The proposed Trans-Pacific Partnership (TPP) agreement covers 12 Pacific Rim countries that collectively account for about 40 percent of the world economy. Credit: Amantha Perera/IPS

By Richard Heydarian
MANILA, Jun 14 2014 (IPS)

Amid simmering territorial conflicts across the Western Pacific, specifically between China and its neighbours in the South and East China Seas, coupled with China rising to the rank of top trading partner with Japan, South Korea, Australia and the Association of Southeast Asian Nations (ASEAN), the Obama administration has been hard-pressed to re-assert its strategic footprint in the region.

Since 2009, Obama has turned Washington’s strategic focus towards the Asia-Pacific region, which has gradually emerged as the global center of gravity in both economic and geopolitical terms.

The “Pivot to Asia” (P2A) policy, formally announced in late-2011, represents Washington’s renewed attempt to tap into booming markets of Asia and check China’s rising territorial assertiveness in the East and South China Seas.

The P2A policy contained both trade as well as security pillars, designed to maintain the U.S.’ strategic primacy in Asia and aid its post-recession economic recovery. The cornerstone of the Obama administration’s economic policy in Asia is the proposed Trans-Pacific Partnership (TPP) agreement, which excludes China and covers 12 Pacific Rim countries that collectively account for about 40 percent of the world economy.

In security terms, the Obama administration has sought to deepen the U.S. military footprint across Asia by exploring new basing agreements and gradually redeploying 20 percent of its naval assets from the Atlantic to the Pacific theatre.

Obama’s latest trip to Asia, however, underlined the inability of Washington to balance its economic and geopolitical initiatives in the region. While Obama managed to strike new strategic agreements with leading Southeast Asian countries, namely Malaysia and the Philippines, and strengthen bilateral military alliances with Japan and South Korea, there was, in turn, no concrete development vis-à-vis the ongoing TPP negotiations.

“I’ve been very clear and honest that American manufacturers and farmers need to have meaningful access to markets that are included under TPP, including here in Japan,” said Obama during his trip to Tokyo, hoping to encourage Japan to make necessary concessions in the TPP negotiations.

“That’s what will make it a good deal for America — for our workers and our consumers, and our families. That’s my bottom line, and I can’t accept anything less.”

As the world’s third largest economy, with a GDP of six trillion dollars, Japan is central to the conclusion of the TPP negotiations, which missed its late-2013 deadline and has struggled to gain momentum in recent negotiation rounds. But Japanese Prime Minister Shinzo Abe only promised to “energetically and earnestly continue the talks.”

The disagreements were initially over Japan’s trade barriers on agricultural imports; but the U.S. has increasingly focused on Japanese restrictions on the imports of beef and pork and the opening of Japanese automobile market to American manufacturers.

Amid rising territorial tensions in Asia, Obama went the extra mile to reassure Japan of Washington’s full military commitment if a war were to erupt between Tokyo and Beijing over the disputed Senkaku/Diaoyu Islands in the East China Sea.

In Malaysia, Obama oversaw the formalisation of a bilateral “comprehensive partnership” agreement, which marked the end of decades of frosty relations. Above all, Obama’s visit to the Philippines coincided with the signing of a new security pact, the Enhanced Defense Cooperation Agreement (EDCA), which grants the U.S. military 10 years of access to the Philippines’ top five military bases, namely the three former U.S. bases of Clark airfield, Subic bay, and Poro Point as well as Camp Aguinaldo and Fort Magsaysay in Metro Manila.

On the TPP front, however, Obama faces tremendous opposition at home and across Asia. Long shrouded in secrecy, a growing number of businesses, concerned citizens, and civil society organisations have come to oppose what they see as a lopsided free trading agreement (FTA), which grants multinational companies (MNCs) extensive control over public services such as healthcare and internet.

Among developing countries in East Asia, particularly Malaysia and Vietnam, there is a growing fear over the potential impact of the TPP on the production and importation of cheap, generic drugs, with global pharmaceuticals poised to more vigorously protect their Intellectual Property Rights (IPR), which have contributed to the exorbitant costs of conventional drugs across the wold.

In the industrialised world, especially the U.S., many labour unions and big businesses are worried over the proposed reduction of strategic protectionist barriers, especially in the automobile manufacturing sectors, allowing export-driven countries such as Japan to displace domestic manufacturers.

Japan, for instance, has insisted on retaining high tariff barriers on its agricultural sector, while Vietnam has resisted the proposed privatisation of state-owned textile companies.

The late-2013 revelation of the draconian IPR provisions of the TPP by the anti-secrecy group Wikileaks dealt a huge blow to the ongoing negotiations, further strengthening opposition to the proposed trading regime.

Among the most worrying provisions are proposals that allow MNCs to sue sovereign governments in international courts and override domestic laws on both trade and non-trade matters; relaxation of environmental regulations; greater policing and monitoring of internet; and restrictions on access to public services due to more strict investment rules in utilities and strategic sectors of the economy.

Fearful of domestic backlash, Asian countries such as Japan and Malaysia have hardened their negotiating positions, more explicitly demanding trade concessions from the U.S. In fact, leaked documents reflect the growing isolation of the U.S. within the ongoing negotiations, with Obama struggling to gain enough support within his own party over the proposed Fast-Track Trade bill to expedite the trade negotiations with limited legislative scrutiny.

“Japan’s aim is geopolitical in the first instance, i.e., contain China. I doubt if the leadership has really thought [the TPP] through economically,” Walden Bello, a leading expert on trade issues and co-founder of the organisation Focus on the Global South, told IPS, underscoring how the TPP lacks any compelling economic rationale and is “doomed to fail.”

“Once [Japanese] corporations encounter the same old hard-nosed demands of the U.S. for structural reform…the Japanese government will hem and haw, as it did with the APEC free trade area in the 1990’s.”

Meanwhile, an economically-ascendant Beijing has managed to progressively eclipse Washington in trade and investment terms, with China pushing for an alternative Free Trade Area of the Asia-Pacific (FTAAP), which is increasingly seen as a more viable and inclusive alternative to the TPP.

“China does not even have to initiate a counter-bloc. It just needs to sit quietly and see the TPP fall apart,” said Walden Bello, dismissing the TPP as an ineffectual attempt to counter growing Chinese economic influence in Asia “The benefits of trade accruing to corporations…with what will soon become the world’s biggest economy [China] will undermine the US’s geo-economic objective.”

Aside from being the top trading partner of almost all countries in East Asia, China has emerged as a major source of development aid and soft loans in recent years, contributing as much as 671.1 billion dollars in the 2001-2011 period.

Given China’s continued economic expansion, the country is expected to accelerate its development assistance to neighbouring countries. China is already establishing a 50-billion-dollar Asian Infrastructure Investment Bank, which is poised to directly compete with the Japan-dominated Asian Development Bank (ADB).

Overall, the poor prospects of the TPP underline the U.S.’ weakening economic influence in Asia, with the Obama administration primarily occupied with strengthening Washington’s military footprint in the Pacific waters to hedge against a rising China.

(END)

Chinese People's Liberation Army-Navy sailors stand watch on the submarine Yuan at the Zhoushan Naval Base. Credit: Chairman of the Joint Chiefs of Staff/CC-BY-2.0

By Richard Heydarian
SINGAPORE, Jun 11 2014 (IPS)

China’s early-May decision to dispatch the state-of-the-art oil rig, HYSY981, into Vietnam’s 200-nautical-mile Exclusive Economic Zone (EEZ), has intensified ongoing territorial disputes in the South China Sea, raising fears of uncontrolled military escalation in one of the world’s most important waterways.

It wasn’t long before Vietnamese and Chinese maritime forces were locked in a dangerous naval standoff, which led to low-intensity clashes in the high seas.

China’s unilateral action sparked outrage across Vietnam, paving the way for unprecedented anti-China protests, which snowballed into massive destruction of foreign-owned factories, principally owned by China and Taiwan, and the exodus of thousands of Chinese citizens to neighbouring Cambodia.

The whole episode undermined years of painstaking negotiations between Hanoi and Beijing aimed at peacefully resolving bilateral territorial disputes across the South China Sea.

Shortly after, the Philippines also released photos suggesting Chinese construction activities on the Johnson South Reef, a disputed feature that falls within the Philippines EEZ in the Spratly Island chain in the South China Sea.

Later, China confirmed that it was indeed engaged in reclamation activities on the disputed reef, but it tried to justify it by claiming it exercised “indisputable and inherent” sovereignty over the said feature based on Beijing’s notorious “nine-dash-line” doctrine, which covers almost the entirety of the South China Sea.

The Philippines and Vietnam contend that China has flagrantly violated the 2002 Declaration on the Conduct of Parties in the South China Sea, which explicitly discourages claimant states from unilaterally altering the status by engaging in, among other things, construction activities on disputed features.

Alarmed by the intensifying territorial disputes between China and other claimant states, the Association of Southeast Asian Nations (ASEAN) expressed “serious concern” and called for a rule-based, peaceful resolution of the disputes.

Expecting a more vigorous response from ASEAN, Vietnamese and Filipino leaders called for the swift finalisation of a legally-binding Code of Conduct (CoC) in the South China Sea, and vowed to forge a bilateral “strategic partnership” to counter China’s territorial assertiveness. Meanwhile, other Pacific powers such as Japan and the U.S. have also stepped up their criticism of China’s recent actions, underscoring their direct national interest in preserving freedom of navigation in international waters.

“Whatever construction China carries out on the [Johnson South] reef is a matter entirely within the scope of China’s sovereignty,” argued China’s Ministry of Foreign Affairs Spokeswoman Hua Chunyin, dismissing protests by Filipino officials.

Confronting an increasingly assertive and powerful China, the Philippines and Vietnam have moved closer to a genuine alliance. On the sidelines of the World Economic Forum (WEF) on East Asia in late-May, Philippine President Benigno Aquino III and visiting Vietnamese Prime Minister Nguyen Tan Dung agreed to forge a bilateral strategic partnership, with a particular focus on maritime and defense cooperation vis-à-vis the ongoing disputes in the South China Sea.

“We face common challenges as maritime nations and as brothers in ASEAN,” declared Aquino during his meeting with his Vietnamese counterpart, underscoring Manila’s desire to establish a closer partnership with neighbouring countries.

“In defense and security, we discussed how we can enhance confidence building, our defense capabilities and interoperability in addressing security challenges.”

“More than ever before, ASEAN and the international community need to continue raising a strong voice in protesting against [China’s territorial assertiveness], securing a strict observance of the international law, and peace and stability in the region and the world,” lamented Dung, underscoring Hanoi’s urgent desire for the multilateral resolution of the ongoing disputes.

Recognising China’s military superiority, and the inefficacy of existing diplomatic mechanisms, both the Philippines and Vietnam have been looking towards external powers such as Japan and the U.S. to counter China’s territorial assertiveness.

Much of Asia’s trade and energy transport passes through the South China Sea, and there is a growing fear that ongoing territorial disputes will spiral into a prolonged, destructive conflict, which could affect all regional economies.

Influential actors across the region have been desperately searching for new mechanisms to deescalate ongoing territorial tensions, preventing claimant states, primarily China, from undertaking any destabilising action.

“Japan intends to play an even greater and more proactive role than it has until now in making peace in Asia and the world something more certain,” declared Japanese Prime Minister Shinzo Abe in the recently-concluded 13^th Shangri-La Dialogue in Singapore, which brought together leading defense officials, experts, and journalists from around the world, and saw spirited exchanges between top officials from Japan, the U.S. and China.

During the high-level gathering, Abe, the keynote speaker, sought to present Japan as a counterweight to China, with Tokyo relaxing its self-imposed restrictions on arms exports, increasing its defense spending, and seeking new ways to expand its security role in the Asian region.

“We take no position on competing territorial claims [in the South China Sea]… But we firmly oppose any nation’s use of intimidation, coercion or the threat of force to assert these claims,” argued U.S. Defense Secretary Chuck Hagel, underscoring Washington’s growing alarm over China’s territorial posturing in the Western Pacific.

In response, China’s top representative, Lt. Gen. Wang Guanzhong, deputy chief of staff of the Chinese military, was uncharacteristically blunt in his criticisms, describing Hagel’s remarks as “excessive beyond . . . imagination [and] suffused with hegemonism . . . threats and intimidation.”

Under a new nationalist government, led by Prime Minister Narendra Modi, India is also expected to play a more pro-active role in the region, given New Delhi’s growing trade with East Asia and its large-scale investments in the hydrocarbon-rich areas of the South China Sea. The U.S.’ treaty allies such as Australia have also stepped up their efforts at containing China’s rising territorial assertiveness, as the two Pacific powers deepen their naval interoperability and defense cooperation.

Overall, it seems that China’s rising assertiveness has encouraged a flexible counter-alliance of like-minded countries, which are heavily concerned with the economic and geopolitical fallout of the brewing conflict in the South China Sea. It remains to be seen, however, whether China will relent on its territorial claims amid growing international pressure.

(END)

Amid growing uncertainties over U.S. commitment to Asia, as multiple flashpoints in Eastern Europe and the Middle East continue to consume global attention, President Barack Obama took a long-awaited trip (Apr. 23-29) to Asia, where he visited leading allies in North- and Southeast Asia.

The highlight of Obama’s Asia trip was, however, the formalisation of a new basing agreement in the Philippines, which gave much-needed momentum to Washington’s so-called ‘Pivot to Asia’ policy. For the Philippine government, it marked an important step towards greater U.S.-Philippine defence cooperation amid growing security challenges in the region.Obama made it clear that Washington takes no position over the sovereignty of the disputed territories in the South China Sea.

Recent months have seen a significant increase in territorial tensions between China and its neighbours, especially the Philippines. The late-March decision of the Philippines to file an arbitration case before a United Nations (UN) Arbitral Tribunal in The Hague has infuriated China, which has threatened sanctions and vehemently opposed the “internationalisation” of what it considers an exclusively bilateral territorial dispute. As a result, the Philippines is confronting the real prospect of a direct military confrontation with China.

Without a minimum deterrence capability, the Philippines has opted for deeper defence cooperation with and military support from its principle ally, the U.S. No wonder, Manila has warmly welcomed the Obama administration’s ‘Pivot to Asia’ policy, which many believe is a thinly-veiled attempt at constraining China’s territorial assertiveness in the Pacific theatre.

To counter the growing threat from China, which recently imposed a blockade on a Filipino maritime detachment in the Second Thomas Shoal in the South China Sea, the Philippines, in recent months, expedited the negotiation of a new security pact with the U.S., the so-called Enhanced Defence Cooperation Agreement (EDCA).

