The Philippines and the South China Sea Arbitration Award: External Appeasement and Internal Dissension

INTRODUCTION

At the 75^th Session of the United Nations General Assembly (UNGA) in September 2020, Philippine President Rodrigo Duterte read a speech wherein he “affirm[ed] “commitment in the South China Sea in accordance with UNCLOS and the 2016 Arbitral Award.” He then described the South China Sea (SCS) Arbitration Award as being “part of international law, beyond compromise and beyond the reach of passing governments to dilute, diminish or abandon”, and said that his government “firmly reject[ed] attempts to undermine it”. He even thanked other states that had come forward and expressly stated their support for the Award, such as the United States, the United Kingdom, France and Germany.

Such a firm statement came as a surprise to observers and critics. Since he assumed office in June 2016, Duterte has actively downplayed and avoided official discussion of the Award, and openly belittled its value in the Philippine foreign policy. For five years prior, his constant refrain had been that assertion of the country’s legal rights under the Award would lead to war. So what explains his about-turn at the UNGA last September? Is it genuine and will it be sustained? This analysis reviews the dissonance within the Duterte administration that underlines The Philippines’ self-contradictory approach towards the Award over the last five years.

PRESIDENTIAL PREFERENCES VERSUS THE BUREAUCRACY

Since he took office in 2016, Duterte had taken a marked clientelist approach towards China in the hope that Beijing would reciprocate with infrastructure and financial boons. In the aftermath of a “soft-landing” Duterte orchestrated for China upon the promulgation of the Award, Philippines-China relations on the SCS had a veritable ‘honeymoon’ soon after Duterte visited China in late 2016 and came home with US$24 billion worth of pledges in infrastructure and business deals.

When the Philippines assumed the rotating chairmanship of ASEAN in 2017, Duterte suppressed any formal discussion of the country’s victory and framed it as a purely bilateral matter regardless of its obvious regional implications. Incidents that demonstrated how China continued to advance into the West Philippine Sea (WPS) – Manila’s name for its maritime jurisdictions in the SCS – were constantly suppressed or downplayed. These included, for instance, Chinese warning shots fired against Filipino fishermen at Union Banks, a brief stand-off over Sandy Cay just 4.5 nautical miles from Pag-asa Island in July 2019, interference with a resupply mission at Second Thomas Shoal in September 2019, and unauthorized marine scientific research in the area of Palawan and Reed Bank. Duterte also kept the Armed Forces of the Philippines (AFP) and the Philippine Coast Guard (PCG) on a short leash by restricting their patrols and operational presence in the SCS to the bare minimum. Access to information on unfriendly encounters between Chinese forces was also limited, and the incidents would have gone unnoticed were it not for revelations at Congressional budget hearings. Throughout this time, the administration instead took every opportunity to tout the expected benefits of good relations with Beijing, including a golden age of infrastructure building and joint development of offshore petroleum resources fully funded by China. 

In the trenches, however, the story was a bit different. The professional bureaucracy did not easily toe the administration’s line or mirror Duterte’s radical swing. The Arbitration Award remained at the core of Philippine diplomatic positions in closed-door meetings of the Philippines-China Bilateral Consultation Mechanism. The near-annual event was a formal venue for the two sides to privately discuss the disputes and thresh out differences, but the joint statements issued from its meetings became increasingly repetitive and hollow. Rather than mark progress, they signalled continuing deadlocks, demonstrating that China has not actually been able to get the Philippines to ignore the Award.

One good example is the impasse on joint development of oil and gas resources. After signing a memorandum of understanding (MOU) in 2018, the Philippines provided China with various openings for participation in petroleum exploration and development. The steps included the approval of the purchase by China National Offshore Oil Corporation (CNOOC) of a majority stake in a petroleum service contract in undisputed waters that had been languishing since 2006; and a new policy for unsolicited proposals for negotiated petroleum concession contracts instead of open public bidding. The Duterte administration even publicly claimed that China was offering terms more favourable than those contained in standard petroleum concession contracts with multinational petroleum firms, to soften public scepticism and make any future deal more politically palatable.

Despite these, Beijing has not signed any new agreement implementing the MOU because the Philippine position is premised on the Philippines’ exclusive sovereign rights to the resources as vindicated by the Award. It would require China to become essentially a service contractor of the State in conformity with Philippine petroleum laws. At the time of writing, neither the Philippine Department of Energy (DOE) nor the active service contractors in the West Philippine Sea have publicly announced any ventures with China.

The dissonance between Duterte’s personal policy preferences and the realities on the ground sparked divisions within his cabinet, especially between expectant economic managers and a sceptical security sector. Public opinion against his China policy also intensified, as by the middle of his term, the most prominent evidence of it was a sudden influx of Chinese workers and proliferation of online gambling operations catering to an exclusively Chinese market.

The dissonance between Duterte’s personal policy preferences and the realities on the ground sparked divisions within his cabinet, especially between expectant economic managers and a sceptical security sector.

