South China Sea Disputes: Duterte Has Good Advisors, In Beijing

By Panos Mourdoukoutas 

Philippines President Rodrigo Duterte continued his flip-flops in recent weeks, easing geopolitical risks in the region, and helping Philippines’ equities rebound sharply from last year’s losses.
This time around, Duterte reversed his early decision to raise the Philippine’s flag in disputed islands, following Beijing’s “friendly” advice.
“Because of our friendship with China and because we value your friendship I will not go there to raise the Philippine flag,” Duterte said in a speech before the Filipino community in Riyadh late Wednesday.
The trouble is that diplomacy isn't based on friendships, but on interests, Philippines' interests in this case.
But wait, there's more "friendly" advice from Beijing that led President Duterte to "correct" himself. “They said, do not go there in the meantime, just do not go there please. I will correct myself because we value our friendship with China,” he said, adding that he might just send his son to the island.
So far, Duterte’s flip-flops have saved peace in South China Sea by changing the rules of the game for China and the US.
Last July Philippines and its close ally, the U.S., won an international arbitration ruling that China has no historic title over the waters of the South China Sea. 

Yet Rodrigo Duterte surprised the global community and financial markets by siding with China on the dispute, and seeking a “divorce” from the U.S.
Duterte’s flip-flop left the US without a key ally to pursue its cause in South China Sea, and therefore, no choice but to soften its stance.
Meanwhile China continued its activities around the Scarborough Shoal. 

"So what do you want me to do? Declare war against China?" Duterte was quoted in Chinatopix as having asked reporters. 

"I can but we'll lose all our military and policemen tomorrow, and we are a destroyed nation. And we cannot assert even a single sentence of any provision that we signed."
While Duterte’s flip-flops have saved peace for now, it’s hard to see how they will save peace in the future, as his policies help make China more aggressive in the region.
That’s why investors should always keep a wary eye on the geopolitical risks in the South China Sea region markets.