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West PH Sea dispute poses an economic threat

The West Philippine Sea dispute poses not only security issues, but also a serious economic threat that the next administration needs to handle carefully, according to experts.

Experts said the 6.7-percent plunge of the Philippine Stock Exchange index on Aug. 24, following the collapse of the Shanghai composite index has revealed the bigger economic issues at play in the ongoing West Philippine Sea dispute.

“We have to manage the dispute with respect to continuing business relations,” said Francisco del Rosario, president of the Management Association of the Philippines.

“We cannot completely shut out China from the economic landscape. Instead, we need to improve our relations with them by initiating trade and investment missions, dialogues, and conferences. Currently, there’s almost nothing that’s happening,” del Rosario said.

Speaking at the Stratbase Albert Del Rosario Institute National Security Forum, del Rosario said China has emerged as one of the biggest markets for the Philippines, accounting for 11.4 percent of the country’s exports, valued at $6.4 billion.

“Globally, they’re the current top source of tourists, but only fourth in the Philippines because of this ongoing dispute,” he said.

Dindo Manhit, managing director of the Stratbase Group and president of the ADR Institute, said the ongoing territorial dispute in the West Philippine Sea has drawn attention to the government’s slow implementation of the Armed Forces of the Philippines’ modernization and would be a strategic issue that should be carefully addressed by the next government and the Association of Southeast Asia Nations as a group.

“The NSP [National Security Policy] falls short of defining the role and rationale of the armed forces as well as the national police and other civilian uniformed agencies in national security,” said Ananda Almase of the National Defense College of the Philippines.

 “The country’s National Security Policy should provide a clear definition of goals that should guide the formulation of strategy and that the policy guidelines issued by the president does not have the military element that fills out our capability for deterrence and defense,” said Almase.

Renato de Castro, ADR Institute convener and professor of international studies at the De La Salle University said the involvement of the United States and Japan in the ongoing territorial row would further complicate and prolong the issue.

“This is making China more belligerent and more uncompromising, so it will be a concern for the successor to President Aquino. The challenge for the next administration is to continue the challenge against China’s expansion,” de Castro said.

“If China succeeds in pushing their defense line to the second-island chain, the Philippines will fall under it. It will push out the seventh fleet, and Japan is going to be very worried about the situation,” said former Parañaque representative Roilo Golez, who was chairman of the House committee on national defense.

It’s clear that the eventual target of China’s expansion is Scarborough Shoal, toward establishing a “strategic triangle” in the disputed waters, Golez said.

“Scarborough Shoal is like a dagger aimed at the heartland of the Philippines—it’s very close to our defense and military hardware in Subic, Calabarzon, and Metro Manila,” he said.

The territorial issue is further complicated with the increasingly unified and cohesive stand of Asean and its ongoing integration efforts, even though in the past it had very little success in dispute settlements and conflict resolution mechanisms, said former senator and defense secretary Orlando Mercado.

“A shared-sovereignty approach might be the way to go. We know it’s not going to be an easy process. Asean must break existing trade-offs in governance with new decision-making models and mechanisms. I think what Asean needs is some disruptive innovation; some people should disrupt Asean a little more and make them come at realities of the day,” he said.

Marshalling the necessary resources becomes all the more crucial if the AFP is to scale up and modernize to meet the growing demands of safeguarding the country’s waters, said retired rear admiral Vicente Agdamag of the National Security Council.

“We should strengthen our military budget, which right now is 1 to 1.2 percent of the GDP, when the common or normal defense budget at peacetime is at around 2 percent,” he said.

“To secure the West Philippine Sea, we’re proposing a minimum defense expenditure for five years, or P70 billion for five years, for the capability to move, shoot, and communicate, all of which are basic. For credible defense, we’re proposing P91 billion for the next ten years,” Agdamag said.

Launched in 2014, Stratbase ADRI is an independent strategic and international research organization that aims to influence domestic and East Asia policy in development and security by building and sharing key research and information. The roundtable discussion is part of an ongoing project to draft a National Strategic Agenda for the leaders of the next government.

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