The Arbitration Award also serves as the Philippines’ compass in the talks for the Code of Conduct in the SCS (COC). Foreign Secretary Teodoro Locsin Jr. made it clear that no agreement in the COC will set aside the Award, and that the latter will be incorporated into its terms and conditions even if not specifically mentioned. It will probably take some more years to see whether this is indeed reflected in the document, since substantive discussions on the COC have been stalled by the Covid-19 pandemic.

Aside from the foreign secretary, Defence Secretary Delfin Lorenzana and armed forces officials have often struck tones discordant with Duterte’s preferred harmony. As early as 2017, they began calling out unauthorized Chinese marine scientific research activities in Philippine waters. This was followed by revelations about China’s continuous deployment of its maritime militia around Philippine outposts in the Kalayaan Islands (the name given to the Spratlys claimed by the Philippines), its unannounced military passage through Philippine inter-island waters, and its increasingly stern warnings against Philippine patrol ships and aircraft operating in the SCS. On one occasion in 2020, a patrol ship was targeted by a Chinese warship.

The armed forces quietly moved ahead with plans to improve external defence capabilities directed at the contested areas, such as (i) the improvement of infrastructure in the Kalayaan Islands; (ii) acquisition of more modern naval assets like corvettes and frigates from South Korea, helicopters from the US, and close air support aircraft from Brazil; (iii) conduct of external defence exercises and activities, adding new exercises like Dagit-PA in addition to the annual Balikatan; (iv) improvement of maritime domain awareness capabilities with the receipt of radars from Japan and surveillance drones from the US, and (v) increases in naval and air patrols. High-level bilateral engagements with the US, the Philippines’ treaty ally, also became more frequent, as did combined exercises to improve maritime and aerial capabilities, despite Duterte’s widely publicized disdain for the alliance. There was also an increase in related defence and security engagements with other US allies and partners such as Japan, South Korea and Australia. These engagements were quite diverse, ranging from bilateral talks to capacity-building and even joint exercises.

As for the fisheries and environment sectors, the outer limits of the Philippines’ exclusive economic zone (EEZ) were delineated in accordance with the Award when the Bureau of Fisheries and Aquatic Resources (BFAR) divided Philippine waters into 12 distinct fisheries management areas. In conjunction with the USAID, the BFAR embarked on a multi-year project to improve marine ecosystem governance and biodiversity management, including the efforts to address illegal, unreported and unregulated fishing (IUUF). The project initially focused on inter-island and near-shore waters, but may soon expand to the WPS. Satellite data show a marked increase in Chinese fishing activities in the SCS since 2013, when Chinese President Xi Jinping actively encouraged the country’s fishermen to fish further south to assert Chinese sovereignty over the waters. These led to massive fishing efforts concentrated in the areas around Scarborough Shoal, and all across the southern sector of the WPS, and probably would have continued were it not for a lull apparently induced by the pandemic in 2020.

Duterte at first relegated these developments to the background, especially after publicly claiming that he had personally and verbally allowed China to fish in the Philippine EEZ despite express constitutional prohibition. But internally, frustration built up as reports kept coming in each year from fishermen that Chinese clam-digging operations continued to destroy precious coral habitats in Scarborough Shoal. Personnel belonging to the China Coast Guard (CCG) there also began taking fish catch from Philippine fishermen at sea, even as they still prevented them from fishing in their original fishing grounds in the sheltered areas of the shoal. The incidents were raised at the Bilateral Consultation Meetings but not acted upon. 

By the summer of 2019, it was suggested that other, more visible legal options be considered due to field reports showing China was continuing with its destructive activities in the marine environment in the EEZ and violation of international law. Subsequently, a local news team was able to independently take video evidence of and publicize destructive Chinese giant clam extraction operations in Scarborough Shoal within full view of the CCG ships stationed there. Again, Malacañang (the Philippine presidential office) sought to downplay the incident but this only further set public opinion against Duterte’s policies and China itself.

END OF THE HONEYMOON?

Philippine-China relations began to turn a corner in April 2019, when the Department of Foreign Affairs issued a strongly worded press statement that called out the increased and constant presence of hundreds of Chinese maritime militia vessels around Thitu Island (the Philippine name for this is Pag-asa Island) in the contested Spratly archipelago and demanded their withdrawal. It also reiterated the Arbitration Award to debunk China’s claims to historic rights and any other sovereign rights or jurisdictions that exceed the substantive limits of the United Nations Convention on the Law of the Sea (UNCLOS). The statement was a clear departure from Malacañang’s public justifications and excuses for China’s behaviour in previous years.

Subsequently, on 9 June 2019, a Chinese fishing vessel ran into and sank a wooden Philippine fishing vessel anchored for the night at Reed Bank and abandoned the 22 crew members in the water, creating an intense public backlash for weeks. The crew members might have perished had they not been rescued by a Vietnamese fishing vessel that was five miles away. In return, the Philippine foreign affairs department expressed solidarity with Vietnam when the CCG sank a Vietnamese fishing boat in April 2020.

