Threats and Opportunities in Philippine Foreign Affairs

Ronald M Joves, MNSA IS-108 Philippine Foreign Relations 20 September 2007

The World we live in

Everything is all about assessing threats and opportunities. Before foreign policy is charted, the decision-makers survey possible implications and consequences in courses of action. Courses of action will definitely impact on the country both locally and internationally.

The Decision-Making Process

<http://www.geocities.com/cfidarren/crmfund.htm> Retrieved 20 September 2007

What are the current threats?

Definitely not invasion! Since independence, there has never been any likelihood of an invasion. Such threats of an invading force may have been imagined or created to justify their presence. The Cold War mentality for continued foreign military presence in the country.

What are the current threats?

The uncertain extent of Philippine territorial sea and its exclusive economic zone (EEZ) Homegrown Terrorism Eroding Competitiveness and Confidence World Economic and Financial Crisis Food and Energy Security

Territorial Claims
Shared disputes over conflicting territorial and maritime claims in SCS with China, Vietnam, Malaysia, and Brunei Darussalam. Claims of Philippine EEZ overlaps Japan up north, Indonesia down south, and Palau in the east. Unclear Philippine maritime baselines

The 1982 UNCLOS

Provides certain guidelines on resolving overlapping EEZ claims Guidelines however provide for mutual recognition of maritime baselines, which is not yet established categorically.

The most fundamental issue

Cling to the Treaty of Paris limits, which all claimant countries reject? Adhere to the 1982 UNCLOS, which is generally accepted by claimant states?

The most fundamental issue

There is a need to harmonize and reconcile domestic policies and laws with the international regime. Key issues: internal waters and territorial seas

Internal Waters

The 1987 Philippine Constitution defines internal waters as the waters around, between, and connecting the islands of the archipelago, regardless of their breadth and dimensions, form part of the internal waters of the Philippines (Article 1).

Internal Waters

The UNCLOS defines of internal waters, as waters on the landward side of the archipelagic baseline enclosed using straight baselines across mouths of rivers directly flowing into the sea, bays and permanent harbor works.

Territorial Sea
Philippine territorial sea limits are defined by a trapezoid based on the boundaries defined in the 1898 Treaty of Paris . The Philippine claim for historic title to the territorial sea is based on the Philippines status being a successor to the United States with the formal cession of the Philippine Islands to the United States under the terms of the Treaty of Paris.

Territorial Claim under the 1898 Treaty of Paris

Double Talk

Upon signing the 1982 UNCLOS, the Philippines declared that its act of signing the Convention should not be construed as amending its national laws regarding its maritime jurisdictionsand its sovereign rights as successor to the United States under the Treaty of Paris.

Double Talk
Since then, the Philippines has made pronouncements of remedies being made to address the inconsistencies of Philippine position with respect to the UNCLOS. Nothing has yet been done categorically to abandon the territorial claims of the country based on the 1898 Treaty.

The most fundamental issue

Unless the Philippines resolves with finality the extent of our territorial seas and EEZ, Philippine maritime laws can not be enforced. Encroachments into claimed areas (internal and territorial waters) will continue. Disputes arising from encroaching foreign sea and aircraft will continue.

The Situation
While there is a period of calm, unresolved claims can escalate to armed conflict unless jurisdiction is answered. Foreign fishing vessels and even spy ships run around the contested areas of the SCS with impunity.

The Situation
Confidence-building measures may provide temporary relief, e.g., ASEAN Code of Conduct, joint research and explorations, creation of a SCS development authority. The fundamental issue remains present and unresolved. The Philippines still needs to patrol its territorial waters from the sea and air.

Home-Grown Terrorism
Foreign assistance to local separatist movements. The Philippines as base of international terrorist movements. Established linkages between local and international terrorist cells.

