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Two years of Dutertismo

August 1, 2018

Dindo Manhit, President of the Stratbase ADR Institute

Image Source: BusinessWorld

In 2016, we witnessed power shifts around the world with the rise of populist, nativist, or nationalist politics on a global scale. Rebalancing themselves between change and continuity, the demands for radical social change have gotten more pronounced due to rising inequality amidst wealth, economic growth, and disruptive social forces. In 2017, we welcomed a new world order or disorder: where societies continue to face a state of political uncertainty, unpredictability and international factors beyond the control of national governments and economies. In 2018, more uncertainties have unfolded that characterize an ever-changing political dynamics and political economy of societies. In this post-factual world, we are simply caught in a tug-of-war between change and continuity.

The Philippine landscape is not isolated or alien from these political and economic conditions. Time and again, the emergence of strong-willed leaders has historically wooed and rallied political support from the people in unprecedented scales. Surpassing the electoral votes garnered in 2016 and the performance ratings by past presidents after two years in office, President Rodrigo R. Duterte faces bigger challenges in managing the affairs of the country. Consequently, he finds himself in much tighter and expansive situations than simply being a mayor of Davao city.

Two years into his presidency, Mr. Duterte’s national policy has been anchored on three elements, namely, re-establishing the rule of law, Dutertenomics, and restructuring the form of government. Re-establishing the rule of law consisted of suppressing crime, illegal drugs, and corruption; strictly implementing the rule of law; and ending insurgencies and combating terrorism.

Dutertenomics (or the promotion of inclusive socioeconomic growth and development) comprised of expansionary fiscal policy to fuel investments on public infrastructure and social services, massive infrastructure investments as its centerpiece (from 5.2% in 2017 to 7.4% of GDP in 2022), rising social services spending (from 8.5% in 2017 to 9.2% of GDP in 2022), tax reform to finance investments in human and physical capital, and the focus on investment and industry as major drivers of GDP growth. Meanwhile, the adoption of a federal hybrid system is at the centerpiece of restructuring the form of government with the goal of making it more functional.

With the promise of radical change and adherence to the rule of law, Mr. Duterte is a leader who wants to outrun the “past” and break from its traditional practices. To make the difference, he has initiated actions and policies to disjoin from the traditional practices and has continued to attract popularity by appealing to the nationalistic and sectoral sentiments of the population. However, the problems that he wants to confront head on are historical problems embedded in a whole gamut of societal concerns. For instance, the problems of rebellion and illegal drugs are national (and international) concerns and cannot be resolved through simplistic and militaristic methods. After successfully combating terrorism in Marawi City, the presidency is now endeavoring to achieve much-stalled peace talks with the Communist rebels.

What makes Mr. Duterte an easy target of political scrutiny is his overarching tendency of not displaying appropriate public relations and diplomacy. As a president, a national leader should not plainly approach political dissent and opposition like a mayor bereft of political astuteness and statesmanship. A mayor openly and dauntlessly speaks about town or city issues, unwary of whatever the other local leaders in surrounding towns and cities would say. In turn, a president speaks to the public with all diplomacy and decency and takes into consideration the impact of the statements made. Thus far, what we have then is a parochially adventurist president undaunted by the local, national, and international repercussions of his actions and pronouncements.

Aside from this leadership style, another contributing factor is the web of social relations that he might be challenging, restructuring or reinforcing. Unlike other presidencies that have been indebted to the national oligarchy, Mr. Duterte efforts to exercise political independence from them are fragile.

In an international context, to exercise independence from foreign powers should be done with utmost diplomacy. The blunt, hostile, and arrogant withdrawal from an international judiciary institution does not only promote a politically myopic perspective but undermines years and decades of democratic struggle and achievements. This is why the withdrawal or the threat to withdraw from the International Criminal Court is a big blunder. International politics dictates upon the culture of unending negotiation and bargaining and détente.

However, what could we call the co-ownership agreement of the West Philippine Sea between the Philippines and China? While co-management is a very diplomatic and astute way of addressing the problem, to “share” what is originally ours is simply an abandonment of our sovereignty. If Mr. Duterte could stand up against western international institutions and foreign powers, succumbing to another foreign power clearly undermines the anti-mendicancy principle he has pronounced. In short, the administration has simply manifested a radical turnaround in its foreign policy.

Without establishing the grounds for economic democracy, political democracy is fleeting. It is in this crux of political economy where a national leader can initiate and implement the much-needed change to break from the web of social relations that have dominated Philippine politics.

Consequently, initiatives in battling corruption and advancing political reforms will tend to be impeded by either piecemeal or abrupt actions. For example, the sacking of public officials due to their lifestyle, foreign trips or hidden wealth is not accompanied by follow-up investigations to arrest the many other corrupt officials from top to bottom. Another remarkable initiative is the destruction of high end imported cars. While it created headlines and demonstrated the resolve of the administration to combat smuggling, again, the absence of subsequent inquires and investigation merely relegates such action to a show-off.

As for the concern that TRAIN promotes inflationary effects, the bottom line for the ordinary Filipinos is the cost of their everyday existence. Although in its very early stages of implementation, the mid- and long-term effects of this tax measure would indeed be revealed and experienced. Initiated by the current administration, the railroading of this measure for speedy promulgation has become suspect to many. Currently, the decision as to whether or not to suspend TRAIN amidst increasing inflation is left to Congress.

In the case of federalism, its railroading insinuates a significant degree of the presence of a hidden agenda. Be it in terms of power retention and extension or the preservation of patron-client politics, the current meticulous politicking within the House of Representatives is remarkable. Moreover, to require federalism as an ideal to be accepted as a PDP senatorial candidate casts more doubt on the true nature of the federalist agenda.

Lest we forget, the electoral platform and national program of Mr. Duterte animated by his leadership style has reaped favorable performance ratings from the public. Overall, he enjoys a much better level of public perception compared to the last five presidencies. Although contingent, the trend of his performance and the public trust ratings provided by third party institutions projects a positive trajectory.

The performance ratings of Duterte in the last quarter of 2017 rebounded at +71% satisfactory rating with a +58% net satisfactory rating. The net rating posted a 10-point increase compared to the third quarter of the same year. Similarly, the Pulse Asia survey of in the month of December gave an 80% approval and 82% trust ratings for the top official. The approval ratings did not change while the trust ratings posted an increase of 2 percentage points. This relatively remarkable rebound coincided with the phenomenon where Filipinos expressed widespread hope for the New Year. The SWS survey of 18-16 December 2017 registered an all time high record where 96% of Filipinos are “entering 2018 with hope rather than with fear.” This phenomenon is not unrelated to the changing political environment that the new presidency has brought about.

And after bouncing back by 5 percentage points, the satisfaction rating of PRRD slid by a negligible 1 percentage point, from +71% in the last quarter of 2017 to +70% for the first quarter of 2018. Accordingly, his net satisfaction rating also slid by 2 percentage points, from +58% to +56% in the same periods mentioned.

In essence, whether Mr. Duterte is another “strongman” in the making and capable of demonstrating his political will to achieve radical social change, the democratic adage that institutions matter more should not be overlooked. As leaders come and go, institutions are here to stay.

Hence, the restructuring of the form of government to make it more functional goes beyond the superficial form or system it assumes. Rather, it digs into the deeper condition of a political institution as the breeding ground for democratic values and aspirations.

This article was originally published in BusinessWorld’s Anniversary Report, “The Changing Game”.

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The 3rd SONA in Prospect: Let It Be Heard

July 23, 2018

Dindo Manhit, President of the Stratbase ADR Institute

Today, President Duterte would be delivering his 3rd State of the Nation Address (SONA). Compared to his previous speeches, the upcoming one needs to cover more substantives issues that have been borne out by three factors—the campaign promises that are yet to be fulfilled; the emergent concerns from government dealings for the past two years; and concerns spurred by social demands.

Even as Filipinos await many things to be covered, the upcoming address ought to present two things: “What do the Filipinos need to hear?” and “What does the international community need to know?”

A more presidential approach to the 3rd SONA is to simply focus on three aspects that could makes sense of PRRD’s two years in office: social reforms, political restructuring, political and social space and foreign policy.

Based on PULSE Asia surveys, the state of social reforms could be said to consist of the following: controlling inflation, improving the pay of workers, creating more jobs, poverty reduction, fighting graft and corruption, and fighting criminality (Pulse Asia Survey on Urgent National Concerns, June 15-21 2018). In the last quarter, a similar survey revealed almost the same set of national concerns.

Since 2015, these core issues had represented the gamut of Filipino concerns. Consequently, PRRD needs to heed to these demands and explain what the government is doing to address them. The most pressing of which is controlling inflation, which has been breathing down our necks for the past six months.

While the war on drugs and the sacking of public officials allegedly involved continue to be carried out, the labor and economic woes for the workers seem to worsen. The prices of gasoline and basic commodities are on the rise. Talk of inflation owes a quick reference to the issue of TRAIN. Despite the measure’s anticipated inflationary effects, many analysts were careful to not jump the gun, opting to give TRAIN a chance to demonstrate its worthiness as a tax measure.

