Sovereignty first

There are many situations where the mind of a businessman can solve problems and break deadlocks where the mind of a politician cannot. Often, the businessman—thinking only in terms of pesos and centavos—can formulate innovative solutions that are beyond the imagination of the politician who is hobbled by having to balance a million and one considerations for a multitude of stakeholders. Indeed, a pragmatic businessman can move things forward in ways a pragmatic politician cannot.

But the issue of Philippine sovereignty over disputed territories in the West Philippine Sea, especially those currently occupied by Filipinos, does not make up such a situation.

Consider the resource-rich Recto Bank (internationally known as Reed Bank), which lies within the Philippines’ 200-nautical-mile exclusive economic zone. It is believed to hold deposits of oil and gas and has been the subject of past Philippine exploration campaigns. The idea of certain private groups of pushing ahead with the commercial development of Recto Bank in partnership with China’s largest oil company may be a well-intentioned one. But it is also ill-advised, brought about by a fundamental miscalculation of China’s intentions in the region.

Wildly developing and therefore energy-hungry China will have use for the oil or gas or whatever else will come up from the seas around Recto Bank and the disputed Spratly island chain. But while the Philippines and other countries claim only parts of the Spratlys, China claims the islands in their entirety, naturally including the resources found in and around them. (Remember that it also claims our Panatag Shoal as its Huangyan Island.)

The fundamental flaw of dealing with China National Offshore Oil Corp. on business terms—while ignoring the hot-button issue of sovereignty—is the assumption that the giant firm thinks like a private entity. The fact is that it does not. CNOOC is a state-owned enterprise whose every move requires the blessings of the highest Chinese officials. It is, for all intents and purposes, a state actor. And it should be dealt with as such, with Filipino businessmen harboring no illusions that they can appease the aggressive Chinese dragon with offerings of profit sharing from oil exploration.

In addition, the idea of doing business without talking ownership (an idea relentlessly pushed by the Arroyo administration) is an implicit capitulation to China’s claim that it owns Recto Bank.

Undertaking a joint exploration of the area with CNOOC—with the explanation that Filipino-owned firms do not have sufficient resources to fund such an expensive project—amounts to a cop-out. In both the virtual and physical sense, it will expand China’s sphere of influence (and physical territory) while we pretend that our rights over the area are not eroded.

If the Philippines needs a wealthy partner who can help fund the exploration, it should search for a private oil exploration giant whose acquisition target is restricted to dollars and cents and does not include territory.

What then should the Philippines do, faced with the massive threat that is China? It should stand its ground and not yield an inch, even when talking about joint exploration from a business angle.

President Aquino himself said last week that the Philippines did not have to be “the sole winner in the exploitation of resources” in the disputed areas, and that it had always been a good neighbor to other countries in the Asia-Pacific. But he also pointed out that it had to draw the line and look after its rightful interests, and noted Recto Bank’s position in the Philippines’ exclusive economic zone.

Of course, diplomacy remains the paramount approach, and the Philippine government is well-advised to maintain the issue on the international radar.

But in the end, the Aquino administration will find that the economics of putting sovereignty before business is a double-edged sword. The proposed joint development of Recto Bank with China should ring all the alarm bells. How will the Philippines share the wealth without ending in the belly of the beast?