Grievances
Land ownership and use Abuses and bad governance by the minority's own leadership Neglect of national government to provide basic needs of the minorities Political alienation of the minorities Prejudices against the minorities Deprivation of dignity

The Financial Storm

Began with defaults on consumer mortgage payments Unemployment and lay-offs Tight credit markets Low consumer spending

The House of Cards

Freddie Mac Frannie Mae Lehman Brothers Merril Lynch AIG

Philippine Impact
Affected like any other country But not as hard as other countries in the region Minimal financial exposure among Philippine firms with tie-ups with US financial markets Domestic measures to fend downward trend were averted by safety nets

Food and Energy Security

World prices of food, particularly rice, and fuel World oil prices topped the scale at USD 140 per barrel World food production dips Food lines and riots in most capitals Rice importation

Eroding Competitiveness
Pertains to the Philippine economy Rivalry among states for foreign investments Competition amidst the Global regime or international system.

Competitiveness of the country

The International Institute of Management Development (IMD) annually releases its World Competitive Yearbook IMD analyzes and ranks the ability of nations to create and maintain an environment which sustains the competitiveness of enterprises.

The World Competitive Yearbook

Ranks 55 economies. Economies are grouped by population, greater than 20 million in group 1, the rest in group 2

Criteria in IMD Scorecard

Economic Performance Government Efficiency Business Efficiency Infrastructure

The 2008 IMD Competitive Scorecard: The Top Ten

1. 2. 3. 4. 5.

USA (1) Singapore (2) Hong Kong (3) Switzerland (6) Luxembourg (4)

Denmark (5) 7. Australia (12) 8. Canada (10) 9. Sweden (9) 10. Netherlands (7)
6.

http://www.imd.ch/research/publications/wcy/upload/scoreboard.pdf (16 Sept 2008) (2007 rankings in brackets)

The 2007 IMD Competitive Scorecard: Our Asian Brothers

13. Taiwan (18) 17. China (15) 19. Malaysia (23) 22. Japan (24) 27. Thailand (33) 29. India (27) 31. Korea (29) 51. Indonesia (54)
http://www.imd.ch/research/publications/wcy/upload/scoreboard.pdf (16 Sept 2008)

The 2007 IMD Competitive Scorecard: The Philippines

The Philippines is 40th among 55 economies in 2008 The Philippines was 45th among 55 economies in 2007 (42nd 2006)

The role of Philippine diplomacy

Responsible for projecting an image of the Philippines as a good investment destination and persuading foreign investors to risk their money in the country.

Face-lifting or Cosmetics aint enough

Image-making, persuasion, and promotion is not enough. Luring investments to the country will never be realized nor will have a lasting effect if the reality is that the investment environment is not conducive and improved. The country stands to lose out to alternative investment destinations, i.e., China, India, Malaysia.

Ingredients for good environment

Sound trade policy Political stability Peace and Order The absence of corruption (or a reasonable level of it?) The Rule of Law Adequate and inexpensive transport and communications infrastructure

Ingredients for good environment

Tax Policy Transaction Costs Relationship of Wages and Productivity

Foreign Policy Agenda

Settle the national territorial issue Strengthen the countrys capacity for surveillance and enforcement in the territorial sea and the exclusive economic zone

Foreign Policy Agenda

Cooperate with other countries to cut off support for separatists and terrorists Redress the grievances of the minorities Strengthen the competitiveness of the economy and substantially improve the investment climate.

In other words, the Philippines should

Keep its house in order Maintain sound macro-economic fundamentals and policies Address peace and order, particularly internal security Eliminate or at the very least bring down the levels of graft and corruption Transparency

The Opportunities
The conduct of foreign relations also entail recognizing the opportunities presented by issues and seizing them. The period of relative calm in the last decades. The Northeast Asian Triangle and the ASEAN + 3 process

Down the road

Cooperative efforts between policy-makers, politicians, and private sector to make economy competitive Strong partnership among stakeholders

Sink or Swim
The Philippines has no choice. Large, continent-size economies are surging. Smaller markets are coalescing. The Philippines has to join the trend and strengthen itself for competition, which is definitely fiercer.

Taking a national action

Settle the extent of territorial waters and exclusive economic zone Decisive action against terrorism while addressing humanitarian concerns (the grievances) Strengthen domestic conditions to become competitive.

The best or ideal FP

Domestic

reform and decisive action on national issues.

Addressing the Universal Good

Strong and even keeled balance between international commitments and the promotion or protection of national interests. Address the gaps between what is and what ought to be.

Basis for Foreign Policy

What is

What ought to be