At present, however, the people who had been targeted as the beneficiaries of the reform are instead feeling the crunch from the inflation and the negative impact on income.

In terms of domestic security, what we need is a programmatic approach to Muslim separatism and Communist insurgency. While offering a glimmer of hope by prioritizing the enactment of the BBL, the establishment of a new political identity to supplant the ARRM needs to be seen. As for the on-and-off peace negotiations with the CPP-NPA-NDF, back door channels are currently the main option.

In trying to make government more functional and make public services available, political restructuring is a must. In this sense, what needs to be tackled is the real color of the ongoing efforts to promote federalism and constitutional change. As 67% and 62% of the Filipinos do not agree with a federal set-up and constitutional change, respectively, (Pulse Asia Research Inc., 2018), the government needs to convince the population that these political changes are not simply to extend the economic and political power of incumbent public officials and existing dynasties.

The third critical issue is the promotion and defense of our territorial integrity amidst Chinese claims and militarization of the West Philippine Sea. In terms of livelihood, these include the marine wealth and energy resources that are at stake in the territorial row and how to explain the tactical lean toward mitigating the economic and security impact of such militarization? How should government take into consideration that 4 out of 5 Pinoys repudiate the government’s policy of allowing Chinese intrusion in the West Philippine Sea (Social Weather Survey, June 2018)? If PRRD has consistently and passionately been nationalistic in many respects, should he stand less resolutely in terms of defending Philippine territory vis-à-vis China?

Fourth, a democratic society entails the protection and promotion of the social and political space. The events of lording over the judiciary, the killing of priests and the “arrest” of tambays in the thousands, which led to the violent death of a few, are indicators of the revival of authoritarian tendencies. Constricting the social and political space is not tantamount to re-establishing law and order. The situation now tends to sow fear among the population, reminding many of the methodical constriction of both the social and political space during martial law.

In a nutshell, the 3rd SONA should be informative and not defensive. Strong societies unequivocally need both strong leaders and institutions. Lest we forget, leaders come and go but institutions are here to stay.

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Time to recover from failure to use the South China Sea ruling as leverage

July 17, 2018

Dindo Manhit, President of the Stratbase ADR Institute

Image Source: philstar.com

During the second anniversary of our nation’s victory at the Permanent Court of Arbitration (PCA) in the Hague, the Stratbase ADR Institute gathered international experts, key stakeholders from the academe, government, and the private sector to discuss the consequences of the policy of appeasement that the administration had taken, in addition to the threats against and opportunities within the international rules-based order.

Brahma Chellaney, professor of Strategic Studies at the Center for Policy Research in New Delhi, said that “compliance with or defiance of international rules has no correlation to state size.” He noted that China’s defiance has heightened international concerns about the security of maritime domain.

The Philippine victory at the Arbitral Tribunal is concrete proof that small nations like the Philippines can make our voices heard in a rules-based regime.

He said that as far as China was concerned international law matters only when it serves their interest.

The current administration has failed to use the landmark ruling that invalidated China’s “historic claims” on the South China Sea as a leverage to claim what is ours and fully explore and use the abundant resources in the West Philippine Sea.

Instead, amid friendlier relations, China continued its military build-up in the South China Sea. They continue to destroy our marine resources, dictate the rules of the sea and bully our poor fishermen who are just making a livelihood in the Scarborough Shoal.

Dr. Go Ito of Meiji University asserted that the Philippines can better enforce the award by engaging like-minded partners like the United States and Japan to support the 2016 decision. He also noted that issues related to environmental protection in the South China Sea and maritime areas can also be raised to counter China.

What Filipinos want

In its effort to appease China and generate much-needed capital to finance its ambitious infrastructure program, the Duterte administration has adopted “silent diplomacy,” which prevents it from protesting the belligerent behavior of China in the South China Sea.

This is against the wishes of the majority of Filipinos, who clamor for a different approach. They want the Duterte administration to protect its territorial integrity and defend its claims in the West Philippine Sea. The results of a recent Pulse Asia survey showed that 73 percent of Filipinos want the current administration to assert our rights and protect our territorial sovereignty in the West Philippine Sea.

On the other hand, 36 percent of the Filipinos want our government to file a diplomatic protest against China amidst the reports of its continued militarization of the South China Sea. In addition, 22 percent believed that there is a need to strengthen military alliance with other countries such as the United States, Japan and Australia.

The national survey by the Social Weather Stations likewise confirms these findings with four out five Filipinos or 81 percent saying that it is not right to do nothing about China’s intrusion in claimed territories.

The Filipinos are now taking their stand to protect our territorial integrity. Moreover, they want our government to do what it should do—use diplomatic protests as an expression of our dissatisfaction on various cases.

While the president reiterates that we need China to boost trade, tourism and infrastructural development, a small percentage of Filipinos believe that friendlier relations will promote stability in the South China Sea.

The surveys affirm a strong patriotism among Filipinos, that they want to protest against all unlawful and coercive practices of other states.

The Philippines is for the Filipinos to enjoy, benefit and explore. We should never allow others states to enhance its political and economic power at our expense.

We must protest what is unlawful, coercive and contrary to the correct principles that govern relations between states. Our people deserves a government that is willing to fight for their citizens’ future and not a government that is helpless and weak.

We must defend what is ours now before it is too late.

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China's Grand Larceny

CHINA’S GRAND LARCENY Stratbase ADR Institute Forum | July 12, 2018 By: Albert del Rosario Chair of ADR Institute Former Secretary of Foreign Affairs and Philippine Ambassador to the United States

Image Source: Rappler

It is my honor to welcome you as we mark the second anniversary of the UNCLOS Arbitral Tribunal’s decision on the Philippines’ case against China in the West Philippine Sea.

The tribunal’s decision was of great importance to our country and to all peace-loving people who believe in a shared vision of regional prosperity, peace, and the rule of law.

As we celebrate the second anniversary of our victory, we should take this opportunity to re-examine what has transpired in our maritime commons and leading us to where we are today. We also would wish to characterize, not only China’s behaviour, but also our own country’s actions.

HIJACKING AN ENTIRE SEA

China’s plans to dominate the South China Sea began in 1947. Its objective was, and still is, to secure the South China Sea as a sovereign territory and harness its resources to feed its population, fuel its economy and become the new regional super power. With a pencil, China’s planners looked at a map and drew nine-dash lines to mark a vague perimeter around the South China Sea. Previously it was said to have begun with eleven dashes, then it became nine, then 10, then back to nine again.

Clearly, accuracy was not important to the goal of unlawfully dominating about 3.5 million square kilometers of one of the world’s most important sea lanes and South East Asia’s most critical marine resource where millions depend on for their food and livelihood.

With nine little lines, the South China Sea became China’s claim for “indisputable sovereignty”, underpinning one of China’s most potent modern fiction: that one nation could hijack and own an entire sea and all that lies beneath.

INVALIDATING CHINA’S NINE-DASH CLAIM

The Philippines challenged China’s baseless claim through diplomacy to no avail. As a last resort, we turned to the sensible path of arbitration. Before an international panel of neutral experts, we presented the facts and our prayer for the rule of law.

Our overwhelming victory in the Arbitral tribunal is a vindication against China’s unlawful expansion agenda, and its outcome is now an integral part of international law. The ruling upheld the need for a rules-based order over the waters in the South China Sea. It espoused that any claim not anchored on and supported by the UN Convention on the Law of the Sea should be denied.

However, our hope that the ruling’s clarity on maritime rights would usher in constructive areas of cooperation was instead arrogantly ignored by China which continues to strongly flex its muscles against its smaller neighboring states.

CONTINUING UNLAWFUL ACTIVITIES

We are all familiar with China’s continuing unlawful activities. These include preventing our fishermen from pursuing their livelihood in our exclusive economic zone, blocking the Philippine development of our natural resources, destroying elements of the marine environment, erecting military facilities, and directly confronting our President with the threat of war.

It is therefore of utmost importance that, today, the Philippines call attention once more to the favorable rulings decided on by the Arbitral Tribunal, whose chief gift to the whole of our region and to the community of law-abiding nations was the invalidation of the nine-dash line.

The landmark international decision should encourage Filipinos to stand with even greater confidence in a principled position on the West Philippine Sea.

To the deep dismay of our people, however, our government has persisted in allowing China to deprive our citizens of what is ours by continuing to shelve the tribunal outcome. We are still succumbing to threats of force including a threat of war. Surprising as it may sound, according to Professor Amitav Acharya of the American University, war is not even a good option for China. Its economy is heavily reliant on global trade, including its fuel supply, which needs open shipping lanes such as the Malacca Strait and the Indian Ocean which are dominated by US naval power.

It may not be necessary therefore to shrink to China’s threats of war.

