The Strait of Hormuz crisis brings the Philippines and China closer

Political analyst, Bianca Venkataramani, believes that there is a deep feeling of crisis in the Middle East in Southeast Asia, and this crisis may be felt most deeply in the Philippines, which imports 98% of its oil from the Gulf, and therefore the strangulation of global oil trade has led to a severe fuel shortage, which has caused the Philippine government to declare a general state of emergency.

Venkataramani, coordinator of the Center for Global Governance and Security at the Chatham House Institute, officially known as the British Royal Institute, said in a report published by the institute that this situation forced the Philippine President, Ferdinand Marcos Jr., to study all options, even with the most unlikely partner country, which is China.

Relations between the Philippines and China are witnessing severe tension, due to land disputes in the South China Sea. But as President Marcos faced public anger, a deteriorating economy, and 7.2% inflation last April, he announced that he was seeking to reset relations with China and reopen talks on joint oil and gas exploration in the South China Sea.

Despite their tense history, Beijing welcomed the move, and talks were held immediately afterwards. While nothing concrete was agreed upon, the dialogue alone brought about a tangible change. The Philippines appears open to further talks, but has made clear that any agreement will only be achieved after concrete commitments to the United Nations Convention on the Law of the Sea and the signing of the Code of Conduct in the South China Sea.

While the Strait of Hormuz crisis has caused chaos in global markets, given that 20% of the world’s oil supplies pass through its waters, 60% of all global trade passes through the South China Sea, and it is difficult to even imagine the repercussions of a disturbance.

The Philippines is well positioned to lead efforts to secure an agreement, as its alliance with the United States continues to grow stronger. The Philippines also holds the current presidency of the Association of Southeast Asia (ASEAN), which enables it to achieve regional consensus, and recently hosted the 48th ASEAN Summit in Cebu City, where all 11 ASEAN member states focused on supporting energy and food security through greater regional integration. The ASEAN Leaders’ Declaration on Maritime Cooperation was approved during the summit, which included the establishment of a maritime center in the Philippines to serve as a place to preserve issues related to maritime security in the South China Sea.

The Philippine President explained that the purpose of the center will be to ensure freedom of navigation and enforce the United Nations Convention on the Law of the Sea.

Joint oil exploration in the South China Sea is a valuable incentive to encourage a positive outcome in the negotiations on the Code of Conduct in the South China Sea, not least because it is consistent with the Chinese policy values ​​established by the previous leader, Deng Xiaoping, who encouraged the pursuit of common development and the sharing of economic interests. In this case, China will have access to oil and natural gas reserves in the South China Sea worth billions of dollars, without violating international law and angering the United States and other allies.

However, although the conditions for a dialogue are developing more favourably, Manila must be careful to ensure that it secures its own interests and enjoys the support of its neighbors and allies. In fact, the United States, the Philippines’ largest and most powerful ally, may approve plans to use joint oil exploration projects to secure an agreement on a code of conduct in the South China Sea. Over the past four years, the United States has made huge investments in military infrastructure in the Philippine islands, and last month the two countries successfully conducted their largest joint military exercise.

Washington reaffirmed to the Philippines its commitment to securing its regional sovereignty, and that it is in a good position to help ensure the implementation of an agreement on the code of conduct in the South China Sea, and its commitment in the region. Given President Donald Trump’s self-proclaimed talent for “brokering peace,” facilitating an agreement on a code of conduct in the South China Sea between China and ASEAN would be a major achievement for him.

Just months ago, this channel of dialogue between the Philippines and China was unimaginable, but the Iran war changed the situation, and may have provided Marcos with the key to securing an agreement on the code of conduct in the South China Sea. While there is reason to be optimistic, the devil is in the details, which could be a potential issue in the Philippine Constitution which stipulates that all natural resources in the country’s waters, including the exclusive economic zone, are owned by the state, and that Filipinos must own 60% in any business entities involved in joint ventures.

With the recent historic meeting between Chinese President Xi Jinping and Trump, China appears keen to return to a stable relationship with the United States. Renewed positive relations between the United States and China could help the Philippines’ cause, as there would be greater benefit for Beijing in securing an agreement with Washington’s largest ally in the region.

Reaching an agreement on a code of conduct in the South China Sea will mean long-term stability in the region, and while the agreement will not end all disputes, it will ensure greater trust between China and its closest neighbours.