Lowy Institute

Contrasting Philippines President Benigno Aquino with President-elect Rodrigo Duterte is much easier than finding similarities. Undoubtedly, the Duterte administration will be very different from Aquino's. Duterte has brought communist party nominees into his cabinet but not the Vice President-elect, Leni Robredo. Aquino moved from the Senate to the presidential palace carrying the most powerful surname in Philippine politics. Duterte will, reluctantly, move to Manila from far-flung Davao City where he is mayor. Reflecting these differences, Philippine security policy under Duterte is also likely be very different to the present settings.

Yet, in one important aspect, their security policies could be similar in effect.

The biggest change in security policy introduced by the Aquino administration came in 2013 when it chose to take China to court over maritime rights disputes in the South China Sea, an action led by Foreign Secretary Albert del Rosario . This quickly became Aquino’s most famous policy internationally. It gained widespread public support, and was endorsed by the US and key security partners such as Japan.

It also seriously damaged the president’s personal relationship with China leading him to be castigated by Beijing and excluded from China-organised cooperative events with Southeast Asia. Many critics in the Philippines and beyond thought Aquino and del Rosario had pushed China too hard and that the rash Philippines would pay too high a cost.

What could be the biggest change to Philippine security policy under Duterte is already unfolding even before he is inaugurated. Duterte has restarted the peace process, which was largely moribund under Aquino, for the decades-old, nation-spanning communist insurgency. His peace envoys have had their first meeting in Oslo with the self-exiled founder of the Communist Party of the Philippines (and Duterte’s former teacher) Joma Sison, and the chief negotiator for the communists, Luis Jalandoni. The Duterte team is considering releasing political prisoners, a return for Sison, and a very quick negotiation of a peace deal. Negotiating to end the insurgency and the disruption and death it causes across the archipelago will likely gain public and international support.

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However, Duterte’s unprecedented offers to the communist insurgents at a time when the insurgency is not a threat to the state has triggered concerns from senators including the elder of the Senate, Juan Ponce Enrile. Former coup plotters turned elected politicians publicly spoke during the election campaign about a potential coup if Duterte goes too far and concedes too much. The Armed Forces of the Philippines has backed Duterte’s plans for restarting the peace process but many may find the release of political prisoners and other olive branches to the militant left bitter pills to swallow.

Aquino’s most significant change to Philippine security policy severely strained relations with China, the country’s largest trading partner, at a minor cost to Aquino and the Philippines. Duterte’s likely biggest change to security policy, if not handled well, could put serious strain on his relationship with elements of the army. Sison himself has warned Duterte of this risk.This should be more worrying for the Philippines than China’s opprobrium and cancelled invitations. 

Duterte’s likely biggest change to Philippine security policy is larger than Aquino’s move. It offers greater rewards, and greater risks as well.

The Lowy Institute has today released Dr Malcolm Cook's Analysis, 'Turning Back? Philippine Security Policy under Duterte'.

Photo by Lito Boras/Anadolu Agency/Getty Images

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At first glance it looks like much has changed in Philippine politics. In Rodrigo Duterte the Philippines will have, for the first time, a president from the island of Mindanao, and one who came to power without either the backing of a major party or pre-existing network of local political bosses behind him. Moreover, it is still possible that the son of Ferdinand Marcos Sr, Ferdinand 'Bongbong' Marcos Jr, will be only a heartbeat away from the presidency. The dictator’s unrepentant son is in a very close race for the vice-presidency with Leni Robredo, the VP choice of President Benigno Aquino. A national elected position may for the first time ever be decided by overseas votes. And in another first, a trans-gender candidate has been elected to a national political position.

Yet, at second and third glance, four powerful trends in post-Marcos Philippines appear to be holding true.

1. Political dynasties rule and the number of locally dominant families is growing.

The Duterte family’s two decades-plus control of Davao City will continue with Inday Sara Duterte (Rodrigo Duterte's daughter) winning over 99.5% of votes cast for mayor. While vice president Jejomar Binay faded badly as a presidential candidate, his family’s lock on power in Makati City is unbroken after Abigail Binay replaced her deposed brother as mayor in a close-run affair. Imee Marcos won the governorship of Ilocos Norte by acclamation as did Pia Cayetano, sister of Duterte’s running mate Senator Alan Peter Cayetano, in their bailiwick of Taguig City in Metro Manila. Duterte and Binay are first-generation scions of new urban-based political dynasties. The 'anarchy of families' continues.