REPUTATIONAL COSTS FOR CHINA AND THE PHILIPPINES

On the matter of a country’s character in international affairs, we may say that both the Philippines’ and China’s current positions are less than acceptable. For China, continuing on its current course presents high reputational risks to the history of its good people.

It may be helpful if we beg that specific queries be carefully considered which may lead us to calling a spade, a spade. We then have three questions.

First question: What should we call one that uses muscle to deprive others of their rights?

Answer: A BULLY

Second question: What should we call one that unlawfully takes a significant property of others?

Answer: A GRAND LARCENIST

Third question: What should we call one that refuses the rule of international law?

Answer: AN INTERNATIONAL OUTLAW

Let us turn now to our own country. The outcome of our arbitration was not only beneficial to the Philippines, nor only to the countries that rely on the Law of the Sea, but to all states determined to maintain peaceful relations by committing to international law.

The Philippines has had two years to take advantage of its position to develop and obtain the support of many countries whose principles are aligned with our own and with whom our own voice could be magnified. Sadly, however, this was not made to happen.

In this light, we must as well consider our own country’s character since we have once been a reliable advocate for international law. Should we ask how we now see ourselves and how others see us? For a balanced view, we need to do that. Again, we ask three questions.

First question: What may we call one that acquiesces to the abuses against it?

Answer: A WILLING VICTIM

Second question: What may we call one that defends an aggressor at every opportunity?

Answer: AN ABETTOR

Third question: What may we call ONE THAT GAMBLES THE RIGHTFUL PATRIMONY OF ITS FUTURE GENERATIONS for unlikely gains in the present?

Answer: Sorry, I cannot help you. That is for each of you to ponder.

MOVING FORWARD

Where do we go from here? What should we now do as a willing victim and an abettor that has fully embraced our big northern neighbor who is clearly acting as a bully, a grand larcenist, and an international outlaw?

We must believe that there is still time for our country to do what is right for our people. While we have allowed more than a few occasions to pass, there are opportunities yet for the Philippines to lead in promoting the rule of law. Whether through multilateralism at the UN, or with ASEAN, or through our bilateral engagements with other states, or an all-out effort in pursuing all of the aforementioned, the path to gaining the support of the community of responsible nations remains. For the sake of our children and our grandchildren, this is the path we must take.

To close, we reiterate our position that coercive diplomacy has no place in a rules-based international order. Our common goal is peace and prosperity without sacrificing our sovereignty and our sovereign rights. How we choose to assert our rights and dignity as a nation today will be the legacy the next generations of our country will have to live with. As Filipinos we must voice our sentiments to our government and exercise our right to raise our indignation against China. Finally, we need ALL of our friends in the community of nations who believe in the rule of law to help us. But before we can hope for help, we must first demonstrate that we are worth helping.

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Risks, opportunities in China’s BRI

June 27, 2018

Dindo Manhit, President of the Stratbase ADR Institute

China’s “Belt and Road” Initiative (BRI) is expected to be a game changer not only for the Philippines, but for the rest of the world in the next decade. China is expected to invest up to $5 trillion in transcontinental infrastructure projects covering as many as 64 nations across four continents — Asia, Australia, Africa and Europe. That area accounts for 62 percent of the world’s population and about a third of the global gross domestic product.

Since President Duterte assumed office, he has been criticized for his apparent pivot to China and policy of appeasement. Many fear that the Philippines may be sacrificing its territorial rights to China in exchange for economic trade-offs and infrastructure assistance. Indeed, after two years, it appears the country has been placed in a disadvantaged position because Mr. Duterte has not used the 2016 Hague arbitral ruling as leverage in its negotiations with China and other multilateral partners.

Instead, the Duterte administration has tapped China as a major partner for national development. In this regard, it sees China’s BRI as complementary to the massive “Build, build, build” infrastructure programs planned under “Dutertenomics.”

A recent study by Richard Heydarian called “The 21st Century Silk Road: Perils and Opportunities of China’s Belt and Road Initiative,” published by the Alberto del Rosario Institute, discusses how the BRI perpetuates Chinese soft power and allows it to pursue its geopolitical and strategic interests in the post-American international economic order.

The study acknowledges that BRI is an indispensable infrastructure boost to the Philippines and other countries in Asia, but noted that its target beneficiaries should welcome with “cautious embrace” all forms of assistance, such as loans and grants, offered by it.

Although some analysts say the BRI is a promising initiative because of its potential to jump-start global infrastructure development, the program has also been criticized for being too ambiguous and murky, prompting some nations to exercise more caution to prevent themselves from being trapped in “debt diplomacy.”

In his study, Heydarian stressed that small economies with slow sovereign credit ratings face greater risks under the BRI. Despite China’s lofty pronouncements and pledges, the risk of falling into a “debt trap” remains very high for these economies.

For the Philippines, it is essential to understand the underlying objectives of BRI to counter the prospective negative impact on the economy, as well as on sovereignty and cultural growth. The objectives of the BRI fall under two key themes: internal economic rebalancing, and expansion of strategic presence across resource-rich and geographically important nations.

The international credit rating agency Fitch recently warned that China’s new Silk Road project is “driven primarily by China’s efforts to extend its global influence.”

In previous Philippine administrations, some Chinese projects had become controversial because of corruption, lack of transparency and problems in accountability. Among these projects were the NBN-ZTE and Northrail deals.

For prospective projects, concerns have been raised over such issues as the over-reliance on Chinese technology, labor and long-term maintenance contracts, which could threaten both domestic employment as well as national security considerations. With the influx of heavy capital from China, some experts have also expressed doubts over the absorption capacity of government agencies, and the lack of construction workers and skilled labor.

The study cited that a number of Chinese contractors have been blacklisted by the World Bank for their anomalous track record. As a matter of responsibility, the Philippine government still needs to ensure that competitive bidding procedures are observed when it comes to these Chinese projects, and that standard practices in good governance and environmental sustainability are followed.

The BRI should be able to promote inclusive growth and provide jobs for Filipinos, rather than its projects in the Philippines relying on a fully integrated Chinese supply chain of capital, technology and labor.

If this scenario cannot be guaranteed, the Philippines’ engagement with China under the BRI will be meaningless and unsustainable.

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To respectfully differ with the Secretary of Defense

21 June 2018

Amb. Albert del Rosario, Chairman of the Stratbase ADRi, Former Secretary of Foreign Affairs and Philippine Ambassador to the United States

Image Source: philstar.com

We had read with a heavy heart the interview of Sec. Delfin Lorenzana in which he declared “President Duterte was handling the Philippine maritime row in the South China Sea very well” while, insisting in comparison, “Aquino mismanaged the Philippine sea dispute with China and that everything was chaotic”.

QUALITY OF MANAGEMENT COMPARISON

One government had defended what is ours by resorting to political and diplomatic means while utilizing both bilateral and multilateral approaches to seek a peaceful resolution. That government did everything possible, which as a last resort included bringing our dispute to the United Nations Convention on the Law of the Sea (UNCLOS) Arbitral Tribunal at The Hague, resulting in an overwhelming victory for the Filipino people.

Another government, after being awarded this invaluable victory at The Hague, immediately announced the shelving of this most important outcome, thus avoiding for itself the task of managing what had been handed down.

Based on the above, we are left with no basis for comparison.

EVERYTHING WAS CHAOTIC

Sec. Lorenzana moreover attributed “chaos on everything” related to the Aquino administration’s handling of the South China Sea dispute. We fully agree that defending what is ours against a powerful nation as China could be chaotic.

Chaos is often looked upon as being negative and destructive, but it can also be looked upon as positive and constructive.

It was chaotic when in the past we fought for our independence; it was also chaotic when we defended our democracy.

ILLUSTRATIONS OF CHAOS

Please allow me to provide a few examples of what may be chaotic:

1. MEETING WITH LEADERSHIP OF CHINA

When I first met with now President Xi Jinping, he immediately brought up what contributions China was making to our economy and how much more we could benefit by fully cooperating in areas where there existed differing points of view. When I suggested that we move together in advancing our traditional bilateral agenda while abstracting contentious issues to be dealt with separately, he then strongly asserted that China had indisputable sovereignty over the South China Sea as represented by their nine-dash line. According to him, there were no disputes in the South China Sea.

I respectfully stated that the nine-dash line was an excessive claim which we believed was in violation of International law. The dialogue shifted to other topics but inevitably it came back to a staunch re-statement of China’s position many times over and over, eliciting essentially the same response from us.

In dealing with this powerful nation, we were being asked to acquiesce, but we did not.

If this is being deemed as chaos, so be it.

2. MEETINGS WITH CHINA’S FOREIGN MINISTER AND ITS FOREIGN MINISTRY

Our many meetings with both China’s Foreign Minister and the Chinese Foreign Ministry were at all times more of the same. We were being influenced to be fully acquiescent to China’s position but we were firm in asserting that what is ours is ours. The DFA had countless meetings with China, a great number of which included formal protests against China’s unlawful acts. I am told that we can substantiate nearly 50 such formal written protests against China.

China continued manifesting its increasing anger against the Philippines which led us to more strongly defend our position.