Obama’s visit to Manila (Apr. 28-29) coincided with the formal signing of the EDCA, which grants the U.S. military rotational access to Philippine bases in Subic and Clark. In exchange, the Philippines is poised to benefit from expanded military assistance from and jointmilitary exercises with the U.S.

Filipino officials were quick to frame the latest defence agreement as a landmark deal, reflecting the long-standing alliance between the two countries. But critics claim that the new agreement disproportionately favours the U.S., lacks transparency, and may be in violation of the Philippines’ constitutional restrictions on the establishment of permanent foreign bases on Philippine soil.

“This agreement, concluded after intensive and comprehensive negotiations over the course of nearly two years, marks a milestone in our shared history as enduring treaty allies,” stated Philippine Foreign Secretary Albert del Rosario, a staunch advocate of deeper U.S.-Philippine military alliance. “With the EDCA, the Philippines and the United States as sovereign allies have written a new chapter for our modern and mature partnership, firmly grounded on deeply-held democratic values, common interests and shared aspirations.”

Influential political figures such as Senator Miriam Defensor-Santiago, chairman of the Philippines Senate Committee on Foreign Affairs, were, however, unconvinced. In an interview with Al Jazeera, she argued that the latest security pact only provides “marginal advantages” for the Philippines, while granting the U.S. inexpensive access to foreign military bases, which, in effect, would make “the Philippines sound as if [it were] a satellite ally of America.”

Others like former Senator Joker Arroyo deplored the lack of consultations with legislators and concerned citizens ahead of the signing of the EDCA. “[The government] rushed to sign the EDCA as a gift to President Obama…No one, but no one was consulted about its constitutionality or participated in its preparation,” lamented Arroyo, among the senators who voted for the abrogation of U.S. military bases in the Philippines back in 1991. “What did the Philippines get out of the Obama visit? Zero. Analyse it.”

Both Defensor-Santiago and Arroyo, among other legal experts, contend that the new security pact should have required the ratification of the Philippine Senate (the legislative upper-house) to ensure its compliance with the Philippine constitution and the country’s national interest. For many Filipinos, especially progressives and members of the intelligentsia, EDCA represents a significant regression in the Philippines’ age-old attempt to become a more independent, self-reliant country.

As an archipelagic country, the Philippines has a disproportionately small navy and coast guard force, which deprives it of credibly defending the country’s maritime territorial claims. A combination of massive corruption, lack of strategic foresight, and continued focus on domestic insurgency has undermined the Philippines’ efforts at building a fully-functioning, modern military.

As a result, the Philippines has continued to rely on American military support to deal with both security as well as humanitarian challenges. No wonder, latest surveys suggest that the absolute majority of the Filipinos continue to regard the U.S. with high levels of trust and respect.

Earlier in his trip, Obama went the extra mile to reassure Japan that the U.S. will stand by its ally if a military confrontation were to erupt over the disputed Senkaku/Diaoyu islands in the East China Sea.

During his visit to Manila, however, Obama carefully avoided making a similar commitment, and instead called for the Philippines to seek a diplomatic compromise with China in accordance with international law. He made it clear that Washington takes no position over the sovereignty of the disputed territories in the South China Sea.

“We believe that nations and peoples have the right to live in security and peace, to have their sovereignty and territorial integrity respected,” said Obama in his speech before the Philippine armed forces. “We believe that international law must be upheld, that freedom of navigation must be preserved and commerce must not be impeded. We believe that disputes must be resolved peacefully and not by intimidation or force.”

Obama’s latest trip deepened Washington’s strategic footprint in Asia, but also demonstrated its unwillingness to militarily confront China over the South China Sea disputes. As a result, the Philippines will have to contemplate alternative diplomatic strategies to avoid an outright confrontation with China and preserve its territorial integrity.

After a year of futile diplomatic efforts aimed at resolving the South China Sea disputes, the Philippines has risked permanent estrangement with China by pressing ahead with an unprecedented arbitration case before a United Nations court at The Hague, while ironing out a new security pact with the U.S.

The primary goal of the Philippines’ latest manoeuvre is to put maximum pressure on China amid an intensifying territorial dispute, which has raised fears of direct military conflict. Manila has been alarmed by the increasing assertiveness of Chinese paramilitary vessels, which have reportedly harassed Filipino fishermen straddling the South China Sea as well as threatened Filipino troops stationed across varying disputed features in the area.There seemed little goodwill left for resuscitating frayed bilateral relations.

In the disputed Second Thomas Shoal, for instance, recent weeks saw Chinese paramilitary forces imposing a tightening siege on Filipino troops, who have struggled to receive supply materials from their military command headquarters in the Philippines.

Since 1999, the Philippines has exercised effective and continuous control over the disputed feature, which falls well within the country’s 200-nautical mile Exclusive Economic Zone (EEZ). But China is seemingly bent on seizing control of the shoal, which is very close to the hydrocarbon-rich waters off the coast of the southwestern Philippine island of Palawan.

From the perspective of the Filipino leadership, China is not only threatening the country’s territorial integrity, but also its vital economic and energy security interests in the South China Sea. In addition, the Philippines and its principal military ally, the United States, share similar concerns over China’s accelerated military spending. Beijing has focused on enhancing the country’s naval capabilities, part of China’s short-term goal of consolidating its territorial claims in the Western Pacific – and its long-term ambition of becoming the preeminent naval power in Asia.

“We will resolutely safeguard China’s sovereignty, security and development interests,” Chinese Premier Li Keqiang said at the opening session of the National People’s Congress in early March. “We will comprehensively enhance the revolutionary nature of the Chinese armed forces, further modernise them and upgrade their performance, and continue to raise their deterrence and combat capabilities in the information age.”

Recognising the apparent futility of existing diplomatic efforts, Philippine President Benigno Aquino III effectively abandoned his earlier attempts at reviving bilateral channels of communication with the top Chinese leadership when he chose to provocatively liken China to “Nazi Germany”.

“At what point do you say: ‘Enough is enough’? Well, the world has to say it. Remember that the Sudetenland was given in an attempt to appease Hitler to prevent World War II,” exclaimed Aquino, during an exclusive interview with the New York Times, where he compared China’s rising territorial ambitions in the South China Sea to Nazi Germany’s annexation of the then Czechoslovakian territory in the early 20^th century.

China was outraged by Aquino’s comments, dismissing him as an “amateurish” leader with little appreciation for the delicate art of diplomacy and conflict management. At this point, there seemed little goodwill left for resuscitating frayed bilateral relations.

With diplomacy taking the back seat, the Philippines has stepped up its efforts to welcome a greater American military presence on its soil. Under the proposed Enhanced Defence Cooperation, the Philippines is offering the U.S. expanded access to its military bases in Subic and Clark. In exchange, the Philippines is seeking enhanced U.S. military aid, increased joint military exercises, and, potentially, even temporary access to American military hardware to counter China’s maritime assertiveness.

“The proposed agreement will allow the sharing of defined areas within certain AFP [Armed Forces of the Philippines] facilities with elements of the U.S. military on a rotational basis within parameters consistent with the Philippine Constitution and laws,” explained the Philippine Department of National Defence (DND), which has strongly lobbied for deeper military relations with Washington in order to enhance the country’s “minimum deterrence capability”.

The Philippines’ direct legal challenge to China’s sweeping territorial claims in the South China Sea, however, is the greatest source of tension in bilateral relations. In early 2013, the Philippines initiated an ambitious arbitration case at the International Tribunal for the Law of the Sea (ITLOS) at The Hague, with the explicit aim of undermining China’s notorious ‘9-dashline’ doctrine, which accords Beijing “inherent” and “indisputable” sovereignty over the bulk of the South China Sea.

The Philippines contends that China, as a party to the United Nations Convention on the Law of the Sea (UNCLOS), is obliged to respect the Philippines’ rights to exercise qualified control over features that fall within its 200-nautical mile EEZ. These include, among other features, not only the Second Thomas Shoal, but also the Scarborough Shoal, which was effectively seized by China after a brief military standoff in mid-2012.

In early 2014, China reportedly offered certain “carrots” in exchange for the Philippines’ decision to postpone its submission of its formal written complaint – known as ‘memorial’ in legal parlance – at the ITLOS. Beijing reportedly offered, among other things, mutual disengagement from the contested features such as the Scarborough Shoal, trade and investment benefits, and postponement of the planned Chinese imposition of an Air Defence Identification Zone (ADIZ) in the South China Sea.

The more hardline factions within the Philippine leadership reportedly refused to entertain China’s offer, and convinced the Aquino administration to push ahead with the arbitration move.

“It is about securing our children’s future. It is about guaranteeing freedom of navigation for all nations,” said Philippine Foreign Affairs Secretary Albert del Rosario, who oversaw the filing (Mar. 30) of a voluminous memorial against China at ITLOS. “It is about helping to preserve regional peace, security and stability. And finally, it is about seeking not just any kind of resolution but a just and durable solution grounded [in] international law.”

The Philippines hopes that its latest legal challenge to China will rally like-minded countries such as Vietnam and Japan as well as the broader international community behind its own cause. But the Philippines’ latest decision runs the risk of irreversibly antagonising China, which could, in turn, permanently undermine diplomatic efforts at peacefully resolving the South China Sea disputes, and pave the way for a military showdown.

Dissatisfied with the Philippines’ response to the 2010 Manila hostage crisis, which led to the death of eight Hong Kong residents and injuries to seven others, authorities took the unprecedented decision late January to impose travel restrictions against Filipino officials. The restrictions took effect Feb. 5.

Visa-free travel privileges for Philippine diplomats were revoked, affecting up to 800 Filipino officials, who visit or pass through Hong Kong each year.

The punitive measures came after three years of fruitless negotiations between officials from the Hong Kong Special Administrative Region (SAR) and Manila. Under rising domestic pressure, Hong Kong authorities have demanded that Philippine President Benigno Aquino III formally apologise for the incident and provide proper compensation for all the victims and their families before any rehabilitation of bilateral relations takes place.

On Aug. 23, 2010, Rolando Mendoza, former senior inspector of the Manila Police District (MPD), hijacked a tourist bus carrying 21 Hong Kong nationals. In exchange for releasing the hostages, he demanded a judicial review of his dismissal from office on allegations of extortion. After long hours of tense negotiations, in which hopes of a peaceful resolution of the crisis gradually arose, Manila city officials opted for a rescue operation, which led to deaths and injuries among the hostages.

Aquino has refused to apologise on behalf of the Philippine state, arguing that the tragic incident (August 2010) was the result of the criminal actions of a disaffected Filipino citizen. Mendoza reportedly shot the hostages and later himself during the rescue operation.

The Philippines contends that it has provided compensation to the victims and already apologised for the incident, and there were hopes that Manila city authorities, who oversaw the botched rescue operation during the hostage crisis, would have separately assuaged Hong Kong at the local government level.

The Hong Kong decision was relayed through the Chinese embassy in Manila, with Beijing expressing its support for the semi-autonomous city-state on the issue. Many in the Philippines tend to see the latest sanctions as part of a larger Chinese strategy to isolate the country amid rising territorial disputes in the South China Sea.

Bilateral Philippine-China relations have hit a new low, further undermining the prospects of a diplomatic resolution of bilateral disputes. And there are growing worries over the fate of up to 160,000 Filipino overseas workers, who are mostly domestic workers living in precarious conditions in Hong Kong.

“[The victims and their families] are seeking an apology from the Philippine government for the failure and lapses of their officials in handling the rescue operation,” Hong Kong Chief Executive Leung Chun-yin stated, placing the blame on the Philippine state rather than the hostage-taker.

Hong Kong authorities have warned of more sanctions in the absence of a satisfactory response from the Philippines, framing their latest decision as a calibrated warning to avoid a total breakdown in bilateral relations. “I urge the Philippine government to demonstrate sincerity and resolve in bringing the discussion to a satisfactory conclusion so that we do not have to implement further sanctions,” Leung said.

There is a common perception in the Philippines that Hong Kong would not have made such an unprecedented decision – imposing sanctions on a foreign country – without prior approval from Beijing authorities. As a result, some Filipinos see Hong Kong’s policies as a proxy for Chinese approach to the Philippines.

“The [hostage crisis incident] affects the feelings of the Chinese, including Hong Kong compatriots,” Chinese foreign ministry spokesman Hua Chunying declared, reflecting the deep resonance of the issue among the broader Chinese population.

Beijing also went so far as to prod the Philippines into fulfilling Hong Kong’s demands, with Hua stating: “We urge the Philippine side to face squarely the concerns of the victims and their families, show sincerity and solve the relevant issues at an early date.”

Alarmed by the possibility of more disruptive sanctions, which could seriously undermine trade relations, affect job opportunities for Filipinos in Hong Kong, and reduce tourist exchanges between both countries, the Philippine government opted for appeasement instead of retaliatory sanctions.

“We are stepping away from the path instead of going for common ground,” the Philippines’ presidential communications secretary Herminio Coloma lamented, characterising Hong Kong’s decision as a provocative action that could seriously undermine ongoing negotiations over the issue. Shortly before the sanctions took effect, Coloma defended the Philippine government, emphasising how the Aquino administration is “[still] seeking a solution and that is where we continue to be until the present time.”

The Philippines’ Department of Foreign Affairs (DFA), which was directly affected by Hong Kong’s latest measure, called into question the validity of the sanctions, and argued that a “closure” had already been achieved on the matter.

“A substantive closure on the Quirino Grandstand incident had already been arrived at three years ago with the previous Hong Kong (Special Administrative Region) government and the victims as well as their families,” DFA spokesperson Raul Hernandez stated.

In November 2013, the Philippines sent a high-level delegation to Hong Kong, delivering 2.28 million Philippine pesos (51,000 dollars) to one of the victims of the hostage crisis. It was the first payout by the Aquino administration to the victims.

“To bring the issue to its final conclusion, the Philippines remains committed to manifest compassion to the victims and their relatives, and is ready to turn over the additional tokens of solidarity from the Filipino people,” Hernandez declared.

Other Filipino officials expressed outrage at Hong Kong’s decision, while some legislators called for a retaliatory response. For some Filipinos, it was particularly insulting for a SAR like Hong Kong to impose sanctions on the Philippines, which is a sovereign nation-state. But the Aquino administration ultimately decided to tone down tensions and avoid a downward spiral of retaliatory actions, stating that arriving at a common understanding and helping the affected families was their priority.

