energy Department in Manila. “So, yes, this holdup is costly.”
A vocal minority in the Philippines says that Aquino should re-embrace China and again pursue joint development. “Right now, nobody’s getting rich,” said Jose de Venecia, speaker of the House under Arroyo, who helped broker deals with China. “Here, we are getting zero resources. And not only that, but also a lot of stress and problems.”
Aside from standoffs between vessels at sea, China and the Philippines have only the most furtive maritime contact, as each monitors the activities of the other around the South China Sea’s tiny islands, reefs and sandbars.
China and the Philippines, along with Vietnam, have spent recent years establishing settlements on these islands on a first-come basis. The Philippines inhabits nine of the 53 such rocks or islands that it considers its own, citing a U.N. maritime treaty. The Vietnamese have claimed 22, though without eliciting quite the same scorn from Filipinos as China. Meanwhile, China has placed an estimated 1,000 troops on seven islands. It has turned one tiny reef into a concrete fortress with a windmill and a basketball court.
Philippine officials see little chance that the Chinese will withdraw.
“It’s like they have already invaded us,” said Eugenio Bito-Onon, mayor of the Philippine-claimed islands, which are an official municipality.
Carmela Cruz contributed to this report.