If this is being deemed as chaos, so be it.

3. MEETING WITH THE U.S.

At some point in time, I was asked in Washington, DC by our treaty ally what the situation was with China. I explained to both the Secretary of State and the Secretary of Defense that I felt like a scrawny kid in a school yard controlled by a bully. The bully never fails to bring me to the back of the school yard to beat me up while warning me that I needed the bully’s permission each time I enter the yard and that I should not ever mention my being beaten. After being the object of physical abuse so many times, I thought this bully must have a vulnerability. And since the bully asked me constantly not to mention being beaten up by him, I then discovered his vulnerability. He did not want to be internationalized. From then on, we decided to tell the whole world about the bully and his power agenda and the importance of restoring a rules-based order.

If this is being deemed as chaos, so be it.

4. SCARBOROUGH AGREEMENT

During the impasse at Scarborough Shoal with China, we were approached by the U.S., an honest broker, for both China and the Philippines to agree to a simultaneous withdrawal of ships from the shoal. We therefore agreed. At the appointed time, we withdrew, whereas China did not – in violation of our agreement.

Adding to our challenges therefore was having to deal with a powerful China whose declarations were often inconsistent with the facts on the ground. Other nations, we began to discover, had the same difficulty in dealing with our northern neighbor.

If this is being deemed as chaos, so be it.

5. AT ASEAN

Amid China’s unlawful activities to promote their expansion agenda including their artificial island building activities, we led the campaign for upholding the ASEAN-China Declaration on the Conduct of Parties in the South China Sea and adherence to the rule of law. Our efforts were opposed by China and its proxies in ASEAN. We did our best to appeal to the objectivity of the members, which achieved significant success when we made a passionate appeal for support by quoting Martin Niemoller, “First they came for the Socialists, and I did not speak out – Because I was not a Socialist. Then they came for the Trade Unionists, and I did not speak out – Because I was not a Trade Unionist. Then they came for the Jews, and I did not speak out – Because I was not a Jew. Then they came for me – and there was no one left to speak for me”.

If this is being deemed as chaos, so be it.

6. AT LEADERS SUMMIT

At every opportunity, no matter what the odds, we spoke to defend what is ours. Prior to a leaders meet, I received word from Sec. Hillary Clinton that China was attempting to silence the Philippines and for me to secure my back. The organizers of the meeting had made sure that I would not be given an appropriate opportunity to speak. Realizing this, I asked Sec. Clinton if she would speak about the South China Sea and I would merge myself at the end of her talk. I was able to successfully intervene and began speaking about the South China Sea when the microphone suddenly went dead.

After persisting to go on by standing and raising the volume of my message to promote the position of the people of the Philippines, they decided to restore the power.

If this is being deemed as chaos, so be it.

7. MORE ON ASEAN

On another ASEAN Leaders meet, we were able to speak fully and we were able to convince a number of ASEAN members to do so as well. When it was time, however, to release a final statement of matters discussed, the ASEAN chair decided at the behest of China to omit not only the discussion but the entire topic involving the South China Sea. The Philippines insisted that the matter be included to reflect the facts. The chair threatened that there would be no final statement if the Philippines did not support its proposal to exclude the South China Sea discussion. We decided not to move from our position, not only in protection of the Philippines’ interests, but also that of other ASEAN members who were strongly in favor of doing what is right. At the end of the day, it was the first time in ASEAN’s history that no final statement was issued.

If this is being deemed as chaos, so be it.

8. GLOBAL CAMPAIGN INCLUDING UN INITIATIVES

Before I resigned, former President Aquino and I had a total of nearly 200 bilaterals in which we had promoted the Philippines position on the South China Sea.

Having been given the opportunities, I was encouraged by former President Aquino to speak each year before the UN General Assembly for the purpose of promoting our rightful position in the South China Sea.

We had garnered the support of many countries, which we presumed would have continued their support when we had won our case.

If this is being deemed as chaos, so be it.

9. FILING OF PHILIPPINE CASE AT THE UNCLOS ARBITRAL TRIBUNAL

After pursuing all that is possible in arriving at a peaceful resolution on the South China Sea dispute, we filed as a last resort a submission to the UNCLOS Arbitral Tribunal at The Hague, the results of which are now history. Contrary to China’s opinion, the UN had declared that the filing of an arbitration case is not an unfriendly act.

If this is being deemed as chaos, so be it.

10.JOINT PATROLS WITH THE U.S.

In late 2015, we had travelled to Washington, DC a couple of times to seek further assistance in terms of responding to China’s unlawful activities in the South China Sea. To my recollection, we had successfully convinced the State Department to undertake joint patrols which were subsequently objected to as instructed by President Duterte’s government.

If this is being deemed as chaos, so be it.

TRADE WITH CHINA

Sec. Lorenzana had said that, before the Duterte administration, the Philippines had no trade with China. This statement, as the records would show, was gravely inaccurate.

What I recall is that, prior to my stepping down, China was either our second or third largest trading partner based on our records. If you believe our northern neighbor’s claim, our number one trading partner would have been China. I am told that the differences can be explained by the extent of smuggling activities.

While it is true that certain banana exports were held up by China to punish the Philippines for filing our legal case, former President Aquino had mandated the cabinet to replace what was being lost by tapping non-traditional markets. As a result, under the able leadership of Sec. Greg Domingo, the reduction on banana exports were minimized.

TOURISM FROM CHINA

Sec. Lorenzana also mentioned that Chinese tourists were not coming in. We understood, again to punish the Philippines, that China had been unofficially limiting its group tourism to the Philippines. Under the proactive leadership of Sec. Mon Jimenez, the negative effects of China’s limiting group tourism were likewise minimized.

FISHING AT SCARBOROUGH SHOAL

According to Sec. Lorenzana, Filipinos also could not fish at Scarborough Shoal.

The driving out of our fishermen from Scarborough Shoal was indeed the immediate cause of our filing of our case with the UNCLOS Arbitral Tribunal at The Hague, which led to a restoration of the rights of our fishermen there.

OUR VIEW OF SECRETARY LORENZANA

We believe that Sec. Lorenzana is a very good man with the highest credibility in the cabinet. As I said earlier, we feel deeply sad because it appears that he is being used as a propagandist precisely since he has the reputation of being straight as an arrow.

Sec. Lorenzana and I are very close friends, having worked together for many years in Washington, DC. I have the warmest esteem for him and trust that he will consider what I have written as factual and helpful. I also wish to add that he is considered by all people to be a patriot and to be objective at all times, and we hope that this sentiment will continue to be merited by him.

Most recently, we are gratified to hear Sec. Lorenzana at his BBC interview reasserting Philippine sovereign rights in the West Philippine Seas and the need to defend those rights with an abiding faith in the rule of law- truly the great equalizer among nations and the antithesis of chaos.

We wish him all the best always.

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Strategic initiatives from the private sector

June 13, 2018

Atty. Katrina Clemente-Lua, Executive Director of the Stratbase ADR Institute

The recent Shangri-La Dialogue which is an annual intergovernmental defense forum hosted by the International Institute for Strategic Studies was attended by 50 country delegates and ministers on the premise of building foundations for deeper security collaboration among the region’s policy makers.

Indeed, collaboration is key especially in the context of a regional community, development and security. As cliché as it may sound, there is always strength in numbers.

As such, Stratbase ADR Institute (ADRi) has consistently undertaken collaborative efforts with numerous government agencies, private sector entitles, civil society organizations, and universities not only in the country but abroad as well.

The institute has a number of ongoing partnerships that seek to strengthen the advocacy efforts of the Institute and the strategically important bilateral ties of the Philippines with other states.

A year after ADRi was founded, the initiative widely known as the US-Philippines Strategic Initiative (USPSI) was established together with top Washington think tank, Center for Strategic and International Studies and the Philippine Trade Foundation. The initiative is focused on the importance of the two countries’ alliance which underlines and explores the critical linkage of economic ties as the foundation for enduring security linkages through its joint research and programs.

Since 2015, USPSI had played a leading role in advancing high-level policy dialogue on strategic geopolitical trends of US-Philippine alliance in the context of the Indo Pacific Region. The policy agenda of the initiative covered key strategic issues such as political, security, economics, and people to people ties including education and civic society within the framework of the United States, Philippine and Southeast Asian strategic development.

With the election of Presidents Duterte and Trump in 2016, the policy directions of the two countries had to be thoroughly examined in view of the political transitions that happened that year. This became valuable intelligence that guided industry leaders in terms of understanding and adapting to the new dynamics and disruptive leadership style of the new regimes.

Through this initiative, USPSI members participated in a number of activities including a three-day visit to the US Pacific Command (PACOM) Headquarters in Hawaii where there were various high-profile discussions with the PACOM leadership and geopolitical think tank experts.

Following the July 12 ruling of the Permanent Court of Arbitration, a series of conferences were jointly organized by the Stratbase ADR Institute and the CSIS, in the Philippines and US to examine the longstanding and emerging issues in the South China Sea.