Former president and current mayor of Manila Joseph Estrada also tried to resolve bilateral disputes by offering to intercede on behalf of the Philippine government and offer an official apology. Also concerned about the welfare of Filipino workers in Hong Kong, Philippine Vice-President Jejomar Binay pleaded with Hong Kong officials to not introduce any further measure that could jeopardise the livelihood and wellbeing of the large Filipino community in the Chinese city-state.

Overall, it seems that the Philippine government has prioritised the prevention of more disruptive sanctions, but it is far from clear whether it is willing to go the extra mile to appease Hong Kong officials. In the meantime, the broader Philippine-China relationship hangs in the balance, and there are little signs of a thaw in bilateral ties anytime soon.

After two years of intensive negotiations, the Philippine government and the country’s largest rebel group, the Moro Islamic Liberation Front (MILF), have signed a final peace agreement, which paves the way for a lasting resolution of one of the world’s longest-running intra-state conflicts.

The Jan. 25 agreement stipulates among other things the disarmament and eventual reintegration of about 12,000 MILF soldiers into the Philippine security forces. This could effectively end a primary source of armed challenge to the Philippines’ territorial integrity, and put an end to four decades of conflict in the southern island of Mindanao that has resulted in the death of up to 150,000, mostly civilian, individuals.It seems that the Aquino administration has generated enough momentum to push ahead with a new political order in Mindanao.

In exchange, the Philippine government will facilitate the establishment of an autonomous “Bangsamoro” entity in the predominantly Muslim regions of Mindanao. The Philippine Congress is expected to pass a law for enactment of the new autonomous entity this year.

Nevertheless, critics have raised concerns over the viability of the peace agreement and the lack of inclusiveness in the negotiations.

“It has been a difficult road getting here and we know that the path ahead will continue to be fraught with challenges,” declared Teresita Deles, special presidential advisor for the peace negotiations. “In a world looking for peaceful solutions to all troubles, we are grateful that we have found ours.”

Intent on optimising the diplomatic dividends of recent negotiations, the administration of President Benigno Aquino hopes to finalise the establishment of Bangsamoro before the end of its term in 2016. This means the minority Muslim population will finally have an opportunity to enjoy a significant measure of socio-cultural and political autonomy, with the Bangsamoro sub-state entity exercising considerable powers over the management of domestic natural and fiscal resources.

Leaders from across the world welcomed the agreement, hoping that a more stable Mindanao will contribute to the retrenchment of Islamic fundamentalism and extremist ideology in Southeast Asia. U.S. Secretary of State John Kerry congratulated the Aquino administration for “concluding negotiations toward an historic, comprehensive peace agreement,” and hailed the promise of “peace, security, and economic prosperity now and for future generations in Mindanao.”

Washington also commended Malaysia as well as the International Contact Group, composed of representatives and conflict-resolution experts from around the world, for their pivotal role in brokering the final agreement in Kuala Lumpur.

Meanwhile, international investors have turned their attention to economic implications of the peace agreement. Mindanao is estimated to have as much as 300 billion dollars in untapped mining and natural resources. Given the increased regulatory uncertainty in other mining hubs such as Indonesia, investors are considering the prospects of large-scale investments in resource-rich areas such as Mindanao.

The Philippines is already among Asia’s fastest-growing economies, averaging six to seven percent in annual GDP growth in recent years. The Aquino administration has sought to integrate the long-neglected regions of Mindanao into the rising economic tide that is lifting the country. Mindanao is home to one of the poorest regions of the Philippines, with poverty rates increasing in Muslim-majority provinces in recent years.

Given the relative backwardness of infrastructure in Mindanao, post-conflict reconstruction efforts could significantly increase domestic spending and investment rates. Because of its favourable geography and fertile lands, Mindanao is also considered a potential agricultural powerhouse. The economic revival of Mindanao could boost the Philippines’ GDP growth rates by another 0.3 percentage point, according to Standard Chartered economist Jeff Ng.

But the Philippines faces tremendous challenges ahead. Splinter groups such as the Bangsamoro Islamic Freedom Fighters (BIFF) have opposed the new agreement, pledging to continue their struggle against the Philippine government. Immediately after signing the peace agreement, the Armed Forces of the Philippines (AFP) launched an offensive against BIFF fighters, hoping to stamp out any resistance to the implementation of a Bangsamoro entity.

Last year some rebel groups, including members of the MILF’s parent organisation, the Moro National Liberation Front (MNLF), tried to scuttle peace negotiations by launching a siege on Zamboanga city. The result was a massive humanitarian crisis and weeks-long military clashes, which tested the momentum of peace negotiations.

The main concern of other rebel groups was their exclusion from the peace negotiations, and, more importantly, their lack of trust in the Philippine government. In the past, the government and the MNLF were able to arrive at a peace agreement (1996), which paved the way for establishment of the Autonomous Region in Muslim Mindanao (ARMM).

But the final outcome fell considerably short of its initial promises, with the MNLF struggling to cope with governance challenges in the least developed areas of the Philippines. Even worse, succeeding administrations did little to reinforce earlier peace negotiations.

The Joseph Estrada administration (1998-2001), for instance, launched an all-out war against other rebel groups such as the MILF. Former president Estrada believed in a maximalist approach, whereby: “Sometimes you have to wage war to earn peace. You have to show them that there is only one flag, one armed forces of the Philippines, one government.”

As government officials such as Deles admit, the previous peace agreement “failed to put post-conflict rebuilding mechanisms in place.” There were no credible and sustained commitments by the Philippine government to ensure reintegration of rebels and the rehabilitation of conflict-hit areas. No wonder, there are concerns whether the next administration will ensure proper assistance to the Bangsamoro leadership.

For many civil society organisations, the negotiations also fell short of ensuring full participation of a whole host of indigenous communities in the conceptualisation of a new autonomous entity in Mindanao. The greatest threat, however, stems from deeply entrenched warlords and local oligarchs, who will try to hijack the emerging political order by establishing new networks of patronage politics.

Overall, it seems that the Aquino administration has generated enough momentum to push ahead with a new political order in Mindanao. But it remains to be seen whether the MILF will make a successful transition towards becoming an effective agent of governance in Mindanao. This will undoubtedly require sustained commitment from the Philippine government in the decades to come.

After two decades of aggressively privatising its public services, the Philippines is beginning to realise the cost of mindless market reforms.

Recent months have seen an explosion of public outrage over a proposed increase in electricity prices, which threatens the country’s economic trajectory and is undermining the interest of millions of ordinary consumers, who have long suffered from exorbitant costs of public services.

The Philippines already has among the world’s most expensive electricity rates, which in 2011, some estimates suggest, even surpassed those of post-Fukushima Japan – making electricity prices in the Philippines the most expensive in Asia.A growing number of Filipino citizens have come to realise the consequences of hasty privatisation of public services.

For many economists, this served as a major disincentive against desperately needed inflow of Foreign Direct Investment (FDI). No wonder, despite attaining “investment grade” status from the world’s leading credit rating agencies in 2013, the Philippines is still struggling to attract high-quality investments.

Things came to a head when the Manila Electric Company (Meralco), the country’s leading electricity distributor, announced a further increase in electricity costs in late 2013. Meralco tried to justify the proposed increase – the highest single price hike in the company’s history – on the grounds that it had to undertake emergency purchases in the Wholesale Electricity Spot Market (WESM) to cover for a maintenance shutdown in its principal source of energy, the Malampaya natural gas pipeline.

But once the Energy Regulatory Commission (ERC) approved the proposed price hike, there was an immediate explosion of public outcry, with leading legislators and public intellectuals raising suspicions of oligarchic collusion.

“I find it difficult to believe that at the very time that the Malampaya [pipeline] would go into a month-long hibernation for maintenance, about eight power suppliers to Meralco would [also] go offline unexpectedly, forcing Meralco to go to WESM, which was supplied by power companies that were controlled by the same interests that went offline,” legislator Walden Bello told IPS.

“With Meralco’s sudden demand, the electricity price per kilowatt hour tripled, resulting in these controlling interests making a killing. The only question unresolved for me is to what extent Meralco was involved in the collusion by its power suppliers.”

Given the quasi-monopolistic nature of the Philippine energy market, with overlapping cross-ownership between distributors and producers, critics claimed that Merlaco and other major producers allegedly “staged” an emergency shutdown to justify the purchase of “artificially high” emergency supply in the spot-market.

Given the limited capacity of the ERC, and separate ongoing corruption investigations against ERC chairperson Zenaida Ducut, an increasing number of people raised the possibility of regulatory capture.

Under growing public pressure, the Philippine legislature, the Department of Energy (DOE), and the Department of Justice (DOJ) launched parallel investigations into the matter, while the Supreme Court passed a temporary restraining order on the proposed price hike by Meralco.

Like many other developing countries, the Philippines underwent a series of sweeping market reforms in the 1990s. As far as the electricity sector was concerned, the process of market transition culminated in the passage of the Electric Power Industry Reform Act (EPIRA) in 2001.

It was a landmark piece of legislation, replacing the Rate of Return on Base (RORB) system with a Performance-Based Regulation (PBR) regime. Its advocates promised, among other things, lower power costs, efficient transmission of electricity, and expanded capacity for energy production.

But in reality, a privatised electricity sector meant its domination by influential business families, who transformed the electricity sector into one of the country’s most profitable businesses.

The cost of the bungled privatisation process was borne by the consumers and the economy. The manufacturing sector – relying on affordable and reliable sources of energy, and crucial to the provision of large-scale employment – suffered from increasingly exorbitant power costs, making the Philippines highly reliant on services and domestic consumption as its engines of growth.

The Ibon Foundation, a research and development NGO in the Philippines, says electricity costs rose more than 112 percent in the 2001-2011 period.

Three years into office, President Benigno Aquino III managed to bring about an unprecedented period of political stability and economic revival to the country. But his good governance initiatives ultimately fell short of overhauling the country’s power infrastructure. There was also minimal improvement in the creaking regulatory agencies.

“In not calling Meralco and the power generators to task, the President lost an opportunity to show he understands the plight of consumers that are now suffering power rates that are among the highest in Asia,” Bello told IPS, reflecting the growing demand among leading legislators and the general public for a more decisive intervention by the government.

“The administration will be remembered as being soft on big business if it continues its hands-off attitude in this matter.”

Although President Benigno Aquino initially refused to directly intervene in the matter, he eventually agreed to review the 2001 law, signaling his willingness to introduce crucial reforms in the energy sector.

“We are open [to review]…When it comes to court action or any legal remedy that is available to consumers or to anybody who has the legal standing to do so, they are free to do so,” deputy presidential spokesperson Abigail Valte said.

It seems that a growing number of Filipino citizens have come to realise the consequences of hasty privatisation of public services. As a result, more people are calling for decisive state participation in the economy and empowerment of regulatory agencies to ensure energy security and protection of consumer welfare.

In a move that promises to further raise geopolitical tensions in the region, Japanese Prime Minister Shinzo Abe made a high-profile visit to the Yasukuni Shrine associated with 14 Class-A war criminals and dedicated to 2.5 million soldiers from the Japanese Imperial era.

The Dec. 26 visit marked the first time in seven years that a Japanese leader personally visited the controversial site, which has served as major flashpoint in the country’s long-troubled relations with its Asian neighbours.Abe’s decision to ignore widely held opposition to any high-level visit to the Yasukuni Shrine could seriously undermine Japan’s charm-offensive in Asia.

China and South Korea swiftly denounced Abe’s visit, portraying it as a provocative honouring of Tokyo’s imperial past. For them, Abe’s actions reflect his increasingly overt nationalist tilt, reviving age-old fears of a new militaristic Japan.

Meanwhile, allies such as the U.S. expressed their regrets over the issue, and prodded Japan to avoid fuelling a combustible regional dynamic, as Asian neighbours tussle over a number of contested features in the Western Pacific. Even Southeast Asian states such as Singapore broke with their long tradition of diplomatic subtlety, openly expressing dismay at Abe’s decision.

Against the backdrop of rising territorial tensions between China and its neighbours in the East and South China Seas, namely Japan, Vietnam, and the Philippines, the Abe administration has tried to assume the mantle of leadership in Asia. It has sought to rally smaller neighbours against what it perceives as a common Chinese threat to maritime security and freedom of navigation in the Western Pacific.

But, many analysts contend, Abe’s decision to ignore widely held opposition to any high-level visit to the Yasukuni Shrine could seriously undermine Japan’s charm-offensive in Asia – and its bid to isolate China.

For many neighbours, Japan is yet to come clean on its historical atrocities, especially during the Second World War, where tens of thousands of Asian neighbours bore the brunt of systematic abuse at the hands of the Japanese imperial army.

In contrast to post-War Germany, which experienced a decisive break with the Nazi era, critics claim that Japan was allowed to maintain much of its imperial bureaucracy, avoid an outright and sustained apology on its past crimes, and, gradually over time, indulge in a revisionist account of its imperial history.

“Abe’s visit to the Yasukuni Shrine trampled the feelings of the people victimised by Japan’s military aggression. It is a challenge to all the people in the world who love peace,” declared Yang Jiechi, China’s top foreign policy advisor and former foreign minister.

“It’s also a challenge to the post-war order and the victory of anti-fascism war. Undoubtedly, Abe’s wrongdoings are and should be reprimanded by the Chinese people and the international community.”

Given the long-running historical animosity between China and Japan, exacerbated by territorial tensions over the Senkaku/Diaoyu islands in the East China Sea, Beijing’s rancorous condemnations came as little surprise. Worryingly though, South Korea, a fellow military ally of the U.S., was equally stern in its denouncements.

“The government cannot help but feel outraged by and deplore the December 26 visit of Japanese Prime Minister Shinzo Abe to Yasukuni shrine,” South Korean Foreign Minister Yun Byung-se lamented, reflecting the deeper geopolitical implications of Abe’s actions.

“[The visit] glorifies Japan’s past colonial rule and war of aggression and enshrines its war criminals, in defiance of the concerns and warnings of neighbouring countries and the international community.”

For months, Abe has been seeking a special summit with his Chinese and South Korean counterparts, Xi Jinping and Park Geun-hye, respectively. The summit was supposed to address, among other things, renewed tensions over China’s late-November decision to impose an Air Defence Identification Zone (ADIZ) in the East China Sea, which covered contested maritime features claimed by both South Korea and Japan.

The Yasukuni Shrine visit effectively extinguished the prospects of a top-level meeting for the foreseeable future, further deepening diplomatic anxiety in the region.