2. The incumbent’s choice is the kiss of death.

In the past four elections, the serving president’s choice has lost, usually by large margins. In 1998, Vice president Joseph Estrada smashed Jose de Venecia. In 2004, Fernando Poe Jr (Estrada’s best friend), is widely believed to have won the vote but lost the vote count. In 2010, Gloria Macapagal-Arroyo was widely seen to be backing Estrada (whom she had pardoned as president), yet Benigno Aquino romped home. Yesterday, Duterte easily beat Manuel Roxas. Lame ducks indeed.

3. The recent return of the Marcos family to the national stage continues largely unabated.

When Imelda Marcos ran for president in 1992, she came a distant fifth with about 10% of the vote. When her son ran for the Senate in 2010, he finished a creditable 7th (the 12 highest vote winners become Senators) with roughly 35% of the electorate including him among their 12 choices for the Senate. As of 9:00am this morning, Bongbong Marcos had amassed 34.6% of the vote for vice president, only 0.4% behind Robredo’s total. Marcos has easily won Metro Manila and his family’s bailiwicks of northern Luzon and Leyte. 

4. Home region and language group are still the most powerful determinants of voting behaviour.

This holds true in every region outside of Metro Manila, the common shorthand for Metropolitan Manila, the country's national capital region and the predominant destination for internal migration. Duterte triumphed by winning Mindanao, Cebu where his family originates from, and Metro Manila. If Marcos wins the vice presidency, the pattern will be very similar.

Philippine politics are not changeless but they have not changed as much as some fear or hope with these election results.

Photo by Dondi Tawatao/Getty Images

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Two recent extraordinary political statements by the Abe Administration reflect how deep, even neuralgic, Japan's sense of rivalry with China is. Each suggests that this rivalry may be undercutting Japanese diplomacy in general and its aid program in particular.

1.Mugabe in Japan

President Robert Mugabe of Zimbabwe is in the midst of a four-day state visit to Japan where it is reported he will be given the protocol honour of a court luncheon hosted by the Emperor and Empress. Not only that, Japan will extend a ¥600 million grant to the Mugabe regime for infrastructure development.

From 2001-2015, Zimbabwe received no new Japanese aid. What has changed? Not the quality of Mugabe's leadership (for length and venality of rule, Mugabe stands at or the near the top of the global pile), or Zimbabwe's management of foreign aid. Rather, China's commercial and diplomatic push into Africa and Japan's desire to gain more global support for its UN Security Council membership push, which China steadfastly opposes, appear to be the main drivers behind the Abe Administration's embrace of Mugabe. It is likely that while Mugabe will benefit from Tokyo's warm embrace, Japan's long frustrated UN Security Council reform plans, the Japanese taxpayer, and the people of Zimbabwe (the supposed beneficiaries of Japan's aid) will not.

2. Tokyo criticises Jakarta, and lowers its aid standards

In September 2015, Yoshihide Suga, Japan's Chief Cabinet Secretary and Prime Minister Abe's right-hand man, was highly critical of the Jokowi Administration's decision to award the Jakarta-Bandung high speed rail project to China and not Japan. Jakarta insisted that the project bidder waive the condition of an Indonesian government loan guarantee. As noted by Suga, this requirement, which the Chinese side met, goes against Japan's decades-long approach to aid and to the fiduciary principle of having host government investment in projects supported by Japanese overseas aid.

Not only did the fierce Japan-China competition over Asian infrastructure projects lead one of the most powerful Japanese political leaders to publicly criticise Indonesia and the Jokowi Administration (an extraordinary political statement), it has weakened Japan's decades-old policy of requiring host government loan guarantees for its aid projects. In May 2015, Japan announced a US$110 billion Partnership for Quality Infrastructure initiative, seen by many as a response to China's recent Asian infrastructure initiatives. The third pillar of this Partnership seeks to 'double the supply of funding for projects with relatively high-risk profiles'. The main mechanism to achieve this fiduciarily questionable goal is to:

...empower JBIC (the Japan Bank of International Cooperation) to actively provide funding for PPP infrastructure projects etc. with relatively high risk profiles (e.g. a project without a guarantee from a government of developing country to support the payment obligations of the off-taker under the purchase agreement).

