Chinese investors, importers and tourists are seducing the most loyal Asian ally of the US, putting Obama’s Asia Pivot at risk.
This week, Russian President Vladimir Putin visited Germany for the first time since 2014. Relations with the United States and other European powers have been rather chilly since then because of conflict in East Ukraine. German Chancellor Angela Merkel hosted Putin along with leaders of France and Ukraine to seek a peaceful solution of the Ukrainian crisis. Apparently, they also discussed Syria and were slightly optimistic at the end of the diplomatic powwow.
Across the Atlantic, Donald Trump did not share the optimism. At the final presidential debate in Las Vegas, he said that he might not accept the result of the election. He also called the media dishonest and corrupt. He accused Hillary Clinton of being the same and called her “a nasty woman.” The tenor and substance of the debate was dreadful. It was not the best advertisement for the Americano model of democracy.
Even as Putin was parlaying in Berlin and Trump was holding center stage in Las Vegas, Philippine President Rodrigo Duterte arrived in China for a state visit. Chinese President Xi Jinping lauded Duterte’s “milestone” visit. During the trip, the two leaders discussed how to boost trade and defuse a bitter row over islands in the South China Sea. They agreed upon a “settlement through bilateral dialogue.”
The agreement was a major step forward for the two countries. On July 12, an international tribunal rejected China’s claims and sided with the Philippines. After promising to personally retake the Spratly Islands, swashbuckling Duterte has been seeking reconciliation with the Asian giant. His relationship with the US has been fraying and the Philippine leader is looking for new friends.
The Philippines has long been a loyal ally of the US. Only in March, the Philippines and the US signed a new agreement, “clearing the way for a new permanent American military presence across five bases.” This was part of Barack Obama’s Asia Pivot that the May 29 edition of The World This Week analyzed in some detail. The US president seeks to shift focus to Asia from the Middle East and “manage the rise of China.” Having troops close by to defend the South China Sea against the Middle Kingdom is an essential part of the Asia Pivot.
For the US, it was business as usual until Duterte won the presidential elections in May. Maverick Duterte has a strongman image and a controversial record. He is known for his colorful remarks. In this strongly Catholic former Spanish colony, he even had harsh words for the pontiff, “Pope, son of a whore, go home. Do not visit us again.” More worryingly, he promised to kill thousands of drug dealers and criminals. The Obama administration was deeply uncomfortable with Duterte, and his victory put relations between the two countries into uncharted territory.
Since 1898, the US has enjoyed the loyalty of comprador elites in Philippines just as in Latin America. That year, the US gobbled up the Philippines after a war with Spain over Cuba. It also took over Puerto Rico and Guam thanks to that war. Uncle Sam crushed the native rebellion in the brutal three-year Philippine-American war that lasted from 1899 to 1902. From now on, English became the official language of the country and Philippine elites flocked to the US instead of Spain to learn Anglo-Saxon capitalism and American-style democracy. The war compelled good old Mark Twain to issue an immortal mea culpa: “We have robbed a trusting friend of his land and his liberty; we have invited clean young men to shoulder a discredited musket and do bandit’s work under a flag which bandits have been accustomed to fear, not to follow; we have debauched America’s honor and blackened her face before the world.”
Despite Twain’s misgivings, the Philippines turned out to be a valuable asset for the US. In due course, the Japanese invasion of the island nation bolstered American standing. The cruelty and brutality of Japanese troops made the Philippines value the alliance with Uncle Sam. Independence in 1946 was followed by client status during the Cold War. Unsurprisingly, Philippine servicemen served alongside American troops both in Korea and Vietnam. Of late, fears of China have made the Philippines insure for its safety by turning to the US.
Given Duterte’s rhetoric against China in the election campaign, it seemed unlikely that the Philippine relationship with the US would turn sour so fast and the country would seek solace in China’s arms. What’s going on?
First, Duterte is singing a new tune because the Philippines needs cash. Foreign investors have been fleeing the country. They have pulled out an estimated $58 billion from the stock markets. Credit rating agencies have downgraded Philippine debt. Although Duterte’s rhetoric has lowered investor confidence, the fact that his country issues bonds denominated in US dollars has not helped. The possible rise of interest rates in the US has played havoc with Philippine finances.
Besides, winning in court against China has cost the Philippines dearly. Four years ago, Chinese ships pushed out Philippine vessels from the Scarborough Shoal. The Philippines responded by filing a case against its bigger neighbor. China retaliated by encouraging its investors, importers or tourists to boycott the Philippines. This hurt the Philippine economy, but Uncle Sam did not dole out any cash to ease the pain. With foreign capital fleeing its shores, the Philippines needs Chinese money more than ever.
Bloomberg reports that Duterte’s China visit led to $24 billion of funding and investment pledges. Of these, $9 billion will be in the form of soft loans, while the remaining $15 billion will take the form of long-term investments. China will invest in steel plants, railways, ports and more. It is a playbook that the Middle Kingdom has used in Africa in the recent past. The Philippines desperately needs better infrastructure, and Chinese investment could not have come at a more opportune time.
Second, economic currents are pulling this island country closer to the Middle Kingdom. As per the Office of the US Trade Representative, Uncle Sam and the Philippines “have had a very close trade relationship for more than a hundred years.” The US remains an important trading partner for sure, but it now ranks third after China and Japan. In 2015, Philippine exports to China totaled $16.2 billion and boosting them could generate thousands of jobs.