While hosting an event commemorating the 40th anniversary of the US-ASEAN relations, focus was given on re-examining the US-ASEAN relationship and stronger US-Philippine ties. ADRi through USPSI, has likewise supported CSIS’ Asia Maritime Transparency Initiative which has been a credible source of data and analyses relevant to maritime security issues in Asia.

These are just snippets of private sector led efforts that has served to boost the Philippines’ relation with its allies.

While the activities of the initiative have had impact in the policy milieu and consequently contributed to the discussion of bilateral and regional relations, so much more can be done to advance national issues of strategic and political importance. An enhanced level of collaboration with other countries, without a doubt, will boost our individual and regional interests, which in turn could eventually lead to regional and international harmony.

Moving forward, Stratbase ADRi together with the Philippine Trade Foundation continues to provide extensive coverage on the raging issues on regional security, trade and investment.

This week, USPSI will meet in Washington DC for several high-level policy discussions with think tanks and associations such as The Heritage Foundation, and the Asia Society Policy Institute, among others.

The insights from this rare gathering of thinkers should be very interesting.

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Continuing challenges in education

June 7, 2018

Dindo Manhit, President of the Stratbase ADR Institute

Direction is a defining element of change. The express directive of “making education accessible, relevant and liberating” by Education Secretary Liling Briones speaks of a shift in our educational thrust. In this sense, education’s role of serving as the great equalizer becomes more a reality than myth.

To begin with, the current budget for education stands at P553 billion — a 60-percent increase over the past three years. In 2015, the budget stood at P346.66 billion. This alone manifests a commitment to invest in Filipino human capital — one of the priorities of the Duterte administration.

The “trifocalization” approach to Philippine education also makes it one of the most vibrant systems in the world. Like a tripod that ensures a steady foundation of operations, three agencies handle different levels of education — the Department of Education (DepEd )for basic education, the Commission on Higher Education for tertiary and graduate education, and the Technical Education and Skills Development Authority for technical-vocational courses and middle education.

The basic and tertiary education systems underwent a transformation under the K-to-12 program. From a basic 10-year education period, two senior high school levels were added. Grade 11 was introduced in SY 2016-2017, and Grade 12 was introduced in SY 2017-2018.

Through senior high school, learners become more immersed in industry needs at the national, regional and international levels. However, meeting national needs is the utmost priority. In this respect, the DepEd is overhauling the curriculum to establish a “spiral” approach designed to challenge and stimulate learners and develop their critical thinking. In the process, myriad issues and learning aspects are integrated, among them science and technology, entrepreneurship, sex education, and environment and disaster preparedness.

Further, two key presidential directives have been added to basic education: drug education and the expansion of the Alternative Learning System (ALS). The ALS, together with the IPED program (which caters to the rights of indigenous peoples to education), is part of a grander scheme to make education more inclusive.

As such, the DepEd is confronted with both old and new challenges to improve and deliver basic education for all. While the problems about the lack of teachers, classrooms, facilities and equipment still exist, the challenge of curriculum revision is also vital.

The Duterte administration’s commitment to provide education for all offers several nodes of intervention that can be done to address the challenges. Aside from the firm resolve to fund and invest in education, the teacher education program should be made as the basic reference point. The teacher is the key to unlocking and motivating the students’ learning process. By addressing teachers’ education, the problem of curriculum revision is also resolved.

The 1966 Magna Carta for Teachers also needs urgent review and updating. Promoting basic education requires a plurality of actors that can provide outcomes-based learning. The goal of making education more inclusive through ALS and IPED likewise needs the collaboration of educators coming from all backgrounds.

Finally, multilevel partnerships between the public and private sectors and between industry and community partners are important ways to address basic education gaps. The process of accrediting education providers based on desired learning outcomes needs to be fine-tuned and aligned with the pressing concerns of basic education.

Despite these challenges, the DepEd appears to be headed in the right direction. With more basic education and job training, we can address not only our national industry needs, but also opportunities offered by regional and international communities.

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Time to make a stand

May 29, 2018

Dindo Manhit, President of the Stratbase ADR Institute

The Duterte administration’s policy of appeasement did not deter China’s military buildup in the South China Sea, including parts of the West Philippine Sea. The administration’s failure to take up the Philippines’ victory in the arbitral court against China’s nine-dash-line claims has allowed China to continue its belligerence and militarization.

In a report, the Asia Maritime Transparency Initiative (Amti) said China has begun or completed over 70 acres of new construction and facility improvement in its bases in the South China Sea since the start of 2017.

Last week, China’s People’s Daily announced the conduct of takeoff and landing exercises of its bombers on Woody Island in the Paracels.

The Amti said nearly the entire Philippines falls within the radius of the bombers, including Manila and all five Philippine military bases earmarked for development under the US-PH Enhanced Defense Cooperation Agreement.

Vietnam demanded that China cease militarization activities and strictly respect its sovereignty over the Hoang Sa Islands or Paracels.

Mahathir Mohamad, the new Malaysian prime minister, raised concerns over China’s military activities, and sought to “ensure our voice is heard because Malaysia does have islands in the area, and this must be upheld.” In an interview with the Financial Times, he described China’s new leadership as “more ambitious” in its willingness to “flex their muscles a bit, and that is very worrisome.”

The Philippines, on the other hand, expressed concern about the missiles installed in South China Sea islands, but said it did not see any immediate threat to its maritime security from China’s deployment of long-range bombers.

It is unthinkable that our government seems to have given up the fight so easily and agrees with all the concessions promised by the expansionist power. The administration’s response to Chinese militarization gives the impression that we are at a losing end.

A mere strict enforcement of the arbitral ruling from The Hague is a more than sufficient weapon for our government to take a firm stand against China’s actions in the South China Sea. Our government’s appreciation of the Philippines’ victory against China’s unfounded nine-dash claim can be a good starting point.

We cannot afford to be silent on “clear and present threats” to the islands that are clearly within our exclusive economic zone, as affirmed by the arbitral court. We have the responsibility to defend what is legally ours. All the resources in the West Philippine Sea belong exclusively to the Philippines. There is no legal dispute as to the ownership of the oil, fish and gas resources.

We cannot be so engrossed with the short-term gains that we surrender our national interest and sovereignty along the way.

There are alternative options to explore. We need to exhaust all available multilateral mechanisms, like the Asean and traditional allies. We should negotiate from a position of strength, not weakness.

We should actively engage the world powers—like the United States, Japan, India and Australia—to oppose the island-building in and militarization of the South China Sea, and pursue continued peace and prosperity. Such cooperation could be extended to like-minded democracies that uphold the same idea of a rules-based order and interest in maintaining the status quo.

Former Philippine ambassador Albert del Rosario is right in saying that we lost opportunities to advance our position when the government decided to shelve the arbitral ruling. Instead of maximizing our gains, he said, “we also found ourselves being thrown into reverse gear, thus allowing ourselves to be fully disadvantaged.”

But it is not too late. When he urged Filipinos to speak with one voice in promoting our national security, he meant everyone regardless of economic class or political affiliation.

Our traditional partners and friends in the international community are waiting to hear the Filipinos’ united voice. We need to take a stand to call on the President to revisit our foreign policy to enable us to defend our sovereignty in the face of China’s militarization.

With a united stand as a nation, we can rally the international community to take more responsibility in preserving peace and the freedoms of navigation and flight. The Philippines should not shelve its claim of sovereignty and must continue to promote a rules-based regime. It might want to take advantage of the Shangri-La Dialogue to be held on June 1-3 in Singapore. With leaders of over 50 countries expected to attend, the Philippines can take the opportunity to rally other countries against China’s actions in the South China Sea.

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On South China Sea: Let us help our President

May 23, 2018

Amb. Albert del Rosario, Chairman of the Stratbase ADR Institute and Former Secretary of Foreign Affairs

“CHINA LANDS BOMBERS ON SCS ISLES” were the headlines that greeted us yesterday.  

These landings took place in a reclaimed feature in the Paracel Islands which is within our neighborhood, bringing full militarization closer and working itself with certainty into our own backyard.

Following our earlier suggestions on what we may consider doing to advance our lawful position in the West Philippine Sea, we were again asked what else could be done.

As a reminder, the Philippine Constitution mandates our president to defend what is lawfully ours.  Our government should also be mindful that as early as 2016, a Pulse Asia survey indicated that more than eight in ten Filipinos took the position that we should assert our rights as awarded by the arbitral tribunal.

NEED TO REVISIT OUR FOREIGN POLICY

Since an early decision was made by the incumbent government to shelve the arbitral outcome, not only did we lose opportunities to advance our position, but we also found ourselves being thrown into reverse gear, thus allowing ourselves to be fully disadvantaged.  

That said, is it timely for us to take stock of our situation? Should we be more helpful to our government as a proud people of a sovereign democratic nation?  Would it make a difference if we all speak loudly, clearly, and with one voice in promoting our national security? For obvious reasons, we must do so.