The Japan-China rivalry is deeper and broader than the US-China one, and it is driving deep Japanese policy changes across a wide spectrum. These two extraordinary Japanese political statements reflect this change, and the risk that the Abe Administration's approach to its rivalry with China is warping long-standing bipartisan policy settings in ways that do not clearly benefit the Japanese people or those whom its aid program seeks to help.

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Pyongyang's latest nuclear test led to the same responses as the earlier ones: calls for the resumption of the Six-Party Talks and an overwhelming focus on how the present US approach is flawed and needs to change. It feels like we're in a time warp. You could write the same story about each North Korean nuclear test, updating the name of the North Korean leader, the US president and the US policy (this time known as 'strategic patience') that is the subject of criticism.


Statue of North Korean founder Kim Il Sung, Pyongyang. (Flickr/Matt Paish.)

Not only is this time warp mind-numbingly repetitive, it is also based on two flawed assumptions. Correcting these assumptions and tweaking the 'strategic patience' approach in three ways may help get us out of this flawed and increasingly dangerous time warp.

First, using the latest North Korean nuclear test as a reason to restart the Six-Party Talks is wrong in principle and in practice. As noted by Japan, this nuclear test is the latest is a long line of North Korean actions that run counter to its Six-Party commitments. North Korea's actions show that nothing which is agreed in the Six-Party Talks affects North Korea's decades-long nuclearisation strategy. Restarting the talks, which permits North Korea another media-friendly gap in attempts to isolate it for its destabilising behaviour, sends the wrong message (do wrong and get rewarded in the hopes that you will not do wrong again) and will likely encourage further transgressions.

Second, China's policy towards North Korea should be the focus of criticism, not that of the US. China's rhetoric on North Korean nuclearisation has certainly become less contradictory to that of the US, Japan and South Korea. Yet China willingly provides the largest gaps in attempts to isolate North Korea for its nuclear destabilisation. Isolation is still the best tool available to try to change North Korea's nuclear calculations and has the significant added benefit of imposing costs on North Korea for its destabilising behaviour and for welching on its commitments. It also sends the right message to Pyongyang: do wrong, suffer the consequences.

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Three tweaks to the US 'strategic patience' approach, supported by Japan and South Korea, would help correct these persistent assumptions and make the approach more consistent:

  • All six parties should admit the twin realities that North Korea is a nuclear-armed state (hence comparisons with the Iran nuclear deal are false) and that Pyongyang shows no signs of altering this long-sought status. This will not be easy.
  • The US, Japan and South Korea (and Russia and China, if willing) should declare the Six-Party Talks dead due to North Korea's continued transgressions. To not do so implies that the Six-Party Talks are more important to the US, Japan and South Korea than they are to North Korea.
  • There should be greater efforts to crack down on known North Korean ways of getting around sanctions. Announcing new sanctions would be to fall into the time warp again. Expending more effort and diplomatic capital on truly enforcing the existing ones would be new.

These changes will not lead Pyongyang to give up its nuclear weapons. But they would be more consistent in principle and practice and would raise the costs for North Korea of its transgressions and destabilisation, and increase the incentives for China to live up to its newly critical rhetoric towards its only formal ally. We should replace strategic patience (an inherently passive approach) with strategic determination.

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The most important outcome of Prime Minister Turnbull's flash visit to Japan today probably won't be in what deals are signed or not (unless Turnbull is delivering bad news on the submarine tender). Rather, the most important outcome will be the hardest to judge from the outside: will Turnbull and Abe establish trust and a close working relationship?

Prime Minister Howard struck up a close relationship with prime ministers Koizumi and Abe (in Abe's first term in 2007), and the Australia-Japan relationship was elevated to a new, much higher level. Kevin Rudd was able to form such a relationship with South Korean President Lee Myung-bak and the bilateral relationship blossomed. Prime Minster Abbott developed close relationships with both Abe and Singaporean leader Lee Hsien Loong, and again both bilateral relationships were quickly elevated to new heights.

Good chemistry between leaders is key to both elevating bilateral relations and protecting them from tough divisive issues such as Japan's unwelcome return to whaling, something that will undoubtedly anger many in Australia and elsewhere. With both Abe and Turnbull in strong political positions facing weak opposition leaders, they could be at the peak of the Australia-Japan relationship for the coming years. It would be good for both countries if Turnbull is able to strike up as a good a relationship with Abe as his two Liberal prime ministerial predecessors did.

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Tomorrow's meeting between President Ma of Taiwan (pictured) and President Xi of China in Singapore truly will be historic, and good history at that.

