Beware the New China-Philippines South China Sea Deal

On August 14, Philippine Defense Secretary Delfin Lorenzana made headlines when he told lawmakers that China and the Philippines had reached some sort of “modus vivendi” in the South China Sea where Beijing had agreed not to occupy any new features. Though Lorenzana’s remarks were merely a reiteration of similar statements heard from other Philippine officials since President Rodrigo Duterte came to office last June, they are nonetheless yet another reminder of the administration’s determination to pursue a deal with Beijing despite the significant risks therein.

The idea of some sort of Sino-Philippine deal in the South China Sea – whether understandings to de-escalate tensions temporarily or a proposals to jointly explore and exploit resources – is not new and has in fact been discussed in some form or another since the 1980s. And there is no surprise that the two governments might consider such a deal as being beneficial for them now because of the opportunities therein – be it Manila’s desire for increased Chinese investment or Beijing’s desire to preserve its uncompromising stance on sovereignty while trumpeting some sort of cooling down period in the South China Sea – despite evidence to the contrary.

The problem, as I have noted before, is that the Duterte administration has yet to demonstrate that the opportunities presented by such “deals” with Beijing outweigh the significant risks: the the reliability of the deal itself, its terms, or its broader significance in the context of the region and the world are grappling with how to deal with China’s conduct in the South China Sea. Let’s consider each of these in turn.

Will Any Deal Even Last?

The first risk is that China will simply not abide by its end of the bargain, either now or at some point in the future. That is not an unreasonable question given the poor record China has to date when it comes to living up to its end of pledges or deals in the South China Sea. In the past quarter-century, since Southeast Asian states and China have been directly negotiating on the South China Sea issue, Beijing has been blatant about flouting commitments it has already made, be it the 2002 Declaration on the Code of Conduct in the South China Sea (DOC) or President Xi Jinping’s pledge not to militarize the Spratlys.

China’s record isn’t any more comforting when it comes to the Philippines more specifically. When a joint development deal struck in 2005, termed the Joint Maritime Seismic Undertaking agreement (JMSU), began to unravel years later, Beijing quickly reverted back to its unilateral assertiveness, pressuring the Philippines diplomatically and even interdicting survey vessels to prevent Manila from getting other foreign companies to help it explore and exploit resources. In last year’s arbitral tribunal ruling on the Philippines South China Sea case against China, China was found to have violated Manila’s sovereignty by interfering with resource exploitation at Reed Bank.

Given this clear pattern where China has flouted its commitments in the South China Sea, it is not clear why the Duterte administration is so convinced that Beijing will behave differently this time around, and why the Philippine people and its critics ought to share that view. Indeed, it is no surprise that in the wake of mid-August legislative hearings on another joint exploration deal with China in the South China Sea, the administration has taken a lot of heat.

What Sort of Deal, Exactly?

The second risk is that the Philippines, in pursuing a deal, might end up giving up more than it gets. This concern has already been expressed during Duterte’s first year in office, and it is not difficult to see why. Though some temporary gains have been cited publicly, such as access for fishermen to Scarborough Shoal and a Chinese pledge not to reclaim there, the reality is that these are pretty minor compared to the big compromises the Philippines has made, including setting aside a binding international ruling that was in its favor and weakening the regional consensus on the South China Sea as ASEAN chair.

And that is a very charitable reading. A more critical assessment would also factor in other indirect opportunity costs that the Philippines has incurred in pursuing such a deal, including more assertive actions not taken to safeguard its own interests by itself and in concert with other actors. This is not an existential issue. Lawmakers expressed concerns that the Duterte administration, in its eagerness to strike a deal with China, may not be taking as tough a stand on Beijing’s continued assertiveness, be it the harassment of commercial and government vessels or the recent deployment of assets near Pag-asa Island.

This more critical assessment would also not dismiss the possibility that there may other more problematic aspects of the deal that the administration might not be willing to disclose publicly. Though one does not have to resort to speculation to make the case for how poor a deal Manila is actually getting, such shenanigans simply cannot be ruled out given the fact that the last deal with Beijing, the JMSU, ended up being embroiled in one of the largest corruption scandals in Philippine history.

Devil’s Bargain?

The third and final risk is that the Duterte administration, in engaging in such deal-making with China, may be reinforcing existing tendencies among Southeast Asian claimant states and interested parties to invest even more in a go-it-alone approach in the South China Sea rather than a more collaborative one, even though the former in fact plays more into Beijing’s divide and conquer approach.

To be sure, the Philippines is not the only Southeast Asian claimant state that has attempted to strike some sort of deal with China. And, as Philippine diplomats will be quick to remind you, other ASEAN countries have been guilty of not adequately supporting Manila when it was pushing for a more collaborative approach in previous periods, whether regionally within ASEAN or, failing that, internationally with filing the historic case against Beijing.

But those same diplomats would also admit that by severely weakening the Philippines’ South China Sea position as the most forward-leaning claimant state in its haste to cut a deal with Beijing – whether it be through downplaying the ruling or presiding over meek ASEAN statements as the organization’s chair – the Duterte administration is undermining previous efforts made to shore up a more collaborative approach and investing too heavily in a unilateral, transactional one.

The immediate costs of Manila’s passivity are already quite clear, be it in the softer line that other Southeast Asian states have taken on the South China Sea issue since the Duterte administration came into office or the undercutting of global efforts to counter Beijing’s assertiveness. But perhaps the most worrying result of this is not simply the lack of a joint U.S.-Philippine freedom of navigation operation (FONOP) or a stronger ASEAN statement, but what this says to Beijing. As I cautioned last year, the Philippine about-face in the South China Sea merely confirms what some hawkish voices in China already suspected: that while Beijing’s assertiveness may lead it to incur some costs in the short term, its growing military and economic might means it can simply absorb these costs for a while and then look to recover its losses by charming those who it has previously coerced.

Deals of this ilk reinforce this dangerous belief among some in Beijing, rather than disabusing them of it. And that has worrying implications not only for the Philippines, but other Asian states and the international community more generally that are worried about how China as a rising power will conduct itself in the international system.