Our government needs to listen to its people.

Our northern neighbor needs to listen to the Filipino people.

And finally, all our traditional partners and friends – who are waiting for a united voice - need to hear from us.  

As we speak, to begin with, nearly all Filipinos will agree that our foreign policy should be revisited.  Let us say so.

Is it high time for our government to assert our rightful position by utilizing the experience and diplomatic expertise of our DFA? If we believe this, let us say so.

Is it, moreover, high time for our government to assert our rightful position by relying on the skill, courage and patriotism of our AFP who are capable of developing a credible minimum defense posture against any bully or aggressor, whoever that might be?  If we believe this, let us say so.

As we had previously said, we are opposed to war - as we should be.  But if threatened by the use of force, we should be ready to inflict, at the very least, a bloody nose on any attacker who is out to harm us.  For example, it is my understanding that this capacity, which may be delivered by Bramos Missiles, may be acquired by our AFP from India and would be a good starting point.

Should we then undertake to stand more firmly in defending what is ours thereby, upholding the future security of all our people? If we believe this, let us say so.

With the president’s thoughtful leadership and with the coordinated execution by our DFA and our AFP under Secretary Cayetano and Secretary Lorenzana, respectively, we can still do so.

FILIPINOS MUST TAKE A UNITED & VOCAL STAND

What else can we do?  Solita Monsod suggests that all of us take a few minutes to write our president.  I humbly suggest that we all ask him to be more proactive and assertive in defending what is ours.

Acting Chief Justice Antonio Carpio, a learned and patriotic advocate, believes that a diplomatic protest should be urgently filed and that we should take our assertive and lawful stand to the doorsteps of our northern neighbor’s embassy.  I fully agree with the aforementioned suggestions and trust that many others will share the same sentiment.

The president believes, however, that those of us who endeavor to speak in the spirit of being helpful are not prepared to sacrifice ourselves.

It truly behooves us then to ask our leadership to have more confidence in our people.  

To support our president, to secure our nation and to ensure the future of all Filipinos, it must be believed that indeed there are those of us who are prepared to make the supreme sacrifice for our country, especially when called upon.

Finally, all of us want to be helpful; all of us must be helpful.  

Let us therefore, respectfully convey to our president that we eagerly await his inspirational leadership by doing what is right.

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Listen to the ‘QUAD’

May 16, 2018

Dindo Manhit, President of the Stratbase ADR Institute

Image Source

Four major powers — the United States, Japan, India and Australia — are sending a message to the Philippines regarding a pushback against China’s increasingly pervasive influence and assertiveness in the region. They are saying that the Philippines has other foreign policy choices other than appeasing an expansion power or getting on its bandwagon.

This is according to a recent study titled “Revival of the QUAD and the Emergence of the Indo-Pacific Region as the 21st Century Geopolitical Region” by Dr. Renato C. De Castro, a trustee of the think tank Stratbase Albert del Rosario Institute (ADRi) for Strategic and International Studies and a full professor of international studies at De La Salle University-Manila.

De Castro explained that the recent use of the term “Indo-Pacific region” in policy circles is related to the formation of the Quadrilateral Security Dialogue (or QUAD) in 2007, which brought the four powers together in a loose security association.

Among the developments that led to the revival of the QUAD in 2017 are China’s maritime expansion, the US strategic rebalancing to Asia, and the “One Belt, One Road” initiative. It is worth noting that all the countries represented in the QUAD share interests in maritime security that extend from East Asia to the Indian Ocean.

For the Philippines, the study offers valuable insights on the effects of the “policy of appeasement” on its long-term strategic and economic interests as an archipelagic state, as well as the overall security of the Indo-Pacific region.

Recently, the Philippines and Vietnam reacted differently to China’s reported installation of missiles in the South China Sea.

Malacañang expressed concern about the reported missile deployment in the contested areas in the South China Sea, but remained confident that the Philippines’ renewed relationship with China ensures that those missiles will “not be directed at us.”

Vietnam had a stronger but still diplomatic response. In a report published by VN Express, Vietnam asked that China, “as a major regional and global power, show responsibility in the maintenance of peace and stability in the East Sea, stop militarization, and withdraw military equipment illegally deployed on structures under Vietnam’s sovereignty.”

The QUAD study warned that by appeasing an expansionist power like China, the Duterte administration is becoming complicit in China’s long-term strategy to push the United States out of East Asia as China builds a maritime great wall in the South and East China seas.

According to the study, the revival of the QUAD and the formation of the Indo-Pacific as a geopolitical region has three major implications on Philippine foreign policy.

The first is the possible erosion of Asean’s centrality in regional security architecture. The revival of the QUAD and the expansion of the geopolitical competition between its members and China will exert tremendous pressure on Asean members and divide them between those who will support China and those who will side with the QUAD.

The second is that these can also diminish the Philippines’ tendency to tilt closer to China. Three members of the QUAD—Japan, the United States, and Australia—have close economic and security relations with the Philippines. They are “silently but warily” observing the Duterte administration’s efforts to appease China. They can apply diplomatic, strategic, and economic influence on the Philippines to ensure a regional balance of power and interests.

Finally, these can be viable tools for a renewed equi-balancing gambit. The QUAD can provide the Philippines with viable means to adopt a policy based on equi-balancing China with the other major powers in the region. A minor power fosters its diplomatic linkages and economic activities with two or more competing major powers to a level where it is able to influence the major powers’ policies yet insulate itself from undue external influence.

In a world where “might is right,” the revitalization of the QUAD shows the Philippines that there is strength in numbers in order to survive in a rapidly changing and challenging Indo-Pacific region.

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Inflation: reality vs expectations

May 8, 2018

Dindo Manhit, President of the Stratbase ADR Institute

It is ironic that although the Philippine economy posted a full-year growth of 6.7 percent in 2017, many Filipinos are not too enthusiastic about it. According to the recent Pulse Asia survey, 98 percent of Filipinos affirm that the prices of basic commodities have risen since January. People are now more concerned about how they will cope with the surge in commodity prices.

In the first quarter of 2018, the inflation rate continuously increased from 3.4 percent in January to 3.8 percent in February and 4.3 percent in March. The last is so far the highest monthly figure since 2013.

The latest Bangko Sentral Consumer Expectations Survey also shows that consumer confidence, while still positive, has weakened. The overall confidence index declined to 1.7 percent in the first quarter of 2018 from 9.5 percent in the fourth quarter of 2017.

The “less optimistic” sentiments of the respondents stemmed mainly from higher prices of goods, low income, and rise in household expenses.

The same survey also shows that more respondents expect their expenditures on basic goods and services to increase in the second quarter compared to the first. Increased spending is expected on electricity, food, nonalcoholic and alcoholic beverages, fuel, water, and transportation, indicating that inflationary pressures could come from these goods and services.

The increase in commodity prices was more or less expected by most Filipinos as early as last year due to the passage of the Tax Reform for Acceleration and Inclusion (TRAIN) Law. But the current situation seems to be worse than expected.

Socioeconomic Planning Secretary Ernesto Pernia explained that based on the National Economic and Development Authority’s calculations, just 0.7 percent of inflation for 2018 at most is attributable to the effects of the TRAIN Law. The increase in the prices of crude oil in the international market and the drop in the exchange rate could also cause inflation to accelerate further.

But while the government’s economic managers try to downplay the steadily rising inflation rate, the public needs to see more serious efforts to lessen the adverse effects on low- to middle-income Filipinos.

When the TRAIN Law was being deliberated on in the Senate and House of Representatives, the government claimed that it would benefit 99 percent of Filipino households because of the proposed income tax cuts for salaried workers plus the unconditional cash transfers for the poorest families.

Three months after the implementation of the tax reform measure, Pulse Asia’s March survey reported that 86 percent of Filipinos are strongly affected by the rising prices of basic commodities. This is the prevailing sentiment in each geographic area and socioeconomic grouping (83-92 percent and 80-88 percent, respectively).

It is interesting to note that those Filipinos not at all affected by the increase in prices of basic commodities comprise only 1 percent.

To make matters worse, the “joblessness rate,” according to the recent Social Weather Stations Survey, increased to 23.9 percent in the first quarter of 2018 from 15.7 percent in December of 2017. According to SWS, its findings indicate that the estimated number of jobless adults in the country rose from 7.2 million in December 2017 to 10.9 million in March 2018.

The ultimate goal of the TRAIN Law is to seek additional funding for the government to bankroll its infrastructure and propoor programs, which, in the long run, will generate sustainable jobs and livelihoods for Filipinos.

Unfortunately, it may take at least five more years before these infrastructure projects are completed, and Filipinos, particularly those below the poverty line, can’t wait any longer for these projects to materialize.

The bigger challenge now is to implement mechanisms to mitigate the inflationary effects of the TRAIN Law, higher global oil prices, as well as the continuous drop in the exchange rate. Moving forward, the government should balance its need for increased revenue with ensuring that its reforms will not inadvertently burden Filipino consumers.