It is also a rare case in which the dual roles of national leaders as both statesmen and leading figures in their political parties (Ma Ying-jeou is no longer Chairman of the KMT but he is a senior figure) do not conflict but converge. So often in foreign policy, we hear that a particular leader could not take action due to 'domestic politics' (eg. the fear of losing popular support and/or alienating key constituencies in their party). But in this case both leaders have something to gain domestically by appearing statesmanlike, and this first meeting of the leaders of Taiwan and China is only possible because this rare alignment is in place for both Ma and Xi. 

For Ma, Taiwan's least popular elected president, now at the end of his final term, the meeting will be a major legacy moment. It will put Taiwan back in the international spotlight in a favourable way (a very hard thing for Taiwan to achieve), and it will be presented as the ultimate sign of success of Ma's signature policy over two four-year terms of warming up cross-Strait economic relations and reducing cross-Strait political tensions.

Domestically, Ma and the KMT's calculation may be that this meeting in Singapore will change the campaign dynamics of the January presidential and legislative elections in Taiwan.

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Presently, it looks likely that the opposition party that favours greater Taiwanese autonomy from China, the DPP, will win the presidential election and for the first time ever also become the largest party in the Legislative Yuan. If that occurs, the KMT would be completely out of power at the national level for the first time in Taiwan's history. This meeting will focus the media spotlight back on cross-Strait relations, an area where the KMT has long thought (possibly mistakenly, as shown by the Sunflower Movement) it has a distinct advantage over the DPP. 

For Xi, the meeting will likely be presented as the first concrete success of China's policy of pursuing closer economic integration with Taiwan as a means of starting cross-Strait political negotiations. Xi and the Chinese Communist Party also likely share the KMT's hope that the meeting shifts Taiwan's electoral balance away from a double DPP win. Domestically, it also could enhance Xi's image as a strong leader willing and able to tackle problems and do things his predecessors shied away from.

Given Ma's two-month shelf life as Taiwan's leader, this rare alignment will likely be fleeting. If it backfires on the KMT electorally (or simply doesn't shift the present electoral trajectory), then the effects of the meeting will not last the year. There is no foreseeable way from either side of the Taiwan Strait for President Xi to follow up with a meeting with Tsai Ing-wen, the DPP's leader and presidential candidate. As is usual, domestic political realities may again trump the hoped-for outcomes of statesmanship.

Photo courtesy of Flickr user Jameson Wu.

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Among the five bilateral relationships successive Australian Governments have agreed upon as being the most important (US, China, Japan, Indonesia and India), the sudden, though not unexpected, change in Liberal Party leadership will cause the most angst in Japan.

When Kevin Rudd replaced John Howard in 2007, many in Japan were concerned. This anxiety was further inflamed with Rudd's first maladroit steps in regional diplomacy. Luckily, while more slowly and awkwardly, the bilateral relationship and security partnership continued to strengthen as shown by the signing of the Cross-Servicing Agreement in 2013.

Common security interests, more adroit diplomacy on the Australian side and a strong and expanding network of operational cooperation quickly assuaged Japanese angst. Test passed. 

The change of leadership from Tony Abbott to Malcolm Turnbull will pose another test of the degree to which common strategic interests and ongoing intergovernmental cooperation shape policy, versus local domestic interests and individual leaders. As with Rudd, there are concerns (again flowing from the domestic debate in Australia) that Turnbull is 'pro-China' and hence not a 'friend' of Japan. 

In two ways though, this second test will be harder:

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  1. The Abbott-Abe relationship is very strong and developed from the beginning of Abbott's term and Abe's second. Howard's close personal ties with Koizumi and Abe came in the second half of Howard's long prime ministerial stay.
  2. This close personal relationship was seen to be the key to delivering the Japan-Australia trade deal. The security relationship moved from a walk to a sprint with prime ministerial support for Australia's consideration in buying Japanese submarines or submarine technology. On each side, the potential submarine deal is a huge, ground-breaking initiative and, unfortunately, has become a media touchstone in both countries for the direction of the relationship as a whole.

It is unlikely that Turnbull will be able to develop such a close and in some ways defining relationship with Abe before the next Australian election. Likewise, it's unlikely that Turnbull will retain Kevin Andrews as Defence Minister, so the delayed 2015 Defence White Paper will probably be delayed again, as will any decision on submarines.

