July 13, 2017 2:59 am JST

Manila touts economic gains in sea dispute approach

A year after Hague ruling, Philippines enjoys surge in investment from China.

CLIFF VENZON, Nikkei staff writer

President Rodrigo Duterte addresses stock traders during a visit to the Philippine Stocks Exchange on Tuesday. © AP

MANILA -- President Rodrigo Duterte's government said Wednesday its approach to solve the South China Sea territorial dispute through bilateral talks with China has yielded an economic windfall for the Philippines.

On July 12 last year, a United Nations arbitration court in The Hague ruled that Beijing's claim of nearly entire waterway has no legal and historical basis. The landmark decision, in response to a case filed by the previous Philippine government in 2013, clarified maritime entitlements surrounding the South China Sea, parts of which are also claimed by Brunei, Malaysia, Vietnam and Taiwan. Beijing rejected the ruling.

But Duterte, who came to power on June 30 last year, abandoned the hard-line approach of his predecessor, Benigno Aquino. Instead, he decided to temporarily set aside the court victory and repair damaged ties with China.

"The Philippine approach has led to great benefits for the country, allowing us considerable economic gains as well as strengthening our status as ASEAN chair and regional peacemaker," the Foreign Ministry said in a statement. 

Duterte visited China in October, his first foreign trip outside Southeast Asia, and secured $24 billion in credit lines and investment pledges. Beijing also lifted a ban on Philippine agricultural products. His China-friendly talks also charmed Chinese tourists.

Foreign direct investments from China jumped by 122% from January to April this year, while Chinese tourist arrivals in May jumped by 57%, according to latest government data.

"President Duterte's priority of regional peace and stability has led to the healthy environment of dialogue, cooperation and development," the Foreign Ministry said.

"The bold initiatives of the administration in pursuing an independent foreign policy have become a game changer not only in the geopolitical landscape in the region but more importantly in the lives of our people," the ministry added.

Duterte has distanced himself from Manila's traditional ally, the U.S., which criticized his controversial war on drugs, and aligned himself with China and Russia.

But speakers at a forum on Wednesday were critical of Duterte's foreign policy. Philippine Supreme Court Associate Justice Antonio Carpio said the government should not compromise national sovereignty in exchange for economic gains.

"I'm sure the value of resources in the West Philippine Sea is much, much higher than the $24 billion," Carpio said at the forum organized by Stratbase ADR Institute, a Manila think tank.

Former Foreign Secretary Albert Del Rosario, who initiated the arbitration process in 2013, said the Philippines should use its chairmanship of the Association of Southeast Asian Nations this year to promote the Hague ruling, an idea rejected by the current government.

"There is a room for us to steer the discussions on the code of conduct [on the South China Sea] to ensure that it is effective, binding and quickly concluded," he said. "We believe that the arbitral ruling should be an integral part of the code of conduct."

Duterte's statement as ASEAN chair in April ignored the massive island reclamation and militarization Beijing has undertaken in the South China Sea, disappointing diplomats from Vietnam and Indonesia.

"The Philippines shall remain an enemy to none and a friend to all in its pursuit of economic and political benefits for the country, including the long-term security and stability in the region," the Foreign Ministry said. 

Jay Batongbacal, director at the University of the Philippines Institute for Maritime Affairs and the Law of the Sea, at the same forum questioned Duterte's foreign policy: "Is it really an independent foreign policy, or are we just trading one perceived master over another?"

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