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Labor and economic woes

May 2, 2018

Dindo Manhit, President of the Stratbase ADR Institute

Image Source: Microsoft Insider

The annual celebration of workers could not have come at a better time. As the Duterte administration concludes its second year in office, the lingering issues of labor and inflation should serve as a constant reminder for the President to keep his promise of inclusive growth.

International Workers Day, adopted on the first of May in 1886, symbolizes the historic struggle of workers to establish humane working conditions. To date, what the event celebrates has not only continued but has also transcended things like the daily eight-hour working shift toward the expansion of workers’ economic and political rights.

Almost two years after the administration assumed power, economic issues are still foremost among Filipinos’ concerns. The results of Pulse Asia’s March 2018 Ulat ng Bayan survey showed that the most urgent concerns of Filipinos are the following: the need to increase the wages of workers (50 percent), controlling the rising prices of goods (45 percent), reducing poverty (35 percent), and creating jobs (32 percent). These seem to imply that, almost two years into its term, the administration has done little or nothing to assure its constituents that it is doing enough to address the problems related to wages, inflation and jobs.

Aside from the rising costs of everyday living, the slow growth of wages has been a key obstacle to workers’ enjoyment of increased prosperity. According to the Philippine Statistics Authority, the average daily wage of workers at the national level has increased by only 2.84 percent from July 2016 to July 2017, representing the gross amount of P412.92. Among the regions, Bicol and Eastern Visayas recorded the highest increase at 24.28 percent (P400.84) and 17.10 percent (P376.79), respectively, while wages in Central Luzon, Davao, and Caraga even decreased by -3.94 percent (P396.00), -2.05 percent (P359.30), and -1.67 percent (P349.18), respectively. Meanwhile, the top three highest average daily wages by major industry groups were registered by education (P749.16), electricity, gas, steam and air-conditioning supply (P659.23), and human health and social work activities (P639.04).

Further, whatever increase in wages that the workers may have seen during the last year is instantly curtailed by inflation, significantly eroding their purchasing power. Inflation, which reached a three-year high of 3.8 percent during the first quarter of 2018, has exceeded the expectations of most analysts. Accordingly, the faster increase in prices is attributed to the direct and indirect effects of the first tax package (TRAIN), the increase in global oil prices, the weaker peso, and the tightening of US monetary policy.

All the talk about inflation begs a quick reference to the issue of the TRAIN Law. In the earlier stages of its implementation, many analysts were careful not to jump the gun and decided to give the law a chance to demonstrate its worthiness as a sound tax measure. At present, however, the faster increase in the prices of commodities has affected the people targeted as the beneficiaries of the tax reform. While the government has allocated funds for a continued cash transfer program, such subsidies may not be enough to cover these beneficiaries’ most basic needs.

President Duterte continues to remain popular, indicating that many Filipinos still believe that he can carry out his promises. But if economic reforms are not felt by ordinary people and if they continue to become victims of persistent social problems, the President may see a substantial drop in his performance ratings. In turn, other promises like “making government more functional” that rely on the radical economic change of safeguarding and protecting workers could simply go up in smoke.

Of course, it is never too late to stimulate relevant changes. Mitigating measures should be immediately and effectively instituted to cushion the TRAIN Law’s adverse effects and to make it more acceptable to the working population. As for inflation, the appropriate policy response in the form of monitoring and countermeasures could be adopted.

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Maritime security in Asean Summit agenda

April 24, 2018

Dindo Manhit, President of the Stratbase ADR Institute

Image Source: Singapore Management University

The Association of Southeast Nations, as a powerful regional bloc, was in the best position to rally behind the 2016 landmark arbitration ruling that China’s claim based on the “nine-dash line” has neither legal nor historic foundation. But experts believe that the 10-member bloc failed to use its international clout to “tame an aggressive Beijing” in 2017.

This year, the ball is in the hands of Singapore, the new Asean chair, to change the tide or keep the status quo. The arbitral ruling forces states in the region to take sides—to be on the side of international law (or the status quo) or against it (revisionism leading to China’s domination of the South China Sea).

Amid the daunting challenges in the region, the heads of Asean member-states will meet on April 25-28. Singapore, experts believe, is in a better position to steer the direction of sensitive discussions on maritime cooperation and security since it is not directly involved in any territorial or maritime dispute. For the past years, it has also maintained amicable relations with all major powers, including China and the United States.

Prime Minister Lee Hsien Loong has said that under Singapore’s chairmanship, the Asean will seek to promote a rules-based order in the region and devise ways to effectively address security challenges. Singapore is determined to work with the member-states to find innovative ways to cope with emerging security challenges such as cybersecurity, transnational crime, and terrorism.

During the Asean Foreign Ministers’ Retreat last February, we had a preview of their “soft stand” on the issue. It seems that the Asean’s “overabundance of caution” still lingers. Per the Chairman’s Statement, the Asean “took note of the concerns expressed by some Ministers on the land reclamations and activities in the area, which have eroded trust and confidence, increased tensions and may undermine peace, security and stability in the region.”

There were no strong words on China’s assertive actions in the South China Sea, but the Chairman’s Statement cited the need for self-restraint in the conduct of activities, avoidance of actions that may further complicate the situation, and the pursuit of a peaceful resolution of disputes in accordance with international law, including the 1982 Unclos.

At the annual Asean Summit, the heads of states will have a strategic opportunity to put the South China Sea issue as part of their maritime security agenda. The multilateral meetings will play an important role in reinforcing international law and building practical cooperation among member-states.

The continuing militarization of the South China Sea as a result of China’s expansionism poses a serious threat to freedom of navigation and the rules-based order. Recent developments, including the sighting of Chinese military transport planes on Panganiban Reef, which is within the Philippines’ exclusive economic zone, should not be taken lightly.

We hope that the Asean can live up to its own organizing principle as an independent force for regional stability and its long-held goal of serving as a rock of peace and pride for the region.

As the new chair, Singapore can assert its leadership and propose open discussions on the arbitral ruling for a lawful approach to the South China Sea disputes.

The Asean can encourage the “voices of our Southeast Asian claimants” to be heard. As a group, it can stand firm against China’s belligerence in the South China Sea. The disputes must and will be settled through the agreement of all those involved directly or indirectly. The voice of Asean members, especially the claimants, should be highlighted in this year’s discussions.

Asean leaders should prioritize the formulation of an effective and legally binding Code of Conduct with China. In order to be effective, the Code should have binding and enforcement settlement mechanisms.

The 2016 arbitral ruling should be made an integral part of the Code of Conduct framework that is being finalized and, eventually, the Code itself. After all, our region cannot promote the rule of law while ignoring the law as it stands.

The key challenge for the Asean is how it can maintain its unity and at the same time assert its centrality amid the growing economic influence of superpowers and evolving geopolitical dynamics in the region.

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Maximizing infra boom for the poor

April 16, 2018

Dindo Manhit, President of the Stratbase ADR Institute

At the recent Boao Forum in Hainan, China, President Duterte trumpeted his administration’s “Build, build, build” program as the “solid backbone” of Philippine growth. Since he assumed office in 2016, we have witnessed an unprecedented allocation of resources to solve infrastructure gaps, which, to date, remains the “weakest link” in our economy.

The Stratbase Albert del Rosario Institute (ADRi) for Strategic and International Studies recently organized a roundtable forum on the government’s infrastructure program and its impact on the majority of the poor. Representatives of the academe, civil society and the government shared their insights, recommendations, and apprehensions on the execution of the ambitious infrastructure plan.

Hopes are generally high, but questions remain on the government’s capability to implement “big-ticket” programs according to world-class standards and on time.

During the forum, Dr. Alvin Ang, director of Ateneo Center for Economic Research and Development, presented the findings of his special study titled “Financing Inclusive Infrastructure.” He cited the need to make infrastructure development “inclusive” to enable a larger segment of the Filipino population to benefit from the growth.

The “infrastructure gaps” prevent the poor sectors of society from feeling the benefits of economic growth. Instead of gaining from the influx of investments and dynamic trade relations, the poor remain at the outskirts. They can only pin their hopes on the success of the grand infrastructure program of the Duterte administration.

For instance, the study showed that the bulk of the 70 flagship projects under the “Build, build, build” program is still concentrated in Luzon and the National Capital Region. Forty-six projects, or 66 percent of the total, are in Luzon and the balance are in the Visayas and Mindanao.

According to Ang, significant investment needs in other regions have to be met “for the growth to be inclusive.” He also noted that growth outcomes should be supported by “an infrastructure program to sustain them and help other regions catch up with NCR and Calabarzon to decongest and distribute growth across the country.”

The Japan International Cooperation Agency has warned that if no drastic actions are done to fix our infrastructure program, we will be losing P5.4 billion every day by 2035.

The increased infrastructure spending of up to 7.4 percent of the gross domestic product (GDP) by 2022 will boost the expectations of Filipinos that these investments will redound to more jobs and livelihood and less traffic congestion in urban cities.