It's doubtful that Turnbull will choose to pay as high a price for being seen to support buying submarines off the shelf (the cheapest and easiest option, but one that limits the number of jobs and ribbon cuts in the Australian defence industry and the option seen most favourable to the Japanese) as Abbott was.

After the first failed attempt to unseat Abbott in February, the process for choosing submarines was hurriedly revised at a rushed news conference in Adelaide where the Defence Minister was surrounded by the Liberal members of parliament from South Australia, the self-named 'Defence State.' The new 'competitive bidding process' was widely seen as less favourable to the Japanese. In a rare show of bi-partisanship, the Labor and Liberal Party leaders of South Australia have already publicly noted they have contacted Turnbull and pushed for a submarine choice that maximises the amount of work done in South Australia. With senior Japanese defence figures questioning Adelaide's ability to build Soryu submarines, any commitment by the Turnbull Government to a 'build in Australia (Adelaide)' approach to submarines will cast further doubt on the Japanese option.

To pass this second tougher test and assuage Japanese angst, Turnbull would be well-served to stay firm on the proper policy that Australia will choose the option that provides the best submarine at the best price to Australia, especially given the huge expenditure of taxpayers' money the project will entail. It would also be a good idea to find ways of promoting other less complex and sensitive aspects of the bilateral security partnership and relationship as a whole, such as Japanese training exercises in Australia.

Photo courtesy of Flickr user G20 Australia 2014.

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There were huge protests over the weekend in Japan against legislation, approved in principle by the Abe cabinet in July, which will reinterpret the Japanese Constitution to permit the very limited exercise of collective self-defence. This fierce public opposition to the normalisation of Japan's Self Defence Forces highlights two connected problems for Prime Minister Abe. 

The size and cross-sectional nature of the protests highlight a serious policy communication problem for the Japanese Government in general, and a particular problem for the Abe administration. There is a strong bipartisan consensus, supported by Japanese public opinion, that Japan faces a very serious and growing security threat from China and North Korea. As shown by the 2010 National Defense Program Guidelines released under the Democratic Party of Japan (DPJ) administration, there also is strong bipartisan support for Japanese foreign and security policy to become much more focused on these neighbourhood threats, for a stronger US-Japan alliance and for Japan to play a more active alliance and regional security role.

But there is partisan disagreement on how to do this, with the leader of the DPJ joining the leader of the Japanese Communist Party at the protest rallies. The partisan disagreement is fuelled by the public's unwillingness to support a more active Japanese security role in general, and particularly changes like collective self-defense seen to undercut the totemic war-renouncing Article 9 in the Japanese Constitution.

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Unfortunately, Abe, with his conservative, revisionist views and tense relations with much of the media, is not the leader to help bridge the gap between what policy and legal changes the Government thinks are necessary for Japanese security, and what many parts of Japanese society are willing to support. Rather, Abe is likely to widen or harden this gap that so frustrates Japanese security policymakers and those who want Japan to play a more active security role.

As the demonstrations show, Japan's battered opposition parties see an opportunity to wedge Abe on this issue. The media and governments in Seoul and Beijing likewise.

The protests, while large and loud, are not a significant political threat to Prime Minister Abe or his administration. Abe's position in the Liberal Democratic Party (LDP) is rock-solid and it looks very likely that he will be re-elected unopposed as party leader this month. Second, the LDP faces no serious opposition party threat, and the popularity of Abe's cabinet has actually increased despite these mounting, headline-grabbing demonstrations, a slowing economy and an embarrassing flip-flop on the centrepiece stadium for the upcoming 2020 Olympics.

We should expect more demonstrations and denunciations inside and outside Japan, but the process of revising Japanese legislation to operationalise the limited right of collective self-defense seems as secure as Prime Minister Abe himself.

Photo courtesy of Flickr user Christian c.

