The economics of the South China Sea conflict

The economics of the South China Sea conflict
Zoilo P. Dejaresco III June 18, 2018 https://business.mb.com.ph/2018/06/18/the-economics-of-the-south-china-s...

The South China Sea conflict is not just about small Filipino fishermen being deprived of their catch there or to have additional beautiful islands we can add as tourist havens on top of our 7,000 plus.

For all claimants, the reasons are the energy source, fish supply, and sovereign security. According to the US Energy Information Agency, the South China Sea area is host to 11 billion barrels of oil and 190 trillion cubic feet of natural gas.

And energy supply stability is key to China’s economic progress. Moreover, currently, 80 percent of China’ oil imports pass through the Indian Ocean and the South China Sea and any hostile force along the path-can paralyze China’s hydrocarbon supply.

We know that America has a superior naval presence not just in the Persian Gulf but in all international waters.

On the other hand, China has over a billion mouths to feed and fish has always been a cheap source for their protein as they are just plucked out of the sea, not commercially-grown, such that China has State-subsidized fishing expeditions (in billions of yuan) going all the way to the seawaters of even as faraway as Africa.

(Hachigian 2015) says the area is extremely rich in bio-diversified marine resource and home to 40 percent of the world’s tuna supply.

The area likewise provides access to much of the world-trading ships and crucial to naval ship movements across the Asia Pacific territory.

Those reasons form the foundation of China’s efforts to build its presence in the area, like reclaimed islands, airports and coast guards. In his book “Asia’s New Battlefield”– author Richard Javad Heydarian mentioned in the area are currently 50,000 Chinese fishing boats – all equipped with connections to a home-grown Beidon satellite system “allowing Chinese fishermen to call in support when they face outside threats.”

Were the Chinese coast guards who allegedly recently “pirated” prized fish by Filipino fishermen in the Panatag Shoal part of the “fishermen-cum-militia” upper layer offensive which is part of China’s “cabbage strategy” mentioned by author Heydarian?

In fairness, Chinese ambassador to the Philippines Zhao Jinhua assured that the Chinese “culprits” will be punished.

What we can also see is China’s charm offensive bilaterally with some claimants of the prized seawaters but at the same time she allows some minor conflicts attesting to their stance of “sovereignty” over the disputed islands but always “below the specific threshold of violence” that might force countries like Japan the Philippines to call in Washington and recognize the letter of their mutual defense treaties.

In 2016, the Permanent Court of Arbitration in the Hague had thrown off the window China’s “nine-dash-line” interpretation of the ownership of the disputed area. The “maximalist” view of the “nine-dash-line” will grant China absolute hold on the territory which America will challenge because it will restrict “access” to navigation and flight which is crucial to her trade and military imperatives.

The “minimalist” view, on the other hand, is more hopeful – giving leeway to possible joint explorations among the claimants over this obviously resource-rich piece of earth. Which will prevail?

While the tug-of-war ensues, it behooves the Philippines to now ready herself by implementing the 2018 General Appropriations Acts Budget for the Philippine Coast Guard to modernize its weaponry – at cost of a billion pesos – to enable it to defend the nation from criminality, piracy and terrorism.

Already, it started implementing recruitment of AFP men into the ranks of the coastguard ranks to be hiked by 4,000 new personnel. In the least, we should have the presence in islands legally undisputed as ours and fishermen been armed with technology to report and record violations against their practice of free trade.

China has truly been kind to the Philippines in both grants and soft loans (drug rehab center in Luzon, railway system in Mindanao? etc.) and is fine and dandy.

But true independence also means, as a country, we should be able to play our cards well – pitting more powerful nation’s interests against each other in order to advance ours.

It is not helped any when we allow crucial (security-wise) utility-related types like the National Grid Corporation of the Philippines to be owned by government-owned State Grid Corporation of China.

In the least we can remain cozy buying Russian armaments and accept trade intercourse with China but at the same time we should not ignore but encourage continued military exercises under the auspices of the Mutual Defense Treaty with the United States. That is true independence.

(Bingo Dejaresco, a former banker, is a financial consultant, media practitioner and book author. Hei s a Life Member and Broadcast Media chair of Finex. His views here, however, are personal and do not necessarily reflect those of Finex. [email protected])