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Joint oil exploration point of no return

The agreement with China to jointly explore oil and gas reserves lying under Reed Bank is a kind of crossing the Rubicon for this country: We shall reach a point of no return.

As early as the late 1980s, drilling in Reed Bank was proposed to then President Corazon Aquino by Premier Deng Xiaoping. Before then exploration in the area had begun, and in 1976 gas was discovered following the drilling of a well. China’s complaints halted further exploration.

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Past the ruling of the Permanent Court of Arbitration in The Hague, which debunked China’s claim to almost the entire South China Sea and affirmed that Reed Bank, Mischief Reef and Ayungin Shoal are “part of the exclusive economic zone and continental shelf of the Philippines, and are not overlapped with any possible entitlement of China,” the Philippine government not only continues to defer to China’s claims, but is now set to tie itself within the latter’s grip.

Instead of inviting other possible investors, those not likely to make incursions into or claim sovereign rights over Reed Bank, the Duterte administration has chosen to set aside the arbitral tribunal’s ruling and go for joint development with a very interested party that does not take the trouble to hide its intent to use force when necessary. Note Chinese Foreign Minister Wang Yi’s warning: “In waters where there are overlapping maritime rights and interests, if one party goes for unilateral development, and the other party takes the same action, that might complicate the situation at sea, that might lead to tensions and as an end result nobody will be able to develop the resources.”

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This may all sound sensible and pragmatic, but it is actually a veiled threat, and China is acting true to form. As with its naval gun battle with Vietnam over the Paracels in 1974, and its sinking of three Vietnamese ships at Johnson Reef which killed 72 soldiers, China is ready to resort to selective war against weak but intransigent states when it calculates to be in its interest to do so.

In the mid-1990s, when we discovered that China has built structures on Mischief Reef—ostensibly shelters for fishermen but now proven to be military installations—China’s top unofficial spokesman for South China Sea affairs, Pan Shiying, was quoted as telling US officials that if China’s offer of joint development was rebuffed, “it will have no choice but to take over the islands forcibly.”

Then President Fidel Ramos engaged a Vaalco firm affiliate to explore oil in Reed Bank, threatened to invoke the US-PH Mutual Defense Treaty, and embarked on a $2-billion program to upgrade the Philippine military. These days, with the more pliable Duterte leadership, China has taken its usual approach of buying its way into ascendancy by promising ruling elites capital and trade inflows.

The hard fact is that China will not drop claim to Reed Bank, for the simple reason that it holds about half of the 11 billion barrels of oil and about a quarter of the 190 trillion cubic feet of natural gas estimated by geological surveys to be in the whole South China Sea. Energy consumption in the region is expected to double by 2030, and China, with its mammoth industries and massive population, accounts for half that growth. This is why it will push for dominance in exploiting the vast resources of the South China Sea, and appears bent on doing so outside of the provisions of the UN Convention on the Law of the Sea, or even customary international law.

The hope that joint exploration will generate employment and yield benefits for our people may prove to be tricky and illusory. Hardeep Puri, chair of India’s Research and Information System for Developing Countries, has warned of how countries like Sri Lanka and Myanmar lost ownership of land and strategic seaports to China when their loans for infrastructure projects proved to be white elephants. When they could not pay, they had to convert their debts into equity.

The African experience is particularly telling. China’s presence in Africa has risen exponentially in the last two decades, its influence ranging from economics to politics, prompting analysts to label this phenomenal growth as “the second scramble for Africa.”

A source from Kenya tells me that around 80 percent of what China invests in a country actually goes back to it in the form of capital equipment and labor, besides expanding its market for its low-cost, low-technology goods. The countries that opened their doors to China now find themselves flooded with not only cheap Chinese imports but also a steady stream of Chinese laborers, mostly those in state-owned enterprises engaged in construction, mining and oil industries. There is perception that China has exported Chinese labor at the expense of local people in its various projects across Africa. Western investments, which have been similarly exploitative, at least generated some employment and technology transfer, even if governments also have had to pay hefty consultant fees.

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After years of open welcome, Zambians, for instance, have loudly protested China’s “hidden hand” in their politics, prompting a top Zambian leader to remark that “Zambia has become a province of China.” Cross-cultural tensions have flared, exacerbated by incidents like Chinese bosses opening fire on protesting Zambian mine workers. Environmental concerns and the rape of the land have been raised in cases like China’s questionable acquisition of 1 million hectares of arable land in the Democratic Republic of Congo to produce biofuel.

In this country, we are similarly in danger of our agricultural lands and natural resources being rented out cheaply to feed China’s industries and its burgeoning population. With this joint oil exploration, we may well find ourselves economically entangled to a point of no return, reduced to a vassal state kept in line by both the threat of force and the subtle seductions of a strategic policy articulated long ago by Li Hongzhang from the Qing-era Self-Strengthening Movement: “Place equal emphasis on wealth and strength; use wealth to promote strength, use strength to protect wealth.”

Dr. Melba Padilla Maggay is a social anthropologist and author of “Rise Up and Walk, Culture and Religion in Empowering the Poor,” published in Oxford, UK.

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TAGS: China, Commentary, Melba Padilla Maggay, oil exploration, Permanent Court of Arbitration, Reed Bank
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