“Japan is a valued ally and friend…[But] the United States is disappointed that Japan’s leadership has taken an action that will exacerbate tensions with Japan’s neighbours,” said a  statement by the U.S. embassy in Tokyo, expressing Washington’s fear of uncontrolled escalation in regional tensions.

Singapore, an influential member of the Association of Southeast Asian Nations (ASEAN), also chipped in, with its Ministry of Foreign Affairs stating: “Our consistent position has been that such visits reopen old grievances, and are unhelpful to building trust and confidence in the region.”

In many ways, Abe’s decision to visit Yasukuni reflects his domestic political calculations as well as personal views. Abe’s main constituency lies within the ultra-conservative camp, both the right-wing members of the ruling Liberal Democratic Party (LDP) of Japan as well as other ultra-nationalist coalition partners, which have been vocal proponents of resuscitating Japan’s regional leadership.

They have combined historical revisionism, underwritten by frequent denials of Japan’s past atrocities, with a call for re-arming Japan.

“I prayed to pay respect for the war dead who sacrificed their precious lives and hoped that they rest in peace,” said Abe, adamantly justifying his decision to visit the shrine in a “purely personal capacity”.

Abe, who hails from one of Japan’s most prominent political families, is considered to belong to the more conservative-nationalist wing of the LDP, and has been consolidating legislative support for revising the country’s pacifist constitution, which bars Japan from developing a standing army with an offensive military capability.

Beyond his core constituency, however, Abe has courted growing popular support by effectively utilising a charismatic brand of leadership. Among his signature policies is a series of economic reforms dubbed ‘Abenomics’ which aim to revive the Japanese economy through the introduction of expansionary policies and structural reforms.

So far, Abe’s policies seem to have succeeded at regenerating a measure of confidence in the economy, gradually ending decades of stagnation and deflation. Trade relations with neighbours such as China, meanwhile, have shown considerable resilience, given the symbiotic nature of bilateral economic linkages.

Overall, having secured his footing on the domestic political landscape, Abe seems to have gained enough confidence to more openly express his nationalist views, relentlessly pushing forward with buttressing his country’s military capabilities and foreign policy assertiveness. But his hawkish policies could ultimately undermine his bid to make Japan an East Asian leader steering a regional alliance against China.

Since his rise to power in late 2012, China’s President Xi Jinping has managed to consolidate his control swiftly over the three pillars of the Chinese political system, the state bureaucracy, the Chinese Communist Party (CCP), and the military. In response, many neighbouring countries cautiously welcomed a more self-confident and stable leadership in Beijing, hoping the new Chinese president will display greater flexibility on outstanding regional issues.

After years of intensifying territorial disputes between China and a number of competing claimant states in the South and East China Seas, fears of an accidental clash in the high seas have grown hand in hand with deepening risks of an outright military confrontation in one of the world’s most crucial waterways.

Against this backdrop, the early 2013 appointment of Foreign Minister Wang Yi, a veteran diplomat with considerable experience in Asia, was interpreted as a positive move in the direction of dampening brewing territorial disputes with neighbouring countries, especially Japan, Vietnam and the Philippines. While many analysts saw the diplomatic reshuffle as a reflection of the new leadership’s commitment to prevent further deterioration in its regional ties, President Xi Jinping has proceeded with buttressing the country’s territorial manoeuvres in the Western Pacific.It seems that the Chinese leadership’s more assertive territorial issue, which resonates with the majority of the citizens, is part of a calculated effort to enhance its political legitimacy ahead of the difficult task of implementing a perilous economic transition.

In mid-2013, Xi consolidated various maritime security agencies under the National Oceanic Administration (NOA), which ensured a more efficient and vigorous enforcement of the country’s territorial claims. This, experts contend, allowed China to step up its patrols across the South China Sea and secure its hold on occupied features.

He went even further in streamlining the country’s foreign policy bureaucracy, establishing the State Security Committee (SSC) in November. This is an overarching decision-making body that allows the president to manage national security and foreign policy issues more directly. Previously, the Chinese leaders had to coordinate foreign policy decisions through a complex web of bodies, namely the Leading Small Groups on Foreign Affairs and National Security and the Central Military Commission.

In late-November, China unilaterally imposed an Air Identification Defence Zone (ADIZ) which covers maritime features claimed by both South Korea (Leodo/Suyan Reef) and Japan (Senkaky/Diaoyu Islands) in the East China Sea. To demonstrate its commitment to enforce the new measure, China announced that it will “adopt defensive emergency measures to respond to aircraft that do not cooperate in the identification or refuse to follow the instructions.”

Worried by China’s move, the U.S., Japan, and South Korea immediately challenged the newly announced ADIZ (late November), sending military aircraft to the area and ignoring Chinese authorities. This was followed by a high-profile visit by U.S. Vice-President Joe Biden to the region, where he held direct talks with leaders in Tokyo, Beijing, and Seoul, hoping to calm down tensions.

“China’s recent and sudden announcement of the establishment of a new air defence identification zone has, to state the obvious, caused significant apprehension in the region,” Mr. Biden lamented during his visit to Beijing, where he held tense talks with Chinese President Xi Jingping.

Meanwhile, the Chinese Defence Ministry’s announcement that it will “establish other air defence identification zones at an appropriate time after completing preparations” worried Southeast Asian nations, who fear the imposition of a similar measure over the contested waters of the South China Sea.

“There’s this threat that China will control the air space [in the East China Sea] … It transforms an entire air zone into China’s domestic air space,” said Philippine foreign secretary Albert Del Rosario, openly criticising China’s ADIZ announcement. “That is an infringement and compromises the safety of civil aviation…[and] the national security of affected states.”

But China has refused to rescind its ADIZ, sending its own jet fighters to the area to enforce its regulations. China maintains that its ADIZ is consistent with established international practices, since a number of countries, including the U.S., Japan, India, Pakistan, Norway, and the UK maintain their own air identification zones. In response, Washington has advised civilian aircraft to observe the Chinese ADIZ, while clarifying that the existing ADIZs elsewhere — contrary to that of China — strictly apply to civilian aircraft only.

Meanwhile, Japan and the Association of Southeast Asian Nations (ASEAN) have worked on a joint statement to express their common concern over any potential “threat” to international civilian aviation, calling for ‘freedom of overflight’ in the region. Reports suggest that the draft statement reaffirms the common positions of both sides to “freedom of navigation” in international waters and “maritime security”.

For many observers, the widely shared criticism against China’s latest measures stands in clear contrast to how Beijing was able to garner tremendous regional clout in early-October, when Xi – in the U.S. President Barack Obama’s absence – offered multi-billion dollar trade and infrastructure deals to facilitate economic integration in the region. The hope was that China would avoid further territorial tensions as it seeks to project itself as the new pre-eminent force in East Asia.

“Is the former [Hu Jintao] administration different from the current one? We have hoped that the current administration will be much more constructive, and we are [still] hoping that the situation improves,” Philippine foreign secretary Albert Del Rosario told IPS, expressing the Philippines’ desire for a retrenchment in China’s perceived growing territorial assertiveness.

Others have been less optimistic, pointing to the leadership’s willingness to accommodate the rising tide of popular nationalism, which has been driving the country’s more assertive territorial posturing. The Chinese leadership is already grappling with a difficult economic transition, as it tries to establish a more sustainable economic model driven by domestic consumption, liberalised capital markets, and high-end manufacturing.

The process of economic transition is expected to meet stiff resistance from the beneficiaries of the previous labour-intensive, export-oriented growth model, while attempts at establishing a more competitive market economy could unleash instability in the future.

So far, it seems that the Chinese leadership’s more assertive territorial issue, which resonates with the majority of the citizens, is part of a calculated effort to enhance its political legitimacy ahead of the difficult task of implementing a perilous economic transition.

After months of rising tensions over disputed territories in the South China Sea, there are growing signs that the Philippine government is seeking to revive strained relations with Beijing. And no less than the Philippine President Benigno Aquino is spearheading the ongoing efforts to diplomatically resolve territorial disputes and prevent a disastrous conflict in the region.

The move, analysts contend, is partly inspired by lingering uncertainties over the U.S. military commitment to treaty allies such as the Philippines, which are yet to receive substantial military aid to augment their defence capabilities. But, it is the recognition of Beijing’s growing regional influence and the futility of a confrontational approach that has largely encouraged the Aquino administration to rebalance its China diplomacy.

Since late 2012, the Philippines has stepped up its international diplomacy to solicit external support and push back against what it perceives as China’s growing territorial assertiveness. Aside from accelerating negotiations to strengthen bilateral defence ties with Pacific powers such as Australia, Japan, and the U.S., the Philippines has also filed a legal complaint against China’s claim to a vast collection of territorial features stretching across the South China Sea.The Chinese military and para-military forces have expanded their operations across the disputed features and consolidated control over already occupied territories in the South China Sea.

These efforts were primarily led by the Department of Foreign Affairs (DFA) under the guidance of Foreign Secretary Albert Del Rosario, who has enjoyed extensive ties with Washington and is widely recognised as one of the principal regional voices in favour of an increased U.S. military footprint in Asia.

In response, hawkish elements within China have threatened economic sanctions, while the Chinese Foreign Ministry has flatly rejected any calls for international arbitration of maritime disputes. The country’s top leadership, in turn, has largely ignored its Filipino counterparts in varying regional and international gatherings, leading to a breakdown in bilateral communications.

Meanwhile, the Chinese military and para-military forces have expanded their operations across the disputed features and consolidated control over already occupied territories in the South China Sea, namely the Scarborough Shoal, which was the site of a dangerous standoff between Philippine and Chinese forces in mid-2012.

Yet, without substantial diplomatic and military support from external allies such as the U.S. and robust regional support for a diplomatic resolution of the South China Sea disputes, the Philippines stood little chance of coaxing China into meaningful concessions. Things came to head in October, when (a) U.S. President Barack Obama was forced to cancel his much-anticipated Asia trips to address a domestic political crisis, to the outrage of regional allies expecting deeper American commitment to Asia, and (b) the revelation of serious disagreements in the ongoing Philippine-U.S. negotiations over an expanded defence pact.

“Both sides are conscious that no action shall be taken to exacerbate the situation,” President Aquino argued during the early-October APEC Summit in Bali, trying to dispel criticism that China is dragging its feet on developing a regional Code of Conduct (CoC) to peacefully resolve territorial disputes. “I cannot say we are that close to signing the Code of Conduct, but everyone is now convinced that we need to talk about it. So, the solution is now moving forward to end the territorial disputes in the South China.”

More importantly, in late October Aquino went as far as contradicting his own cabinet members, namely defence secretary Voltaire Gazmin, when he vigorously denied the earlier claims that Chinese forces have been placing ‘concrete blocks’ in the disputed Scarborough Shoal, allegedly as a prelude to establishing military fortifications in the area.

He told a large gathering of foreign reporters in Manila that concrete blocks were “very old” and “not a new phenomenon”, most likely dating back to the Cold War era. He also mentioned his earlier conversations with Premier Li Keqiang on the sidelines of the early October ASEAN Summit, emphasising how despite disagreements “at least [both sides] are talking.”

In succeeding weeks it became clear that Manila and Washington were still wide apart on striking a new defence deal to allow deeper bilateral military cooperation and expanded U.S. rotational presence in the Philippines.

“It is at the stage where there is negotiation so it’s a give and take process. Right now, we have not agreed on the issues raised,” Gazmin lamented (Nov. 5), admitting an impasse in the ongoing defence negotiations. “They [U.S.] have proposals that we do not agree with. But that’s how negotiations are.”

Crucially, Gazin didn’t mention any date for the next round of negotiations, reflecting the profound nature of bilateral disagreements. Reportedly, there is lack of a agreement on the nature and duration of “pre-positioning” of U.S. defence equipment in the Philippines, its “ownership”, as well as the added value of a new agreement: specifically, what types of military assets would be leased to Philippines in exchange for greater base access.

The combination of continuing uncertainties regarding Philippine-U.S. defence relations and China’s growing economic might, which has been boosted by its offer to establish a multi-billion Asian infrastructure fund to aid the development of Southeast Asian neighbours, has strengthened Aquino’s call for reviving bilateral ties with Beijing.

It is however far from clear whether China is willing to reciprocate Aquino’s overtures, given the rising popular nationalism in the country, which has precipitated a more muscular regional maritime policy. This may, experts argue, explain China’s initially modest pledge of aid to the typhoon-stricken Philippines, much to the disappointment of those who expected more humanitarian pro-activeness on the part of Asia’s biggest economy.

With the U.S. and Japan taking the lead on providing pivotal financial and logistical assistance to thousands of victims of Haiyan in the Philippines, and facing growing criticism in the region for its ‘meagre’ pledge, China eventually decided to increase its humanitarian assistance from 100,000 dollars to 1.64 million dollars, with Chinese President Xi Jinping reportedly offering his “heartfelt sympathies” in a phone conversation with Aquino.

Overall, what is clear is that the Philippines is re-calibrating its bilateral relations with China, and is seeking an alternative approach to resolve territorial disputes. In the end, however, it will take a joint effort by both sides to overcome the recent escalation in tensions and resuscitate diplomatic channels to peacefully resolve the disputes.

As the U.S. struggles with a weeks-long government shutdown which has threatened the country’s economic recovery and forced President Barack Obama to cancel a series of high-stakes visits to Asia, China has instead taken the centre-stage, boosting ties with Asian neighbours and promising multi-billion trade and investment deals.

Amid rising geopolitical tensions in the Western Pacific, Obama’s scheduled trip to Asia was meant to reassure allies and reiterate Washington’s commitment to regional stability. Moreover, Obama was also expected to make a strong pitch for the Trans-Pacific Partnership Free Trade Agreement (TPP-FTA), which aims to cover 12 Pacific Rim nations that collectively constitute about 40 percent of the global economy and a third of its total trade.

But facing a domestic political crisis, with the U.S. Congress blocking implementation of the Affordable Healthcare Act, the White House announced Obama’s decision to not only skip state visits to Malaysia and the Philippines, but also trips to the Asia Pacific Economic Cooperation (APEC) as well as the Association of Southeast Asia Nations (ASEAN) summits in Indonesia and Brunei."Obviously we prefer a U.S. government that is working than one that is not, and we prefer a U.S. President who is able to travel and fulfill his international duties to one that is preoccupied with domestic preoccupations.”

In Obama’s absence, Chinese President Xi Jinping took the limelight, becoming the first foreign leader to deliver a speech at the Indonesian Parliament and serving as the keynote speaker at the APEC summit (Oct. 7-8).