In 2020, the Philippine Mission to the United Nations lodged a Note Verbale with the Commission on the Limits of the Continental Shelf to dispute the second Malaysian submission for a continental shelf beyond 200 nautical miles in the SCS. It also took the occasion to expressly invoke the Arbitration Award to directly contest China’s excessive sea claims which were reiterated in the latter’s own protest against the Malaysian submission. The move led to a subsequent exchange of Notes in the months that followed, with countries like Indonesia, Vietnam, the United States, Australia, UK, France, Germany and Japan contesting China’s excessive maritime claims and referencing the Award directly or indirectly.

The year 2021 heralded with a marked change in the Philippine posture. The inter-agency National Task Force for the West Philippine Sea (NTF-WPS) revealed the presence of more than 200 Chinese maritime militia vessels anchored at Whitsun Reef within the WPS. This time, the AFP and PCG responded with a flurry of activity, flying the press over Chinese artificial islands, calling out the numbers and locations of militia and fishing vessels as they moved from reef to reef. The PCG began showcasing its newly acquired ships in publicized EEZ patrols and exercises near Scarborough Shoal and the Kalayaan Islands. News of PCG ships shooing away Chinese fishing vessels contrasted sharply with the silence and apparent inactivity of previous years.

On its part, the foreign affairs department announced that it was filing diplomatic protests every day that the Chinese fishing vessels remained within the EEZ, while the environment department is drawing up plans for establishing marine protected areas in the WPS and disputed islands and reefs. Bills defining the country’s maritime zones and implementing certain aspects of the Arbitration Award have passed through the required number of readings in both Houses of Congress and should soon be sent for harmonization at bicameral conferences.

It cannot yet be concluded, however, that this more robust posture means a real change in Duterte’s own policy towards China. While the Philippine defence and foreign secretaries issued relatively severe statements, Duterte himself kept quiet for the most part and even admitted that he had to do so because he was still expecting delivery of Covid-19 vaccines from China. With less than one year left in office, it is also likely that the more assertive stance was in anticipation of the upcoming Presidential elections in 2022, for which he needs a friendly successor to win.

Duterte has very little to show for his good personal relations with China: Of the promised US$24 billion in projects, less than a billion have actually been realized. Even Duterte’s economic managers have complained of China’s inability to meet expectations. The most prominent results of accommodation have been only two bridges in Metro Manila, two loans for dams opposed by affected local communities and criticized for less favourable terms and conditions, a railway that will not be implemented until after his term, and modest modernization projects. The Philippine government was forced to go back to the private sector to acquire support for its ambitious infrastructure development plans.

Duterte has very little to show for his good personal relations with China: Of the promised US$24 billion in projects, less than a billion have actually been realized.

China’s development assistance to the Philippines between 2016 and 2019 at around US$1 billion still lags far behind those of Japan (US$25.6 billion) and the US (US$3.5 billion). Chinese private business interests and trade have boomed but benefits have not trickled down to the masses, and whatever gains were expected have been completely wiped out by a poorly managed pandemic response. Duterte hopes that securing Chinese vaccine supplies will salvage his failed appeasement policy. He still echoes Beijing’s official derision of the Award, having publicly called it “a piece of paper fit for a waste basket”. In one of his verbal digressions at his final State of the Nation Address on 26 July 2021, he reiterated the fear of instigating war by asserting legal rights, and echoed China’s claim that no arbitration took place due to the latter’s absence from the proceedings.

China’s three-no’s policy – no acceptance, no participation, no recognition – and its continued assertion of sovereignty and control in the SCS thus still finds an ally in President Duterte, but he does not fully carry with him the rest of the Philippine government or the wider public. If anything, his approach of fomenting fear of war and inviting friendship borne of intimidation has had the opposite effect of further deepening public suspicion of closer relations with China. Furthermore, institutional reflexes to protect national interests in the SCS against China’s incursions continue to work.

The counter-narrative of “right makes might” is still at play and has kept the Philippines from abandoning its hard-won victory despite Duterte’s best efforts to keep it in obscurity. It is likely that geopolitical forces will swirl more strongly around the Arbitration Award in the coming years, as it has provided a bedrock for regional persistence in their respective maritime claims. It also serves as an entry point for external maritime powers to stake their claim to the maintenance of the Rule of Law and the proper interpretation and application of UNCLOS in the SCS.

CONCLUSION

The way forward is not only to keep the Arbitration Award from being cast into oblivion, but for the Philippines to continue to actively exercise its rights, increasingly make use of its maritime entitlements despite China’s protests and intimidation, and ignore the fear instigated by its military and economic might. The Philippines’ hopes lie with struggling for the Rule of Law and working towards China’s compliance with the Award, in deeds if not in words. It should also work with other nations within and beyond the ASEAN region to both protect and strengthen themselves against the regional giant.

The Arbitration Award is still the principal authority defining what is right and wrong in the complex maritime disputes, and must remain the basis for eventually establishing a regional order that fairly and equitably allocates and distributes the benefits of the common marine heritage of Southeast Asia. It is still the only possible basis for the region’s maritime future.

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This is an adapted version of ISEAS Perspective 2021/126 published on 24 September 2021. The paper and its footnotes can be accessed at this link.