The Chinese have already promised to increase imports of bananas, pineapples and mangoes from the Philippines. Chinese tourists are also likely to pour in, earning the Philippines an estimated $1 billion. Duterte’s maternal grandfather was Chinese and he has gone to the Middle Kingdom with more than 400 businessmen in tow. His country produces commodities and has historically exported them to the Middle Kingdom. As the Chinese economy returns to the world stage after two centuries of slumber, no Philippine leader can afford to ignore its gravitational pull for long.
Third, the people of the Philippines have turned to an earthier politician that the US does not know how to deal with. This has given China a unique opportunity to step in. Duterte is not a part of the Manila jet set with an inferiority complex vis-à-vis the US. As mayor of the lawless southern town of Davao, Duterte crushed crime, ran an efficient administration and increased the prosperity of its inhabitants. In 22 years, he transformed his town. Bonifacio Tan, the president of the Davao Chamber of Commerce, credits Duterte for having the political will to clean up the place. Tan says, now “you can walk the streets, come home at night at 2.00 to 3.00 am in the morning and feel peaceful.”
Obviously, Duterte fought crime with strong-arm methods. He was rather trigger-happy, earning the monikers “The Punisher” and “Duterte Harry.” Duterte has talked of killing criminals and drug peddlers. When he learned that Obama would raise the issue of human rights with him, Duterte called the US president a “son of a whore.” Obama canceled his meeting with Duterte, saying he preferred “constructive, productive conversations.” Obama was right to be concerned about Duterte’s brutal “war on drugs” and terrible human rights record. However, Obama failed to realize that Duterte Harry does not like to be told what to do and strongly believes that the sovereign Philippines “has long ceased to be a colony.”
Duterte’s combative personality is what a desperate nation has come to love. With over 25% of the population under the poverty line, Filipinos have reposed faith in crime-busting, tough-talking, action-oriented ways over plutocratic elites who line their coffers with public money and doff their cap to Uncle Sam. As per Karishma Vaswani of the BBC, up to 80% of Philippine legislators could be “connected to political dynasties with vested interests” and “a handful of the families control almost all of the country’s wealth.” Duterte’s election is a bit like a revolution and the US still has not figured out how to deal with it.
In any case, sanctimonious Uncle Sam fails to realize that, in former colonies, the law is invariably an ass. It is divorced from local realities and politicians are not quite adept at drafting decent legislation. Even the judiciary can be utterly incompetent if not horrendously corrupt. As the July 10 edition of The World This Week chronicled, the US itself does not do a great job when it comes to criminal justice. The militarization of its police leads to the deaths of many innocents. One in three black men end up in jail once in their lifetimes to feed the prison industrial complex. Yet America never tires of preaching the virtues of human rights to others. The trouble for the US is that the likes of Duterte have no appetite for its hypocritical preaching.
Duterte is a more complex character than the pale Manila elites the US has propped up for decades. He claims that he was abused by a Catholic priest during his childhood and, as the world knows, is not terribly fond of the pope. Unlike most other strongmen, Duterte wants constitutional change that transforms the Philippines from a unitary to a federal form of government. He rightly argues that the country has inherited its highly-centralized unitary form of government from its colonial masters. Instead, Duterte wants the central government to focus on national security and foreign relations.
The strongman ironically takes the view that the rest of the country suffers due to the concentration of power and corruption in the national government. It is little surprise that millions flock to Manila to live off the “trickle down” economy in the national capital. Federalism would liberate the regions like his native Mindanao from Manila’s tyranny. It would also pave the way for competition between the regions, leading to better governance and higher economic growth. On federalism, Duterte is certainly right.
Duterte has a reflective side to him. He wants conflict with Muslim extremists to end. He claims to be both Christian and Muslim, pointing out that half of his grandchildren are Muslim and his maternal grandmother was Moro, a member of the indigenous Muslim community. This man of mixed bloodlines broke down on his parents’ graves and sobbed in front of cameras saying, “Help me Mom, I’m just a nobody.” More pertinently for the US, this proud strongman resents his country’s colonial past and is clearly touchy.
This week, Duterte told Xi that “he wanted to cut the cord with the US and pivot to China and Russia.” In September, he said “he was not a fan of the Americans” and declared that he has asked US Special Forces to leave his native Mindanao. Duterte blamed the US for the continuing violence in Mindanao. He also announced that he would “reorient” Philippine foreign policy and make it independent of Washington.
At the moment, American forces are targeting Islamists like the Abu Sayyaf group. Duterte has ordered more than 7,000 Philippine troops to the southern island of Jolo. It once belonged to the Sultanate of Sulu that held out against the Spanish for 300 years. It was Chinese traders who sold the Moros the arms to fight the Spanish. When the Americans took over from the Spanish, the recalcitrant Moros put up a jolly good fight and were crushed quite savagely. In his speech from the presidential palace, Duterte evoked those painful memories by waving black and white images of Moros that the Americans slaughtered in the early 1900s.
The US is still the global superpower, but it is overextended and running a touch ragged. Its former colony and closest Asian ally is flirting with the Middle Kingdom. The Philippines and China have traded with each other for centuries. Today, they are doing so again despite bitter border disputes. Culturally, the Philippines is still very much an American colony, but Duterte is harking back to a rebel tradition and could seriously dent US hegemony in Southeast Asia.
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