To up the ante, Xi offered to set up a 50 billion dollar Asian Infrastructure Investment Bank which is set to rival the U.S.-Japan-led Asian Development Bank (ADB) as the continent’s primary source of development aid.

“China will firmly uphold regional peace and stability and help cement a foundation for a win-win situation in the Asia-Pacific,” declared Xi at the APEC summit. He emphasised China’s role as Southeast Asia’s top economic partner and its emergence as a regional powerhouse. “China cannot develop in isolation of the Asia-Pacific, and the Asia-Pacific cannot prosper without China.”

Throughout the summit, Xi astutely glossed over China’s deepening territorial disputes with neighbouring countries, namely Japan, Vietnam and the Philippines, while emphasising the resilience of the Chinese economy and the depth of its interdependence with Southeast Asian neighbours.

Intent on undermining the TPP, a centerpiece of Washington’s pivot to Asia that ostensibly excludes China, Xi also pushed for the Regional Comprehensive Economic Partnership (RCEP) free trade agreement (FTA), which aims to consolidate already existing regional FTAs into an overarching trade arrangement, with China very much at its centre.

The ongoing TPP negotiations, which have been criticised for their lack of transparency, have met strong domestic opposition across member countries, especially in Asian countries such as Japan, Malaysia, and Vietnam. The TPP is widely characterised as a corporate-driven FTA, which aims to stringently uphold intellectual property rights, allow foreign companies to override domestic laws and sue member states, curtail consumer access to basic goods and services, and place restrictions on or/and dismantle state-owned enterprises.

“The TPP is designed as a second-best alternative to promote corporate interests via free trade given the stalemate at the World Trade Organisation,” Dr. Walden Bello, a renowned expert on trade-related issues, told IPS. “The benefits of trade accruing to corporations whatever their nationality with what will soon become the world’s biggest economy will undermine the U.S.’s geo-economic objective.”

Equipped with almost 200 billion dollars in foreign aid budget, China has become the prime economic force in Asia. While cautiously welcoming Beijing’s increased economic footprint, with Xi declaring a one trillion dollarChina-ASEAN trade target by 2020, Southeast leaders are, however, less impressed with Washington.

“Obviously we prefer a U.S. government that is working than one that is not, and we prefer a U.S. President who is able to travel and fulfill his international duties to one that is preoccupied with domestic concerns,” lamented Singapore’s Prime Minister Lee Hsien Loong, prodding Washington leaders to get their act together.

“And America has to continue to be engaged in this region because it plays a very important role which no other country can replace, not China, not Japan, not any other power.”

Immediately after the APEC summit, Chinese Premier Li Keqiang, in turn, took the mantle of leadership at the ASEAN summit (Oct. 9-10) in Brunei. After months of hectic negotiations over establishing a new regional Code of Conduct (CoC) to peacefully resolve territorial disputes in the South China Sea, many were hoping for concrete indications of a diplomatic breakthrough.

With China earlier this year agreeing in principle to re-open negotiations over a CoC, there were expectations of new announcements on the contours of the proposed code, the composition of the technical group in charge of drafting its guidelines, and a detailed timetable for its conclusion.

Among Southeast Asian states such as the Philippines, which are locked in a bitter territorial dispute with China over a variety of features in the South China Sea, there was a great sense of urgency for a major diplomatic development.

Despite incessant efforts by major regional leaders from Japan, Australia and the U.S. (represented by Secretary of State John Kerry), however, there was hardly any sign of China softening its territorial stance, with Premier Li emphasising how China is “unshakable in its resolve to uphold national sovereignty and territorial integrity.”

Alarmed by China’s assertive stance, and with little indications of the ASEAN collectively standing up to China on the territorial issue, Philippine President Benigno Aquino and his Vietnamese counterpart Prime Minster Nguyen Tan Dung held a meeting on the sidelines of the summit aiming to coordinate their efforts in preventing a conflict in the South China Sea and peacefully resolving disputes.

As an indication of the depth of bilateral tensions, Aquino’s effort to reach out to his Chinese counterpart was rebuffed, while Filipino and Chinese diplomats reportedly quarrelled over the wording of a paragraph regarding the territorial disputes in the ASEAN-China joint statement.

The Philippines, currently negotiating an expanded U.S. rotational military presence on it soil, was hoping for Obama to back its territorial claims and dissuade China from further territorial assertiveness.

But amid Washington’s shutdown and Obama’s absence, China was busy courting Southeast Asian states and elevating its regional profile by offering massive trade and investment incentives.

Under the reformist leadership of President Benigno Aquino III who has placed “good governance” initiatives at the heart of his administration’s agenda, the Philippines has enjoyed an unprecedented period of economic revival and political stability. 

The Aquino administration’s decisive crackdown on high-level corruption, which earlier saw the impeachment of top magistrates implicated in the abuse of power, restored some measure of confidence in state institutions and the economy. No longer a regional lacklustre, the Philippines has emerged as one of the few bright spots in Asia, growing by 7.8 percent in the first quarter of 2013, and is expected to grow by an average annual rate of around six percent in the foreseeable future.

Nevertheless, the majority of the population continues to suffer from poverty, with growing income inequality sustaining well-entrenched networks of political patronage that fuel corruption across the country.Many continue to see widespread poverty and inequality as the key underlying factors for systemic corruption.

Latest data suggests that the 40 richest families control up to 76 percent of the economy, the highest rate of “wealth concentration” in Asia. Such staggering levels of income inequality have had a direct impact on the political landscape, where about 178 political dynasties have continuously dominated 73 out of a total of 80 provinces in the Philippines.

Recent months, especially, have raised concerns as to the Aquino administration’s ability to rein in the age-old challenge of systemic corruption. Beginning in July, a number of whistleblowers have come forward, shedding light on a 220-million-dollar corruption scandal, dubbed by the media as the “mother of all scams”.

According to the ongoing investigations, dozens of legislators have allegedly partnered with bogus non-governmental organisations (NGOs) to build ghost projects – those that only exist on paper – in order to re-channel their discretionary Priority Development Assistance Fund (PDAF) to their own pockets.

In principle, the legislators are supposed to use their PDAF for local development projects, but systemic corruption has compromised programmes for rural development and empowerment of indigent communities, with some politicians, in the process, amassing staggering amounts of wealth to sustain their elaborate systems of political patronage and ensure a strong hold on power.

“Despite the reforms we have implemented, we have seen, as the events of the past weeks have shown, that greater change is necessary to fight against those who are determined to abuse the system,” Aquino stated amid growing public pressure, admitting the need for more reforms. “It is time to abolish the PDAF.”

Outraged by the breadth and veracity of the corruption charges, reportedly up to 75,000 Filipinos took to the streets of Manila on Aug. 26 on National Heroes Day to demand immediate prosecution of alleged plunderers as well as the elimination of legislator’s discretionary funds, the PDAF.

“The dominant emotion is anger and outrage,” said Ito Rapadas, the major figure behind the nation-wide anti-corruption rally. “People who are paying taxes faithfully could not accept that the money was being misused.”

Across the Philippines and beyond, concurrent rallies were held in solidarity, reflecting the growing societal anger against the perceived impunity of corrupt officials. It marked the biggest protests under the current Aquino administration.

The protesters were largely unified in their conviction that the PDAF has served as not only an avenue for self-enrichment by corrupt officials, but also a means for sustaining a vicious cycle of political patronage, especially during election periods.

“President Aquino…has the option now of continuing his anti-corruption reforms by going along with the public sentiment and ending [the PDAF],” Ramon Casiple, a leading Filipino expert on good governance issues, told IPS. “If he does that, it’s tantamount to upending the entire political-patronage system in the Philippines.”

Despite Aquino’s historic-high approval ratings, he has understood the significance of recent rallies, and that his popularity does not equate to civic passivity. Feeling public pressure, the government has instituted more checks and balances into current fiscal allocation mechanisms.

Moreover, the government has vowed to prosecute corrupt officials. Aquino has assembled the Inter-Agency Anti-Graft Coordinating Council to gather evidence and file charges against the alleged plunderers, while the Philippine Senate is overseeing a Blue Ribbon Commission to gather testimony from officials and whistleblowers in aid of prosecution.

As most experts agree, however, one of the fundamental drivers of corruption is the huge socio-economic gap between the top few of the population on one hand, and the larger masses on the other.

In the absence of secure and well-paying jobs for the majority of the people, many are forced to sell their votes during elections or beg for patronage from elected officials. This has created a culture of dependency, which has encouraged many officials to amass ill-gotten wealth to secure votes and political support among the poor, who constitute the majority of the voters.

Despite the continuous expansion in the Philippine economy, the country is largely dependent on low-end services and remittance-driven consumption as engines of growth. Lacking a diversified economy, the majority of the Philippine population is unlikely to benefit significantly from the recent economic boom.

While the recent revelations have provided a wealth of evidence and testimonies to warrant a high-profile crackdown on powerful officials, including three potential presidential candidates in the 2016 elections, many continue to see widespread poverty and inequality as the key underlying factors for systemic corruption.

Critics contend that even a successful crackdown on alleged plunderers as well as the abolition of the PDAF will not ensure a decisive reduction in corruption, for officials will vigorously seek other means to tap into state resources to secure votes. Eliminating widespread corruption, they say, will ultimately require a more egalitarian economic environment that breaks the cycle of poverty and dependency that fuels political patronage.

With the administration of Philippines President Benigno Aquino III devoting much of its political capital to resolving the conflict in the southern Philippine island of Mindanao, which has claimed around 150,000 lives over decades, many came to believe in the genuine possibility of a new era of stability and economic prosperity in the region.

Since 2011, the Philippine government has engaged in intensive negotiations with the country’s largest insurgency group, the Moro Islamic Liberation Front (MILF). Committed to bringing about peace to Muslim Mindanao, Aquino went as far as holding secret talks with the MILF chairman Murad Ebrahim in Japan (Aug. 4, 2011) to reinvigorate the long-stalled peace negotiations, with Malaysia serving as a key mediator.

Peace negotiations with the MILF culminated in the late-2012 Framework Agreement, which laid down the foundation of a ‘Bangsamoro’ Islamic sub-state in the near future, allowing the Muslim minority to enjoy a measure of political, cultural and economic autonomy in the South. This represented the strongest attempt at a political settlement of the conflict in Mindanao.

But in the absence of a more inclusive peace process involving all key stakeholders, Aquino’s pitch for a decisive resolution of the conflict was inherently shaky. Things came to head when hundreds of rebel fighters belonging to the MILF’s parent organisation, the Moro National Liberation Front (MNLF), launched a coordinated attack on the Christian-majority Zamboanga City in Mindanao in early-September.The Zamboanga crisis has laid bare the inherent vulnerabilities of the Philippine government.

What followed was a national crisis, which led to the displacement of up to 82,000 residents, the destruction of almost 1,000 buildings, and the death of 90 individuals within two weeks of intermittent fighting between rebels and government forces.

The Zamboanga crisis has laid bare the inherent vulnerabilities of the Philippine government in providing security to its citizens as well as instituting durable peace in Mindanao.

Shortly before the events, as the government and the MILF reached a crucial agreement on the issue of revenue-generation and wealth sharing, there were growing indications of renewed tensions in the area.

In mid-August, MNLF members, led by the doyen of Moro nationalism Nur Misuari, decided to protest their exclusion from the ongoing peace process by declaring “independence” from the Philippines. They argued that the government-MILF negotiations unjustly superseded the 1996 peace deal, which marked the (a) cessation of MNLF’s two-decade-long guerrilla war against the government and (b) the establishment of the Autonomous Region of Muslim Mindanao (ARMM) shortly after.

The ARMM, composed of the impoverished provinces Basilan, Tawi-Tawi, Lanao del Sur, Maguindanao, and Sulu, has fallen way short of MNLF’s hopes for a viable Moro-Islamic state in Mindanao, which is composed of 26 provinces.

Misuari himself, the first governor of ARMM, has been increasingly marginalised within his own ranks for his perceived fruitless compromises with the Philippine government.

“We have achieved something tremendous in our quest for peace in our homeland… [But] we had to fight for it and in fact we have lost hundreds of thousands of lives just to be able to reach this point,” said Misuari earlier this year, criticising the Philippine government for failing to fulfill its age-old promise of genuine autonomy to Muslim Mindanao and sidetracking the MNLF in the ongoing negotiations.

Repeatedly ignored by the government, MNLF members raised the stakes by laying siege on Zamboanga and taking up to 180 residents as hostages. Intent on quelling the insurgency, the Philippine government responded with the deployment of around 3,000 government troops, composed of both the Philippine National Police-Special Action Force (SAF) as well as the Armed Forces of the Philippines (AFP).

A dangerous standoff between the rebels and government troops ensured, with the entire city forced to shut down immediately. Meanwhile, a “no fly zone” was declared by the government, with authorities imposing a curfew.

As clashes turned increasingly violent with government troops seeking desperately to free hostages and end the standoff, a national crisis was born. At this point, top government officials, namely AFP chief-of-staff Emmanuel Bautista, Interior Secretary Manuel Roxas III, and Defence Secretary Voltaire Gazmin, were dispatched to Zamboanga City to directly manage the crisis and end the siege as peacefully as possible.

Matters got worse when other radical rebel groups, especially Abu Sayyaf and Bangsamoro Islamic Freedom fighters, joined the fray and spread the crisis to neighbouring Basilan, which also saw flare-ups in terror attacks and violent skirmishes.

Due to confusion over the leadership of the perpetrators, with Misuari denying direct responsibility in the siege, authorities repeatedly failed at establishing communication channels and negotiating a ceasefire with the rebel groups.

“They refuse to listen to anybody locally,” said Zamboanga City mayor Maria Isabelle Climaco-Salazar. “They say that it’s an international problem, and no less than the international community, the UN, should come in.”

On Sep. 13, President Aquino, sensing the urgency of arresting the deepening humanitarian crisis in the area, arrived at Zamboanga to directly manage the crisis.

“There’s a thin line that can’t be crossed, putting civilians’ lives at risk,” Aquino said in a stern warning to the rebel groups. “When that line is crossed, I will be forced to not only show, but use the full force of the state.”

But rebels continued to dig in and refuse to surrender, prompting the government to employ all its military instruments, with the Philippine Air Force (PAF) beginning to bomb rebel strongholds and ground troops denying exit routes to the rebels.

So far, government troops have killed up to 200 rebels, while rescuing 170 hostages. Overall, the government seems to have gained the upper hand, and the end to the siege is in sight, but the rebels have managed to expose the fragility of the security situation in the South, with the government struggling to cope with a renewed humanitarian crisis and a major blow to its peace initiatives in the region.

