Beijing's South China Sea Bet On Duterte's 'Friendship' Is Souring

By Panos Mourdoukoutas

China’s bet on Philippines President Rodrigo Duterte’s ‘friendship” to advance its South China Sea agenda is beginning to sour.
Last Monday, the Philippines high court instructed key government agencies, like the Philippine Navy, police and the Coast Guard, to do what Rodrigo Duterte should have done three years ago: protect reefs and marine life in Scarborough Shoal, Second Thomas Shoal and Mischief Reef.
That’s according to Radio Free Asia report (RFA), which quoted presidential spokesman Salvador Panelo saying that the government was “duty bound” to enforce the court order.
Apparently, the Philippines’ high court ruling puts an end to Duterte’s flip-flops on the South China Sea disputes, which begun in 2016.
Back then, China lost an international arbitration ruling to the Philippines and its close ally the US regarding its claim that it has historic title over the waters of the South China Sea.
In theory, that is. 

In practice, the ruling didn’t mean much. 

While China lost the ruling, it won a new “friend,” Rodrigo Duterte. 

Rather than teaming up with the US to enforce the ruling, he walked the other way.
He sided with Beijing on the dispute, and pursued a “divorce” from the U.S. 

On April 2018, for instance, Duterte backed off his earlier decision to raise the Philippine flag in disputed islands, following Beijing’s “friendly” advice.
Apparently, Duterte was concerned about the prospect of an outright war with Beijing should he had tried to enforce the international arbitration ruling, reasoning that America wouldn’t rush to the Philippines side in that case.
But there was something else in the works, it seems. 

Beijing had offered Manila a couple of promises, as was discussed in previous pieces here. 

Like the promise to finance Duterte’s “Build, Build, Build” initiative, and the promise of peace and a partnership for prosperity.
Meanwhile, there are a couple of things Beijing and Duterte miscalculated. 

The first is that America has assured the Philippines that it would come to that nation’s defense if it comes under attack in the South China Sea.
That’s according to reports in early March, when Washington reaffirmed a defense code that Manila has sought to revise.
Secondarily, this has removed a major snag in relations between Washington and Manila; and seems to have appeased two former Filipino officials who filed a complaint with the International Criminal Court (ICC) over China’s aggression in the disputed South China Sea.
But not Rodrigo Duterte. 

He didn’t seem to be ready for another foreign policy flip-flop – nor does he seem ready to get the country’s South China Sea Policy right: i.e. stick with the international law.
Until this week, that is, when the Philippines high court ruling forced him to do so, ruining China’s bet on his “friendship.”

South China Sea: Red Lines And Propaganda Wars Flare Up Tensions

By Panos Mourdoukoutas

Investors seem to be spending too much time these days analyzing the Fed's next interest rate move and Washington's next fiscal and deregulation measures, and not enough time watching the gathering of geopolitical storms that may take a toll on their global investment holdings.
One of those storms is gathering over the South China Sea, and it’s threatening to disrupt one of the world's largest trade routes with devastating consequences -- for the economies of the region and the multinational companies that draw a big chunk of their revenues from there.
The South China Sea disputes began as a regional tug of war between China and its neighbors, but they quickly turned into a showdown of economic and military might between China and the US.
Almost three years ago, China elevated the tensions in the region by building artificial islands in the South China Sea. 

America countered by expanding its naval presence in disputed waters, and by advancing its missile capabilities in South Korea.
In the beginning, China confined its response to a few loud statements about America’s “violation” of international law, and by recruiting American allies with the AIIB initiative.
Then, Beijing raised the stakes by announcing that it would send nuclear submarines into the area to “deter” US presence.
Compounding the dispute was an international arbitration ruling last July, which determined that China has no historic title over the waters of the South China Sea – a ruling serving to limit China’s drive to control trade and resources in the region.
Defiant of the ruling, Beijing flared up tensions, reaffirming its determination to continue the artificial build up, setting “red lines” and sending loud messages to neighborhood countries. 

Beijing, for instance, warned Japan to “not send Self-Defense Forces to join U.S. operations that test the freedom of navigation in the disputed South China Sea,” according to a Japan Times editorial.
Last month, following a show of naval force in the Taiwan Strait, Taiwan sent a blunt message to China by preparing its military forces to fend off Beijing’s threats.
Taiwan’s defense minister Feng Shih-kuan told Taiwan Central News Agency that the "enemy's threats are increasingly expanding" as he issued orders for the military to step up training exercises.
Last week, America drew its own red line in the China Sea by asserting its determination to defend Japanese Senkaku islands claimed by China, drawing Beijing’s angry protests.
In the meantime, allegations have surfaced that Japan has launched a propaganda war against China, further flaring tensions between the two countries. 

That’s something Tokyo has yet to refute.
Still, financial markets fixated on central bankers’ easy money and the prospects of a massive US stimulus have been treating the South China Sea disputes as a noise rather than as something more serious. 

But for how long?