Ang, however, urged the Duterte administration to “expand and facilitate current infrastructure for further growth in Luzon and work on specific infrastructure in the Visayas and Mindanao.”

“The challenge is not in the plan itself, but in how to execute and finance these projects,” Ang said. There is a need, he said, for the administration “to improve governance at different levels, whether business- or infrastructure-related.” Execution issues remain a “bigger challenge to achieving inclusivity,” he said.

Despite past experiences, the government is still having difficulty overcoming the serious challenges brought about by issues related to right of way, procurement, and budget bottlenecks. Given the urgency of the times, we just can’t afford another six years of delay, as well as haphazard and poorly implemented infrastructure projects.

Dr. Romy Bernardo, a fellow of the Foundation for Economic Freedom, said the method of funding infrastructure projects—whether by official development assistance or through public-private partnerships—is not as critical as ensuring that the projects are “socially desirable, economically sound, and are built and operated well.”

Experts agree that financing is not a major concern at this point. Whether the Philippines can address the numerous execution challenges is the bigger issue.

We hope the implementing agencies will rise to the challenges that have beleaguered their predecessors. We hope to see faster implementation and faster disbursement in the first semester of 2018 so as not to dampen the people’s expectations.

Let us hope that the success of the “Build, build, build” program is indeed anchored on a “solid backbone,” not on a mere wishbone.

[sparkbyadri]

The state of Philippine freedom

April 10, 2018

Dindo Manhit, President of the Stratbase ADR Institute

Image Source: INQUIRER.net

We mark Araw ng Kagitingan on this day to remember the sacrifice and death of Filipinos and Americans in the hands of Japanese forces during World War II. Their struggle symbolizes humankind’s continuing struggle for freedom.

Today this spirit of freedom is celebrated and monitored by many organizations worldwide. In the Philippine context, whenever international organizations or formations release studies on or analyses of the state of freedom at the global, regional, and national levels, there are two typical responses: They are “outsiders” and do not have the right to meddle in domestic affairs, or they are welcome as they provide policy insights for the government.

The first is a cynical stance and plunges us into passivity and a defensive attitude. The second — the constructive “critical” perspective — provides a variety of options that benefit all policymakers, executive officials, and civil society actors. In particular, it is the government that has the vantage point to make the necessary adjustments and changes in its ways of doing things.

The World Justice Project Rule of Law Index, for instance, studies the presence of the rule of law. The index covers 113 countries via eight indicators with 44 subfactors. The indicators include constraints on government powers, absence of corruption, open government, fundamental rights, order and security, regulatory enforcement, civil justice, and criminal justice (World Justice Project, 2018).

In 2017-2018, the Philippines’ overall score is 0.47, with a regional rank (for East Asia and the Pacific) of 13th among 15 countries. Globally, the Philippines ranked 88th among 113 countries—an 18-spot drop from 70th in 2016. Out of the eight indicators, the Philippines saw significant drops in: constraints on government powers, fundamental rights, order and security, and criminal justice.

For corruption, Transparency International’s Corruption Perceptions Index 2017 focused on the levels of perception on corruption among experts and businesspeople. The Philippines’ rank dropped from 95th among 168 countries in 2015, 101st among 176 countries in 2016, to 111th among 180 countries in 2017. The Philippines scored 34 points in 2017 and 35 in 2016 and 2015 (Transparency International, 2018).

With regard to political rights and civil liberties, the Freedom House looks into the condition of rights and liberties worldwide. Its Freedom in the World annual report in 2018 gave the Philippines an aggregate score of 62 over 100, one point less than last year’s score of 63. Last year’s marks were mainly due to the extrajudicial killings attributed to President Duterte’s war on drugs and assassinations of and threats against civil society activists (Freedom House, 2018).

Also, by Freedom House, the Freedom of the Press 2017 report measures worldwide media independence by assessing the degree of print, broadcast, and digital media freedom in 199 countries and territories. The Philippines had a total score of 44 out of 100, with zero as the most free and 100 as the least free, and was classified as a “partly free” country (Freedom House, 2017).

The Freedom of the Net report considers different factors to internet freedom such as obstacles to access, limits on content, and violations of user rights. The Philippines was classified as “free” in 2017, with an overall score of 28 over 100 (where zero is the most free and 100 as the least free). The Philippines’ score dropped two points from 26 in 2016 to 28 in 2017. The study presented that the country’s internet freedom declined in 2017, despite the improvement of internet access.

From these measures of freedom, three lessons need to be emphasized. First, policy and program continuity is imperative. For instance, the law on freedom of information needs to be implemented at all levels. Second, the presence of procedure is most important. Impunity leaves a big dark space in dispensing justice to all concerned. Third, institutional reform is critical. Corruption breeds not only in the individual practices but in the system as a whole.

Thus, making the government more functional is synonymous to boosting people’s experience of freedom.

[sparkbyadri]

The Quad: A force to contain China?

April 3, 2018

Dr. Renato C. de Castro, Trustee and Convenor of the National Security and East Asian Affairs Program, Stratbase ADR Institute

Image Source: Global Balita

Prior to the Association of Southeast Asian Nations (ASEAN) summit in Manila last year, Australia, Japan, India and the United States resurrected a loose security association called “Quadrilateral Security Dialogue” or the Quad.

These four naval powers formed the original QUAD in the sidelines of another ASEAN event, the ASEAN Regional Forum (ARF) Summit in Manila in 2007.  The four, however, were not able to come out with a formal agenda or make any decision on reconvening, simply expecting that they would meet again in the near future.

The Quad’s objective was to facilitate consultations and cooperation among  the four states in the face of the emergence of China and, later, India as regional powers.

Even so, it was not an anti-China coalition as all four members have extensive economic ties with the country. They were all committed to a policy of constructive engagement, not containment, of this emergent East Asian power.

The Quad could be, therefore, seen as a coalition of maritime democracies seeking to strengthen each other on the basis of shared values and interests. However, its formation indirectly isolated China as a non-democratic power and eroded its diplomatic standing in international gatherings.

Furthermore, the Quad emphasized multilateralism in contrast to China’s bilateral approach. Hence, it offered a model that was quintessential antithetical to China’s approach to international issues and problems.

China saw this association as an alliance of four democracies that would eventually become an “Asian North Atlantic Treaty Organization (NATO) to contain China.” It officially protested its formation and confronted each member about its hidden agenda.

Foreign ministries of the four Quad member states had to explain that the Quad was not about containment or forming an alliance. The Quad suffered a temporary demise when Australia withdrew from the loose association after the election of the Rudd government in 2008.

Setting the stage for the Quad’s revival

The creation and sudden demise of the Quad showed that the association was nothing more than a concept, unlike a military alliance like NATO.

However, two major developments during its 10-year hiatus conspired for its resurrection in 2018: former US President Barack Obama’s strategic pivot to East Asia in 2011 and China’s One Belt, One Road (OBOR), which sought precisely to counter the pivot by outflanking and blunting the US rebalancing through foreign aid and infrastructure projects.

Through the OBOR, China outflanked the Obama Administration’s rebalancing strategy as it directed its geo-strategic efforts towards the Eurasian region away from the Pacific, thus avoiding a direct confrontation with American maritime capabilities.

This enabled China to reap two geostrategic advantages: a) expanding China’s strategic maneuvering space into the Indian Ocean and to Central Asia and b) minimizing direct confrontation and friction in US-China relations.

These two developments led to the geographic expansion of US-China competition from the Asia-Pacific to Indian Ocean area leading to the revival of the Quad and consequently the formulation of a new geographic term — the Indo-Pacific region, in reference to all countries bordering the Indian and Pacific Oceans, an alternative to the conventional Asia-Pacific.

Resurrection of the Quad and birth of the Indo-Pacific

The Quad was revived again in Manila at the sidelines of the East Asian Summit in late 2017. The four-corner security dialogue was revived with a senior official-level interaction with a hint that could eventually become a ministerial-level consultation in the near future.

Upon the initiative of Australia and the US, the Quad again took shape as a four-cornered dialogue, ostensibly to ensure that the Asia-Pacific and the Indian Ocean remains free and open for multilateral trade and commerce.

It emphasizes the importance of rules-based order, connectivity ventures that are not fueled by predatory financing and that territorial disputes are resolved peacefully and in accordance with international law.

The birth of the term Indo-Pacific region underscores the  expansion of the ongoing geo-strategic contest  between China and the Quad. The earth’s two largest bodies of water — the Indian and the Pacific Ocean — are now a new arena for the competition for territory, resources, and influence.

The main drivers for the enlargement of this great game are: China’s emergence as an economic and military power that has transformed the region’s strategic landscape in a matter of ten years and the Quad’s member states’ balancing  approach in  their foreign policies.

If the Quad would not confront China’s efforts to effect a revision of the current territorial and maritime arrangement, the next five years could enhance its geo-strategic position. The result will be the unravelling of the current liberal international order in the Indo-Pacific region and its replacement by a Chinese-led illiberal/authoritarian regional order.