With little sign of a meaningful diplomatic breakthrough on the South China Sea horizons, coupled with a dangerous escalation between Vietnam and China in the disputed waters, the Philippines has faced an added crisis over the Malaysian state of Sabah.

The crisis was prompted when (Feb. 14) between 80-100 armed supporters of the descendants of the Sultanate of Sulu, led by Sultan Jamalul Kiram III, launched a ragtag occupation of a remote area of the Malaysian state, precipitating a muscular response from the Malaysian security forces.

Despite incessant efforts by the Philippine government to prevent a violent confrontation, notably dispatching a humanitarian fleet to fetch children and women among the armed men, Malaysia and Kiram’s so-called Royal Security Forces (RSF) ended up fighting a protracted and bloody guerilla war, re-igniting a centuries-old tug-of-war between the Philippines and Malaysia over oil-rich Sabah.

Meanwhile, the conflict led to the potential displacement of up to 800,000 Filipinos residing in Sabah, with dozens of Filipinos accusing Malaysian authorities of committing human rights violations amid large-scale mopping-up operations against Kiram’s suspected followers.

As the crisis intensified, more supporters – straddling porous maritime borders and infiltrating the naval blockade by Filipino-Malaysian forces – of Sulu Sultanate entered the theatre of war.  Within two months, confrontations led to the death of at least 68 members of the RSF and the arrest of 126 others, while up to 6,000 Filipinos residing in Sabah were reportedly displaced by the crisis.

In many ways, some analysts and commentators have characterised the whole fiasco as a classic case of intelligence failure, with both Manila and Kuala Lumpur failing to anticipate a bilateral crisis resulting from unilateral actions by a number of non-state actors. It was also, they claim, an example of crisis-management disaster, with both governments failing to effectively prevent an armed confrontation in absence of a close bilateral security-intelligence coordination and effective deployment of peaceful, diplomatic means.

All the while, the Philippines has been facing a dangerous escalation in the South China Sea in recent months, with Beijing (a) rejecting Manila’s call for an international arbitration of maritime disputes and (b) taking an unprecedented decision to deploy three “surveillance ships” and a naval helicopter to consolidate its claims over disputed features.

With a cloud of mystery shrouding the exact circumstances leading to the crisis, people have resorted to a range of conspiracy theories amid sensitive elections in Philippines, where the Aquino administration is facing a de facto referendum in a by-elections, and Malaysia, where the ruling coalition is facing a historical parliamentary battle against an emboldened opposition. Some are accusing the Aquino administration of orchestrating the Sabah crisis to score domestic political points, while others have pointed their finger at the Malaysian opposition led by Anwar Ibrahim.

The Malaysian government, meanwhile, has engaged in an effective public relations campaign, rousing nationalist sentiments and public sympathy for the government under Prime Minister Najib Razak, while an increasing number of Filipinos have renewed their calls for a more assertive stance by the Aquino administration on the Sabah issue, with some citizens petitioning the Supreme Court to instruct the executive to bring Philippines’ claims to international courts.

Responding to the popular pulse, the Aquino administration has promised to convene a panel of experts and government officials to review the possibility of subjecting the Sabah claim to international arbitration.

Prior to the independence of Malaysia and the Philippines, the Sultanate of Sulu laid claim to North Borneo, a gift from the Bruneian royalty, which it leased to the British North Borneo Company in 1878 in exchange for an annual payment of 5,000 Malayan dollars then, which was increased by another 300 Malayan dollars 1903 onwards.

At the onset of the emergence of the Malaysian Federation, after the withdrawal of British forces, the Sulu Sultanate ceded its North Borneo claim to the Philippine government in 1962. The following year, however, Sabah was incorporated into the Malaysian federation, provoking a diplomatic crisis between Manila and its new Southeast Asian neighbour.

The Marcos regime in the Philippines pushed the envelope by increasingly agitating against the newly formed Malaysian state, threatening to take back Sabah by force, which, in turn, prompted Kuala Lumpur to seek U.S. assistance to dissuade Manila against any armed action, according to newly-released diplomatic cables.

Initially, Marcos solicited the support of Filipino Muslims, the so-called ‘Moros’, to reclaim Sabah. But a series of events, notably the Jabbidah Massacre, escalated into an internal war between the Philippine government and an all-out insurgency in the South, led by the Moro National Liberation Front (MNLF) under charismatic academic-turned-warrior Nur Misuari.

Reportedly, what ensued was a proxy war, whereby the Malaysian government supported the insurgency to distract the Philippine government, which eventually decided to prioritise its strategic ties with its western neighbour and drop the pursuit of Sabah in order to focus on the domestic crisis.

No wonder, many have accused the Aquino administration of allegedly sidelining the country’s claim to Sabah in order to facilitate the Malaysian-brokered framework peace agreement with the country’s main insurgency group and MNLF-offshoot, the Moro Islamic Liberation Front (MILF), in 2012.

For some, Kiram’s actions were a desperate attempt to highlight an otherwise forgotten territorial dispute, since the Sulu Sultan, prior to the crisis, is said to have repeatedly sought Manila’s assurances on upholding the Sabah claim in principle and practice. Meanwhile, the MNLF, with Misuari supporting Kiram’s stance on Sabah, has accused the Philippine government of striking new deals with the MILF, without fully honouring its earlier agreements with the group.

Against such a stormy backdrop, Malaysia imposed restrictions on barter deals with Filipino traders, while Manila and the MILF failed to reach a deal on key aspects of the framework agreement in the latest series of negotiations, underscoring the depth and range of challenges faced by the Aquino administration.

In effect, Manila has been placed in a precarious strategic position, whereby it is simultaneously facing two diplomatic crises to its west (Malaysia) and north (China), while desperately seeking to rein in domestic insurgency, especially in the southern island of Mindanao.

After almost two decades of non-stop negotiations, and two years of intense U.S. opposition, the much-delayed and controversial 7.5 billion dollar Iran-Pakistan pipeline is well on its track to full operation in the next 15 months.

In a telling sign of Pakistan’s growing energy woes, Pakistan President Asif Ali Zardari chose to ignore vigorous external opposition and visit Iran (Feb. 27) in order to finalise a fateful energy deal which could potentially elevate Iran-Pakistan relations into a strategic partnership. Zardari and Iran President Mahmoud Ahmadinejad inaugurated the pipeline on Monday this week.

Once completed, the gigantic 1,881 kilometre pipeline is set to carry 21.5 million cubic metres of natural gas per day (mid-2015) from Iran’s Assalouyeh Energy Zone in the south, stretching over 1,100 km through the country, to the Iran-Pakistan border (Gabd-zero point). Then it will pass through Balochistan and Sindh within Pakistan, from where it would be connected to an existing gas transmission network. Iran has almost completed its side of the pipeline, but Pakistan has been searching for sufficient funds to build its side of the bargain.

After meeting Iran’s top leaders in Tehran, Zardari was able to seal a final agreement to complete the 1.5 billion dollar pipeline project on the Pakistani side. According to the deal, Iran will provide as much as 500 million dollars in soft loans, with an Iran-Pakistan consortium, Iran’s Tadbir Energy and Pakistan’s Interstate Gas Company, to undertake the pipeline construction inside Pakistani soil. The pipeline is due to assume full operation by December 2014, based on an earlier gas sales and purchase agreement.

“The two countries have mutual trust and consolidated relations today despite the will of all those who intend to ruin Tehran-Islamabad relations and impede our path of cooperation,” Pakistan’s president said after signing the final agreement with Tehran. “I believe that building this project is very beneficial for both sides and we support all the work carried out so far.”

“Iran and Pakistan have and will stand beside each other with a strategic outlook,” Ahmadinejad declared, characterising the agreement as a diplomatic coup against growing external pressure to isolate Tehran amid the ongoing nuclear impasse.

Ahead of the Zardari visit, the Pakistani cabinet committee (composed of senior figures in the finance, law, and petroleum ministries headed by the minister of state for finance) approved a 1.5 billion dollar agreement. In this sense, Zardari’s visit was to iron out the details of the deal, particularly the terms of Iranian financing, construction participation, and gas prices, since the Pakistani bureaucracy was already fully on board.

Nonetheless, the trip marked a dramatic turn in Islamabad’s foreign policy, with Zardari braving international pressure and risking irreversible estrangement with Washington, which has tirelessly pushed for an alternative supply from Turkmenistan, via Afghanistan, the so-called TAPI (Turkmenistan-Afghanistan-Pakistan-India) pipeline.

Ahead of the Zardari trip, outgoing secretary of state Hillary Clinton, in a statement to the U.S. Congress, warned Pakistan against pursuing the pipeline project, saying that “beginning the construction of such a pipeline, either as an Iranian project or as a joint project, would violate our Iran sanctions law.”

Canada’s hawkish leadership condemned the pipeline project, with foreign minister John Baird stating that “Canada is deeply disappointed by Pakistan‘s decision” and that “Pakistan’s decision runs directly contrary” to the objective of isolating Iran over its nuclear programme.

In Pakistan’s view, however, the West is insensitive to the country’s national interests. Pakistan is grappling with an energy crisis, with power shortages hammering domestic industries and further angering the general public. Relations with Washington are frosty and mired in controversy, prompting occasional diplomatic jabs, with growing bilateral tensions over American drone strikes and anti-terror operations inside Pakistani soil.

Given the depth of the security crisis in Afghanistan, as the West swiftly draws down its military presence despite Taliban forces’ relentless push against the fragile Kabul-based government, the Washington-sponsored TAPI pipeline is far from a feasible and timely alternative. Iran represents an affordable and timely energy supplier, with the pipeline set to contribute as much as 20 percent of Pakistan electricity production.

The deal is a subtext of a broader trend where Iran – leveraging its sizeable hydrocarbon reserves – has been gradually warming up to energy-hungry U.S. allies such as Turkey, which has been Iran’s major natural gas customer and a vigorous critic of Western ‘secondary sanctions’ on Tehran’s energy partners.

Pakistan and Iran (together with Turkey) have been founding members of the regional body, the Economic Cooperation Organisation (ECO), and have for decades been exploring multiple ways of enhancing bilateral relations and regional economic integration.

Initially, the pipeline was conceived to extend as far as India, and potentially even China, but a combination of security concerns, external pressure, and pricing disagreements has confined the project to the two immediate neighbours. But Chinese banks are to provide some project financing, while Pakistani officials have indicated a possible extension and re-direction of the Iran-Pakistan pipeline once China is on board. The Iran-Pakistan pipeline, more importantly, will lay down the foundation of a broader trans-regional energy corridor, with Iran at its very core.

Crucially, the two sides have discussed broader strategic cooperation, especially over the insurgency and instability in the Balochistan province (a major threat to the pipelines) as well as the fate of Afghanistan. Given Western sanctions on Iran’s financial and energy sectors, the bilateral talks also provided the basis for substantial barter deals.

The final agreement represents a new chapter in Iran-Pakistan relations, potentially resolving Pakistan’s energy woes, but also signaling the West’s limited capability to fully isolate an energy-rich Iran.

After a year of intense diplomatic standoff and territorial brinkmanship among disputing states in the South and East China Seas, the U.S. military ‘pivot’ to the region appears to be in full swing – a move that could further aggravate an already combustible regional dynamic.

Against the backdrop of Chinese territorial assertiveness, the year started off with the bang of big-ticket U.S. arms sales to treaty allies and strategic partners across the region, including an expanded package of sophisticated military hardware featuring state-of-the-art anti-missile systems and warplanes. On top of this, Washington has also stepped-up its joint military exercises with Asian allies perched on the forefront of ongoing territorial spats.

Building on its earlier promise of greater commitment to the freedom of navigation in the Western Pacific, an artery for global trade and energy transport, Washington aims to improve its allies’ military capabilities in a bid to rein in Beijing’s strong-willed territorial posturing.

Facing a stubborn economic downturn at home, the dramatic boost in U.S. defence sales to the region underlines Washington’s growing emphasis on a primarily military-oriented (as opposed to trade-and-investment-driven) approach to re-asserting its position as an ‘anchor of peace and stability’ in the region.

Among the biggest beneficiaries of growing U.S. military commitment to the region is the Aerospace Industries Association (AIA), a massive trade group that includes top Pentagon suppliers such as Lockheed Martin Corp, Boeing Co and Northrop Grumman Corp. It underscores the extent to which the U.S. ‘pivot’ has energised the American industrial-military complex, further dimming the prospects for a peaceful resolution of the ongoing disputes.

“(The pivot) will result in growing opportunities for our industry to help equip our friends,” says Fred Downey, vice-president for national security at the AIA.

Since the formal commencement of the U.S. pivot, after U.S. President Barack Obama’s fateful speech to the Australian Parliament in November 2011, Washington has come under tremendous pressure to reassure troubled allies such as Japan and the Philippines against Beijing’s assertiveness. In response, the U.S. has beefed up its rotational military presence across the Pacific, while expanding joint exercises – focusing on maritime defence – with and military aid to Pacific partners.

To calm China’s fears of a U.S.-led regional containment strategy, Washington has also focused on deepening economic integration within the Pacific Rim, specifically through the proposed Trans-Pacific Partnership (TPP) trading agreement, which aims to facilitate the flow of investments and goods among partner-nations. In addition, the U.S. has also – at least in principle – underlined its support for diplomatic resolution of ongoing territorial disputes in the South and East China Seas.

However, the U.S. pronouncements have failed to appease regional partners and deter Chinese assertiveness. Beijing continues to accuse Washington of staging a concerted effort to deny China its (perceived) legitimate interests, while allies have raised doubts as to Washington’s ability – given its dire fiscal woes – to maintain regional ascendancy.

Reflecting on fragile U.S. finances, Ken Lieberthal, director of the Thornton China Center at the Brookings Institute and former president Bill Clinton’s top China adviser, has stated, “The most important single element to our (U.S.) success in Asia will be whether domestically we get our house in order, whether domestically we’re able to adopt and integrate a set of policies that will effectively address our fiscal problems over time.”

Given TPP’s failure to gain traction among major Pacific economies, and in the absence of any substantial American investments and economic aid to strategic partners, Washington seems to have instead opted for a full military pivot. The Association of Southeast Asian Nations (ASEAN) inability to forge ahead with an effective diplomatic mechanism to settle the disputes has only encouraged this trend.

