WORLDPOST

How Manila Stands Up to the Goliath

11/26/2012 05:11 pm ET | Updated Jan 26, 2013

By any measure, the Philippines is increasingly emerging as a 'frontline state' in the ongoing Sino-American competition over the destiny of the Asia-Pacific region -- the world's new center of economic and geo-strategic gravity. Desperate to secure its territorial claims within the South China Sea, the Philippines is not only struggling with China's growing territorial assertiveness, but also exploring ways to maintain a measure of self-autonomy amidst America's plans to re-assert its Pacific hegemony.

For Manila, the history is somehow repeating itself, whereby the tiny archipelago is once again finding itself squeezed amid an intensifying great power rivalry. Back in the 19th and 20th centuries, the Philippines was at the forefront of America's competition with colonial Spain and the Soviet Union in East Asia. Obviously, this time Manila is eager to avoid being stamped upon by the march of history, unlike the past.

It's hard to understate Manila's strategic dilemma. On one hand, without America's military-diplomatic support, the Philippines stands heavily outmatched against its Chinese neighbor. While the Philippines' decrepit and under-equipped armed forces subsists on a meager annual expenditure of around $1.5 billion, ranking 59th in the world, the Chinese are the world's second largest spenders, with their $129 billion budget set to double by 2015 -- most of it will feed China's expanding naval 'anti-access' (A2/AD) and blue-water capabilities.

On the other hand, if Manila tilts too much into the U.S.' orbit, it might risk its national sovereignty as well as important bilateral ties with China. (Not to mention, there are lingering doubts as to the extent of the U.S.' commitment to Philippines' security, especially in an event of a direct Sino-Filipino confrontation over disputed features in the South China Sea.) Beijing is already irked by an increasingly revitalized U.S.-Philippine military relations, with elements within the Chinese military repeatedly calling for sanctions against Manila and its alleged role in stoking tensions in Sino-American relations.

At the height of Philippine-China territorial conflicts, when both sides dangerously squared off over the Scarborough Shoal earlier this year, Beijing imposed travel as well as non-tariff barriers against the Philippines' $200 million banana exports. So, Manila has no choice but to take China's threats seriously.

The Post-Cold War Rollercoaster

Like many of its post-colonial peers, the end of the Cold War provided an opportunity for Manila to become a master of its own destiny by veering away from the long and deep shadow of American military-political patronage.

In 1992, the Philippines managed to terminate the U.S. military's forward-deployment presence in Clark and Subic. But, just within three years, Manila watched in horror China's forceful seizure of the previously Philippine-controlled Mischief Reef. Failing to develop a minimum deterrence capability, Manila witnessed an increasingly assertive Chinese expansion in the South China Sea.

In absence of a coherent and effective regional regime to rein in China's alarming behavior, the Philippines' recourse was mere moral suasion and relatively marginal military cooperation with the U.S. and regional powers such as Australia, though primarily focused on the 'Global War on Terror.' At best, Manila was able to secure a non-binding, highly symbolic agreement with China to prevent open conflict over disputed territories. However, the 2002 ASEAN-China Declaration on the Conduct of Parties in the South China Sea was never a substitute for the Philippines' glaring lack of self-defense capabilities. When China stepped up its naval maneuvering in adjacent waters, the Philippines was left little choice but to welcome and encourage America's pivot to the region.

A Tough Balancing Act

The truth is, the tiny archipelago nation has found itself in a tricky situation vis-à-vis China: It faces a rapidly rising China that has simultaneously become an economic boon and a strategic threat. On the economic front, China's booming economy -- buttressed by large local companies eager to invest in emerging markets that are desperate for cheap capital and technology -- represents a huge opportunity for Manila to revitalize its historically anemic economy, strengthen a flailing infrastructure, and expand markets for increasingly high value-added exports. Mainland China is already the Philippines' third largest market,with bilateral trade hovering around $30 in recent years.

Last year, the two sides expressed their hopes of increasing bilateral trade and investment relations to around $60 billion in coming years, potentially making China the Philippines' biggest trading partner. According to some estimates, China's investments in the Philippines could reach as much as $8 billion, with Beijing heavily (or poised to be) involved in major infrastructural projects in the country.

We should bear in mind that in the first decade of the 21st century, Sino-Filipino relations experienced a period of growing economic and strategic ties, thanks to the former Filipino President Gloria Arroyo's efforts to diversify her country's heavily U.S.-centric external relations. However, recent years have introduced a new element of tensions into Sino-Filipino relations, as China stepped-up its efforts in adjacent water of East and South China Seas to cement its hyper-nationalist/populist territorial claims. After all, based on its notorious 9-dotted-line, China claims 'inherent and indisputable' sovereignty over almost all features within the South China Sea. It is particularly this position that has complicated, if not totally obstructed, any multilateral efforts to resolve ongoing territorial conflicts in the South China.

Moreover, China has also been using its economic influence over Southeast Asian countries such as Cambodia, the current chair of the ASEAN, to block any attempts by countries such as Vietnam and the Philippines to put greater pressure on China by (i) forging a unified regional stance and (ii) establishing a binding regional Code of Conduct (CoC) to regulate inter-state behavior over territorial disputes. As a result, the Philippines' diplomatic efforts within the ASEAN have been constantly sidestepped in recent months. But, Manila is still investing in diplomacy, because it knows that it can't risk confrontation and jeopardize booming bilateral trade-economic relations with China.

So, in the meantime, the Philippines is left with little choice but to hedge its bets: It intends on rapidly improving its minimum deterrence capabilities by welcoming greater aid, joint-exercises, and military hardware from as well as deeper operational interoperability with U.S. forces as well as other regional allies such as Japan, Australia, and South Korea.

The situation is really difficult, but don't expect the Philippines -- defined by an undying sense of resilience -- to just roll over anytime soon. It even managed to rename the South China Sea to West Philippine Sea, despite Beijing's repeated condemnations.