Since 2011, the U.S. worldwide military sales have hovered above 60 billion dollars.  In 2011, India alone accounted for a 6.9 billion dollar acquisition deal, underscoring New Delhi’s growing anxieties with China’s massive naval buildup, especially in light of its substantial energy-related investments in South China Sea. Last year, overall sales to Pacific partners topped 13.7 billion dollars.

Building on its earlier arms bonanza, the U.S. defence industry has started off the year with a large package of flashy, cutting-edge arms sales to key partners in Northeast Asia: a 5 billion dollar Lockheed Martin radar-evading F-35 Joint Strike Fighter aircraft deal with Japan, a 1.85 billion dollar Lockheed Martin-led retrofitting of Taiwan’s 145 F-16A/B fighters with advanced radars and electronic warfare suits, and a 1.2 billion dollar Northrop Grumman high-flying RQ-4 “Global Hawk” spy drone deal with South Korea.

Beyond propping up allies’ military capabilities to deal with a wide array of challenges, including China, Washington has also encouraged further self-reliance and inter-operability among regional allies, creating a so-called “inversed wall of China” across the Western Pacific.

As a result, the newly-elected Japanese government, under the hawkish Prime Minister Shinzo Abe, has supported Washington’s call for a more assertive Japanese regional role. Mr. Abe has pushed for revitalised defence ties with Asian partners, enhanced inter-operability with major naval powers in the Pacific such as Australia and India, and expanded military aid to countries such as the Philippines. He has also pushed for a so-called Asian “security diamond”, bringing together likeminded Pacific powers concerned with a perceived Chinese “threat”.

With Japan locked in a brewing conflict with China over the Senkaku/Diaoyu islands in the East China Sea, Washington has conducted a series of high-profile joint naval exercises with Tokyo. In November, 47,000 Japanese and American military personnel took part in the biennial Keen Sword exercise off Okinawa islands, which was originally planned to act out the re-capture of disputed islands off the southern coast of Japan. This was followed by a five-day joint air exercise in January, just days after Japanese jets fended off Chinese aircraft surveying the disputed islands.

Overall, the U.S. seems to be gradually passing the buck to Asian partners, prodding them to bear a growing share of defense costs vis-à-vis China’s perceived expansionism. Meanwhile, there is little indication of a renewed push for a diplomatic resolution of the territorial disputes.

With territorial tensions in the South China Sea entering a new phase of confrontation, there are signs of growing Indian involvement in regional affairs.

Aside from its anxieties over China’s expanding naval capabilities, India has direct economic and strategic interests in Southeast Asia. For many years, India’s state-run Natural Gas Corp. (ONGC) has been involved in joint ventures with TNK Vietnam and Petro Vietnam, conducting exploratory/offshore hydrocarbon projects in the disputed waters of South China Sea.

Meanwhile, India has also been expanding its strategic ties with the booming economies of Association of Southeast Asian Nations (ASEAN), hoping to raise bilateral trade to as much as 200 billion dollars in the next decade.

As ASEAN’s major dialogue partner, India has repeatedly underscored its commitment to the freedom of navigation in the South China Sea, cautioning against rising threats to maritime security.

During the recently-concluded ASEAN-India Summit, many Southeast Asian states, in response to China’s provocative actions, have sought greater role for and involvement of India in ensuring regional stability and deterring Chinese aggressive posturing.

“While the centre of the global economy is shifting eastward, the Indian and Pacific oceans have been and will become even more important in providing the vital sea routes for trade and commerce,” Indonesian President Susilo Bambang Yudhoyono declared during the summit.

Both India and the ASEAN seem to share growing concerns over China’s increasing maritime assertiveness and naval capabilities.

November of last year – when Chinese (paramilitary) vessels allegedly harassed the Vietnamese Binh Minh 02 seismic survey vessel in the hydrocarbon-rich blocks where India’s ONGC is directly invested – marked a turning point in India’s disposition towards the South China Sea disputes.

“Not that we expect to be in those waters very frequently, but when the requirement is there for situations where the country’s interests are involved, for example ONGC Videsh, we will be required to go there and we are prepared for that,” Indian navy chief Admiral D.K Joshi declared in response to the incident, warning China against further provocations.

His comments coincided with a new round of Sino-Indian negotiations over long-standing border disputes, which sparked a war back in 1962 and have embittered bilateral ties since then.

Recent years have witnessed a precipitous escalation in regional maritime disputes, pitting China – which claims almost all features in the South China Sea and continues to prefer bilateral dispute-settlement mechanisms – against Southeast Asian states such as Philippines and Vietnam.

However, last year marked a further deterioration in regional security, with ASEAN failing to adopt a common position on establishing a binding regional Code of Conduct (CoC) to settle maritime disputes.

The situation worsened when the new Chinese leadership engaged in a series of provocative actions, ranging from the issuance of a new Chinese passport, featuring the full extent of Beijing’s territorial claims across Asia, to the recent announcement by Hainan authorities to search and intercept foreign vessels straddling China’s claimed maritime territories, and the new Chinese official map featuring territories within Vietnam’s Exclusive Economic Zone (EEZ).

In response, the Philippines and Vietnam sought deeper strategic and defence cooperation with sympathetic Pacific powers such as the U.S. and India. Vietnam, Philippines, and Taiwan formally protested against China’s passport design, while the ASEAN bloc expressed deep concerns over new maritime regulations by Chinese provincial authorities in Hainan.

There is also the bigger issue of India-China rivalry. Traditionally, the Indian Navy (IN) has focused on patrolling and safeguarding the country’s interests in the immediate waters stretching from the Strait of Hormuz in the Persian Gulf to the Indian Ocean and the Strait Malacca. Yet, China’s rapid rise as a regional naval powerhouse has encouraged continental rival India to speed up its naval modernisation and develop an expeditionary outlook.

Between 2000 and 2012, the IN’s share of annual military expenditures has increased from 15 to 19 percent, while joint exercises with other regional allies, especially the U.S. Pacific Command, have intensified accordingly. An armada of new aircraft carriers, modern French submarines, indigenously designed nuclear submarines, and state-of-the-art aircraft are slated to boost the IN in coming years.

With one of Asia’s most formidable navies, dwarfing all of those in the ASEAN, India’s new naval arms race with China has gained even greater significance in light of rising frictions in the strategic, hydrocarbon-rich waters of South China Sea. Back in 2011, Chinese forces even challenged an IN ship that was patrolling off the coast of Vietnam.

The U.S. pivot to the Asia-Pacific region has been followed by renewed strategic-military commitments with regional partners, but the Philippines and Vietnam are also eagerly seeking India’s muscle to deter China.

“I hope that India supports ASEAN and China in full implementation of the declaration on the conduct of parties in the South China Sea and ASEAN Six-Point Principle on the South China Sea…” Vietnam’s Prime Minister Nguyen Tan Dung emphasized during the ASEAN-India summit.

In fact, the summit’s concluding ‘vision statement’ underscored, in the most unequivocal terms, the importance of maritime security: “We (ASEAN and India) are committed to strengthening cooperation to ensure maritime security and freedom of navigation and safety of sea lanes of communication for unfettered movement of trade in accordance with international law, including UNCLOS.”

Although India has historically stood up to China over territorial disputes as well as the Tibetan issue, in addition to its expressed commitment to defend energy investments in the disputed waters and challenge China’s new passport design, India has actually struck a moderate tone in numerous official pronouncements.

India is not a direct party to the disputes and a bulk of its strategic interests still lie in the Indian Ocean, while its booming bilateral trade with China – hovering above 70 billion dollars annually – means that it has little appetite for risking direct confrontation with Beijing in behalf of ASEAN.

“There are fundamental issues there (South China Sea) that do not require India’s intervention,” India’s External Affairs Minister Salman Kurshid stated in relation to the maritime disputes during the ASEAN-India summit. “(The disputes) need to be resolved between the countries concerned.”

With newly re-elected President Barack Obama having chosen Southeast Asia as his first foreign destination, where he also attended the much-anticipated pan-Pacific East Asia Summit, the U.S. has underscored its commitment to its so-called strategic ‘pivot’ to the Asia-Pacific region.

Months after the 2011 U.S. military withdrawal from Iraq, President Obama signaled the formal launch of the pivot in a November speech to the Australian parliament: “As a Pacific nation, the United States will play a larger and long-term role in shaping this region and its future.”

The U.S. already has around 320,000 troops stationed in the region, as well as 50 percent of its formidable global naval assets. Under the pivot strategy, the U.S. is set to commit several thousand additional troops and increase its naval strength by another ten percent in the coming few years.

The Obama administration has repeatedly denied that the pivot is a containment strategy aimed at Beijing, arguing it is simply a logical ‘rebalancing’ towards the region in light of Asia’s stunning economic growth and the increasing importance of maintaining U.S. interests there.

However, more than two years into the so-called U.S. pivot, many strategic commentators across the Pacific have raised major questions as to its real intentions, actual impact, and practicability, given the United States’ deep fiscal constraints ahead of scheduled defence-spending cuts.

Reacting to lingering uncertainties over the U.S. strategy, China, which views the pivot as an act of provocation, as well as other countries in the region such as Vietnam, Philippines, and Japan, have stepped up their territorial claims in the Western Pacific – indirectly testing America’s resolve to uphold its strategic commitments.

In this sense, the pivot – purportedly to reinforce the United States’ role as an ‘anchor of stability and prosperity’ in the Pacific – has ironically contributed to greater uncertainty, turbulence, and belligerence vis-à-vis the festering maritime disputes.

In a recent op-ed for the Singapore-based daily The Straits Times, Barry Desker, the dean of the Singapore-based S. Rajaratnam School of International Studies (RSIS), called for ‘mutual restraint’ by all disputing littoral states to ‘diffuse’ tensions, while contending that all parties are “guilty of occupying uninhabited islands and land features.”

And a recent report by the Brussels-based International Crisis Group says: “With tensions on the rise, Manila is eager to pursue closer military cooperation with the U.S., and Hanoi (as a strategic partner) is keen to carefully bring in and balance U.S. influence in the region.

“If these countries frame any U.S. assistance as being directed against China, it will be harder for the former to persuade the latter that it will not get involved in territorial disputes.”

The pivot can be traced as far back as the 2010 ASEAN Regional Forum (ARF) in Hanoi, where Secretary of State Hillary Clinton injected the U.S. into the centre of decades-long territorial disputes in the South China Sea by announcing that her country had a ‘national interest’ in the freedom of navigation across the Western Pacific, including the South China Sea.

As a result, allies such as Japan and the Philippines have repeatedly sought U.S. re-assurance vis-à-vis existing bilateral mutual defence treaties, especially in the event of military confrontation with China over disputed maritime features in the Western Pacific.

The Philippines and Vietnam are mired in bitter maritime disputes with China over a whole host of features in the Spratly and Paracel chains of islands in the South China Sea, while Japan is contesting China’s claim to the Senkaku/Diaoyu chain of islands in the East China Sea.

Meanwhile, Washington’s allies in Northeast Asia, Japan and South Korea, are locked in a separate territorial dispute over the Takeshima/Dokdo islands in the Sea of Japan.

In last month’s Australia-U.S. Ministerial Meeting, Clinton sought to calm Chinese nerves by stating, “We (the U.S.) welcomed a strong, prosperous and peaceful China, which plays a constructive role in promoting regional security and prosperity… We do not take a position on competing territorial claims in the South China Sea.”

The U.S. Navy also invited China to join the large-scale, U.S.-led ‘Rim of the Pacific Exercise’ by 2014.

Yet an unconvinced China, under its new leadership, has nudged up its claims. Recently, authorities in the southern Chinese Island of Hainan have issued new laws, whereby beginning next year, they will have the authority to intercept and board any foreign vessel seen to violate China’s ‘sovereignty’ over all claimed features in the South China Sea.

In response, Secretary-General of the Association of Southeast Asian Nations (ASEAN) Surin Pitsuwan warned that such a decision “…has increased a level of concern and a level of great anxiety among all parties, particularly parties that would need the access, the passage and the freedom to go through.” Beijing subsequently insisted that the new authority was not aimed against sea-borne commercial traffic.

China’s new passport design, incorporating disputed territories in the South China Sea under the country’s official map, has also sparked renewed concerns among some of its southern neighbours.

In the face of what it sees as Chinese provocations, however, a deeply divided ASEAN has failed to make any meaningful progress in crafting a legally-binding regional Code of Conduct to resolve disputes, as strongly urged by Washington.

If the pivot is seen in Beijing as a provocation, it has also encouraged greater assertiveness on the part of some of its neighbours.

While the Vietnamese have stepped up their energy exploration projects in disputed territories, and the Japanese government decided to purchase from its private owner one of the disputed Senkaku/Diaoyu islands in the East China Sea, the Philippines has pushed to upgrade its military ties with the U.S., Canada, Australia, Japan, and South Korea to defend its own claims.

“While we are all aware that the U.S. does not take sides in disputes, they do have a strategic stake in the freedom of navigation, unimpeded commerce, and the maintenance of peace and stability in the South China Sea,” Filipino President Benigno Aquino stated at last month’s East Asian Summit, prodding further U.S. involvement in the South China Sea disputes.

How Washington will react to these kinds of pressures, particularly given its own fiscal challenges that have already resulted in nearly 500 billion dollars in cuts to its projected military budgets over the next ten years, adds yet another level of uncertainty to the calculations of the contending parties in the region.

Already, the pivot is being attacked by the U.S. right as insufficient. “This reallocation of military and diplomatic resources was supposed to guarantee stability in a region seeking to balance China’s rise. In reality, this strategic shift is less than it appears,” argued Michael Auslin in an op-ed for the Wall Street Journal. “In reality…it won’t solve Asia’s problems and may even add to the region’s uncertainty by over-promising and under-delivering.”

Against the backdrop of growing territorial tensions in the South China Sea, inflamed by a more explicit Sino-American rivalry in the Pacific theatre, the recently-concluded ASEAN Summit in Cambodia represented the best chance at bolstering regional security through peaceful, multilateral mechanisms.

With the ASEAN (Association of Southeast Asian Nations) gathering coinciding with the pan-regional East Asia and ASEAN+3 Summits, Cambodia, as the current chair of the ASEAN, took centre-stage in a broader international gathering, which brought together leading Pacific powers such as the U.S., China, Japan and India.

Ahead of the ASEAN Summit, many commentators as well as regional leaders expressed their hopes for some form of diplomatic breakthrough to address festering maritime disputes in the South China Sea.

Recent months have also witnessed growing diplomatic pro-activeness by countries such as Indonesia to mend intra-regional rifts, especially between Cambodia and the Philippines, and re-focus diplomatic efforts on a peaceful and rule-based resolution of ongoing disputes. For instance, the Indonesian-proposed “six points of consensus” highlights the commitment of regional states to the 2002 Declaration on the Conduct of Parties in the South China Sea and the adoption of a legally binding regional Code of Conduct (CoC).

“We are hoping and expecting that there will be smooth and very productive results of these meetings as far as our advocacies are concerned,” said Philippine Department of Foreign Affairs spokesperson Raul Hernandez. “What is important here is to underscore the ASEAN centrality and, for ASEAN it has always been our position that any initiatives (such as the CoC) should first be accepted and approved by ASEAN and only then would it be presented to other dialogue partners.” His statements echoed Philippine President Benigno Aquino’s cautious optimism regarding a more unified regional stance on the issue of maritime security.

Interestingly, the Philippines has also been very busy with thawing out increasingly frayed relations with both China and Cambodia in recent months, hoping to build positive momentum ahead of the ASEAN summit in Phnom Penh.

The newly re-elected President Obama also called for easing of tensions among claimant states, warning against an escalation in disputes, while Secretary of State Hillary Clinton earlier identified the territorial conflicts as a ‘critical issue’ in need of urgent resolution.

However, much to the disappointment of some Southeast Asian nations, especially the Philippines and Cambodia – reportedly at the behest of China – once again blocked the inclusion of the South China Sea dispute in the summit’s agenda. After all, China has repeatedly warned against ‘internationalising’ the disputes, while actively sidestepping the issue in all recent regional multilateral forums.

In essence, Cambodia has effectively trammeled any development on the crucial issue of adopting a more binding CoC to not only rein in China’s growing territorial assertiveness in the near future, but to also lay down the foundations of a more robust regional approach to resolve intractable territorial conflicts in the long run.

Far from unprecedented, Cambodia’s recent move mirrored its earlier stance during the ASEAN Ministerial Meeting (AMM) in June, where it blocked the inclusion of maritime disputes in the final communiqué. While Cambodia’s actions during the AMM prompted a flash walkout then by the Filipino Foreign Secretary Albert Del Rosario, this time Manila resorted to a formal protest against Cambodia’s decision to once again block the issue from the ASEAN’s agenda.

“Among the principles that the ASEAN community has pledged to abide by is that of centrality; it should also be foremost in our minds as we address concerns in the East Asian maritime region. Prevailing tensions in the area stand to impact regional peace and stability,” President Aquino shrieked in his formal intervention during the ASEAN+3 Summit. “We reiterate our call on all parties concerned to avoid the threat or use of force, and to adhere to universally recognised principles of international law in settling disputes…because respect for the rule of law remains the great equaliser in the relations among nations.”

Aware of Cambodia’s cosy ties with China, Manila’s strategy during the recently-concluded summits was to rally the support of sympathetic and influential external actors such as the U.S., Japan, India and Australia to push for a binding CoC in the South China Sea and exert more pressure on Beijing against further military fortifications and adventurism in the disputed areas.

Refusing to stand idly by, the Philippine president reiterated his concerns in an intervention during the ASEAN+India Summit, emphasising India’s stake in ensuring regional maritime security. “Since a great deal of our (ASEAN and India) trade and resources flow through our seas, the Philippines views that ASEAN and India will mutually benefit from jointly addressing threats to maritime stability through peaceful means in accordance with international law,” Aquino stated.

During the ASEAN+Japan Summit, Aquino underscored the common interest of both Japan and ASEAN states to uphold the rule of law vis-à-vis ongoing disputes by stating, “The Philippines will continue to uphold this principle in its engagement with ASEAN, Japan, and other stakeholders, as the region strives to resolve overlapping maritime claims.”

Foremost in his mind, Aquino also urged the U.S. to play a more active role to stave off rising Chinese assertiveness.

“Each one of our nations has a stake in the stability of Southeast Asia. The United States understands this and, for this reason, has chosen to work with us to ensure the peace and continuous advancement of our region,” Aquino said during the summit, prodding greater U.S. involvement. “While we are all aware that the U.S. does not take sides in disputes, they do have a strategic stake in the freedom of navigation, unimpeded commerce, and the maintenance of peace and stability in the South China Sea.”

In a veiled criticism of China’s preference for a bilateral approach to the disputes, Aquino argued, “We have long said that if it’s a multilateral problem, you can’t have a bilateral solution.” Most interestingly, he also stated, “The ASEAN route is not the only route for us”, suggesting Manila’s possible recourse to greater military cooperation with the U.S. as well as other regional allies such as Australia and Japan, especially if the ASEAN continues to fail in providing a credible multilateral, rule-based approach to ongoing territorial conflicts.

The Association of Southeast Asian Nations (ASEAN) summit in Cambodia, bringing together top leaders of all ten member nations represents a critical juncture to ensure regional security and in shaping the fate of the organisation itself, as divergent strategic positions among member countries threaten the very fabric of the regional body.

Earlier this year during the ASEAN ministerial meeting in Phnom Penh, Cambodia as the ASEAN’s current chair blocked the inclusion of ongoing territorial disputes in the South China Sea in the final communiqué, provoking uproar among certain members, especially the Philippines and Vietnam, who accused Cambodia of doing China’s bidding. As a result, the meeting failed to issue a final communiqué for the first time in the organisation’s 45-year history – precipitating a diplomatic fallout among member nations, with Philippine-Cambodia relations suffering a temporary but dramatic nosedive.

Cambodia’s actions stood in contrast to the more pro-active chairmanships of Vietnam in 2010 and Indonesia in 2011, where ASEAN made a more concrete move towards establishing a more binding Code of Conduct (CoC) to supplement the highly symbolic 2002 Declaration of Conduct of Parties in South China Sea, which called for a rule-based and peaceful resolution of territorial disputes.

The 2012 ministerial meeting failed to build on earlier multilateral efforts to even iron out the contours of guidelines for a more binding regional CoC, ostensibly to rein in territorial tensions and regulate the behaviour of conflicting parties in the South China Sea. Meanwhile, China still insists on a bilateral resolution of the disputes.

The whole episode created a cloud of uncertainty over the fate of an organisation found on the principles of solidarity, consensus, and consultation, with a growing number of commentators questioning the very centrality as well as the utility of ASEAN as an agent of stability, cooperation, and security in the region.

Writing for the Asia Times, Southeast Asia expert Amitav Achariya captured this growing concern by stating, “…the idea of ASEAN centrality, which assumes that ASEAN, rather than the great powers like China, Japan, the U.S. or India, should be the building bloc and hub of developing a wider Asian or Asia-Pacific regional architecture, is facing a severe test.”

“That failure (absence of a final communiqué) cast significant doubt on ASEAN’s ability to evolve and tackle tough issues. It also caused troubling allegations, especially from Vietnam and the Philippines, that Cambodia had placed its close relationship with China above the interests of its fellow ASEAN members,” argued Gregory Poling and Alexandra Sander of the Washington-based Centre for Strategic and International Studies (CSIS).

Currently, ASEAN members such the Philippines and Vietnam are locked in a bitter conflict with China over a whole host of features in the South China Sea. Diplomacy has partly suffered because of China’s notorious ‘9-dashline’ doctrine, which stipulates that is has ‘inherent and indisputable sovereignty’ over almost all features in the South China Sea.

There is also a domestic political angle: Grappling with a cocktail of outsized domestic economic and political challenges, the Chinese leadership is experiencing a highly sensitive period of transition. With communism losing its ideological appeal, it is popular nationalism that has become the Chinese Communist Party’s (CCP) main tool to placate an increasingly restive nation.

Thus, in recent years, we have seen rising popular pressure on the political leadership to assert China’s territorial claims in adjacent waters of East and South China Seas. This also partly explains the rising influence of more hawkish elements within the People’s Liberation Army’s Navy (PLAN) – already a beneficiary of a growing chunk of China’s ballooning military budget – which have called for a more aggressive approach to securing the country’s territorial claims.

Adding to the complexity of the issue, the U.S.’ ‘pivot’ to the Asia-Pacific has also injected a new geopolitical layer to the ongoing territorial disputes. Back in April, the Philippines and China squared off over the Scarborough Shoal in the South China Sea, culminating in a bitter series of naval and diplomatic jostling over the control of the disputed feature and its surrounding waters.

After securing its control over the shoal, aided by a bilateral agreement that oversaw the withdrawal of Philippine warships from the disputed area, China stepped up its fortifications by expanding its military garrisons and paramilitary infrastructure in occupied features within the Paracels and Spratly chain of islands, encouraging both the Philippines and Vietnam to further deepen their increasingly revitalised military ties with the U.S.

With the U.S. identifying ‘freedom of navigation’ in the South China Sea as a cornerstone of its national interest, and signaling its commitment to the defence of its Asian allies against China’s perceived encroachments, Washington has de facto carved out its place at the centre of simmering territorial conflicts.

Responding in kind, China has rapidly improved it’s ‘anti-access’ and blue naval capabilities to counter U.S. maritime dominance in the Pacific, increased its diplomatic and economic pressure on U.S. allies such as the Philippines, and more aggressively leveraged its favourable ties with ASEAN members such as Cambodia, where Beijing dominates the overall trade and investment picture, to push its interests within regional bodies. Ironically, the U.S. pivot seems to have only encouraged greater Chinese assertiveness.

Despite growing cynicism over this year’s ASEAN summit, there is some room for cautious optimism. The past month or so has witnessed a qualitative shift in the strategic predisposition of countries such as the Philippines. Recognising the importance of healthy bilateral ties with China and Cambodia, Manila has engaged in a diplomatic charm-offensive to restore a measure of ASEAN-wide urgency in pushing for a regional CoC and to de-escalate maritime tensions between China, on one hand, and Southeast Asian countries such as the Philippines and Vietnam, on the other.

So, in many ways, the upcoming summit in Cambodia marks a make-or-break moment for not only ASEAN as a supposedly coherent regional organisation, but also the prospects of a peaceful resolution of ongoing territorial disputes. After all, the 2012 summit theme is: ‘ASEAN: One Community, One Destiny’.

By Richard Heydarian
TEHRAN, Mar 29 2010 (IPS)

Iran continues to defy western pressure and assert its interests in the highly strategic and vital region of the Persian Gulf -which supplies 40 percent of the world’s energy resources- as well as the greater Middle East and Central Asia. Sino-Iranian relations, which have grown steadily stronger are entering a critical stage, and the West will have to address the emerging alliance between these two revisionist powers.

In recent years China stepped up its rhetoric as it wielded more political power -thanks to three decades of relentless economic growth and persistent military modernization- and openly challenged the century-old liberal international order led by the West. While China was at the forefront of calls for the restructuring of the global economic system -especially after the financial crisis- it showed little inclination to utilize its newly-gained clout for more security-oriented ends, such as reigning in Iran’s nuclear program.

Thanks to the increase in oil prices in recent years, Iran has been able to amass a whopping 100 billion dollars or so in sovereign wealth funds. The favourable oil market also enabled Iran to achieve one of the world’s highest annual GDP growth rates: over 6 percent for the last 5 years. In nominal terms, Iran is projected to be among the 25 largest economies in 2009-2010; it is currently the 17th largest economy in terms of purchasing power parity.

Unlike western countries, Beijing has been relatively uninvolved in the politics of the Middle East, but as China’s reliance on energy imports grows, there is little reason for it to remain silent on developments in the Persian Gulf. Last year saw significant developments in Iran-China relations: political ties deepened while economic transactions continued to surge. China signed energy investment deals with Iran worth more than 8 billion dollars.

If one visits Iran today, traces of the flourishing of Sino-Iranian relations are visible everywhere. Chinese contractors, engineers, and workers comprise the majority of visitors to the country, as anyone flying into Tehran’s Imam Khomeini International Airport will see.

The beginning of 2010 was even more significant for relations between the two countries. In January, Beijing sabotaged the P5+1 talks -United States, Russia, Britain, France, Germany plus China- by opposing any new sanctions and sending a low-level representative to the discussions, signalling its disagreement with any serious efforts to further isolate Iran. In the Munich conference in February, Chinese foreign minister Yang Jiechi explicitly articulated his country’s intention to block any additional sanctions against Iran and instead called for more diplomacy. A week later, the US and even Russia rebuked Iran after it announced plans to escalate its uranium enrichment process to 20 percent purity and above. China again stepped in and called for more diplomacy -meaning, it would tolerate no sanctions that could compromise its heavy investments in Iran.

The Iranian regime has not only survived US sanctions, isolation, and threats but has also managed to enhance its influence in the region. Tehran, with its vast influence and regional connections, is now arguably the main key to resolution of the region’s problems, from the civil wars unfolding in Iraq and Lebanon to the security challenge of the Persian Gulf. It is hard to imagine any of them being resolved without its cooperation if not blessing.

Iran is a vital international player beyond the Middle East, mainly because of its geostrategic position in the energy-rich Persian Gulf and Eurasia. It boasts the second largest natural gas reserves in the world and the third largest reserves of oil (second largest if Canadian reserves of unconventional oil are excluded), which make it a potential future energy superpower. To fulfil such a prospect, Iran has been actively searching for big energy companies to invest in the world’s largest gas project (South Pars).

Particularly during the past three years, China has been the major investor in Iran. Despite the sanctions already in place, trade between the countries grew by 35 percent in 2008, to USD 27 billion.

In addition, China has signed an estimated USD 120 billion worth of oil deals with Iran in the last five years to sustain the rapid growth of the world’s third-largest economy.

Iran, for its part, needs China to help vitalize its oil and natural gas industries, which have been hurt by existing economic sanctions against top companies that invest in Iran (Shell, BP, and Total).

The growing cooperation between Iran and China is not entirely opportunistic. Historically, the two countries have much in common: both have long resented western interference in their region and in their internal affairs while defending their revolutionary gains against growing pressure from both within and without.

The spectacular burgeoning of Sino-Iranian relations poses a clear challenge to the US and its superpower status in the world. The combined strength and influence of China and Iran has consistently exposed the limits of American power and the efforts to isolate Iran for defying western pressure over Tehran’s nuclear programme. While China is transforming itself into a superpower and a key player in the Asia-Pacific, Iran is becoming the major power in West Asia and the greater Middle East. It is increasingly evident that the US is still grappling with these seismic shifts in global politics and has yet to develop a coherent and comprehensive policy to manage if not contain the growing ties between these two ancient Asian powers. (END/COPYRIGHT IPS)

(*) Richard Heydarian, a graduate in political science from the University of the Philippines, writes on Middle Eastern affairs.

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