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Over the last two months, there has been noticeable progress on three separate fronts in Japan's 30-year process of 'renormalising' its' approach to external defence:

  1. Last week, the Abe cabinet approved the 2015 Japanese Defence White Paper after revisions were made to make it focus more squarely on the growing military threat from China, both to Japan and the region more generally. As Malaysia, the Philippines and the US are doing in the South China Sea, Japan is more frequently providing photographic evidence of Chinese actions in the disputed waters of the East China Sea.
  2. On 15 July, Japan's House of Representatives passed the first of many key legislative changes that will enact last year's constitutional reinterpretation that permits Japan to exercise a limited right of collective self-defence.
  3. Regional support for Japan's more active defence policy has grown and become more tangible. For instance, in early June the Philippines and Japan signed a joint statement on security cooperation with an attached action plan. On 25 May, Japan and Malaysia signed a similar, but less ambitious joint statement. Discussions have started on a possible status of forces agreements between the Philippines and Japan. On 23 June, as part of a Japan-Philippine bilateral exercise, a Japanese P3-C Orion anti-submarine surveillance plane flew over disputed waters in the South China Sea to Beijing's ire. The Philippines could also be the first recipient of Japanese arms exports when it finalises the purchase of a small number of these maritime surveillance aircraft from Tokyo.

However, Japan is still far from a normal external security actor and alarmist talk of Japanese remilitarisation tells you more about the ideological predispositions of the accuser than of present reality. Yet, it's clear that Japan is again becoming a more proactive and independent security actor in East Asia in both words and action. It is also increasingly focused on the threat from China and is finding growing support from regional countries with similar concerns.

The US-China major power relationship is not the only one that is reshaping the regional security order.

Photo courtesy of Flickr user U.S. Pacific Fleet.

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Michael Thawley's comments on China's present global leadership credentials and ambitions are correct and phrased in the refreshingly direct manner Australians usually take as a badge of national pride and uniqueness.

The fact that his comments caused such a stir in Australia (and seemingly in Australia alone) tells us more about the commentators than the comments themselves.

The Chinese state has so far eschewed attempts at global leadership. Rather, Chinese policy-makers are focusing their institution-building efforts at the regional level, as part of what Beijing refers to rather undiplomatically as 'peripheral diplomacy', and among fellow developing-economy states.

The Shanghai Cooperation Organisation (SCO) and the Asian Infrastructure Investment Bank (AIIB), for instance, are both regional institutions. The SCO only has Asian member-states and observer-states, while the AIIB has regional and non-regional members, though membership is in strong favour of the regionals and China itself. The New Development Bank (known widely as the BRICS Bank) is in line with China's decades-old view of itself as a leading state in the developing world.

In existing global multilateral bodies, from the UN Security Council to the WTO, China has been comparatively low-key and primarily focused on defending specific national interests.

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China was a late-comer to the WTO and its restrictive trade practices and policies have made it not a leader in that institution but the most frequent subject of cases heard by the WTOs dispute-settlement mechanism. In the G20, a new global body created to better acknowledge rising powers like China and India, Beijing has also failed to take a leading role. In the UN Security Council (another body that has long recognised China's leadership potential), Beijing rarely leads or uses its veto power (unless it is in company with others, usually Russia). On climate change, China was painted as the major villain of the failed 2009 UN summit in Copenhagen. 

Recent Pew Research Center polling shows that Australians seem to be a global outlier when it comes to judging China's global economic weight. 57% of Australians mistakenly see China as the world's leading economic power, the highest score among the 40 countries polled. In no other country did a majority of respondents identify China as the world's leading economic power.

The comparatively disproportionate amount of money being invested in Australia into understanding China risks reducing the Australian discussion of Asia as a whole. Given the tempest in the teapot caused by Michael Thawley's remarks, this risk may spill over from Asia, where China is starting to flex its leadership muscles, to the world as a whole, where it is not. 

Photo courtesy of Flickr user G20 Australia 2014.

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Sidu River Bridge in Hubei Province, China, the world's highest bridge.  (Wikimedia Commons.)

China's Asian Infrastructure Investment Bank (AIIB) initiative was has spurred an explosion of opinion and analysis. The Asian Development Bank's (ADB) 2009 estimate that Asia will need US$8.22 trillion in infrastructure investment is the headline figure used to explain the importance of the new bank. Much of the opinion expressed so far has also assumed that the AIIB will be, as the main Chinese media agency Xinhua puts it, a Chinese gift to the world, with China as the main creditor.

But looking more closely at the ADB's figures and at China's present interactions with the World Bank and ADB, a more interesting possibility emerges that has so far escaped attention or analysis.

China, befitting its huge size and developing-economy status, could be a major AIIB borrower. China's own infrastructure needs alone account for over half of the total for Asia, according to the 2009 ADB estimate. In 2014, China was second-largest recipient of ADB loans after India. This was also the case in 2013. Likewise, China has the second-largest present borrowing obligations with the World Bank (at US$17.2 billion) after India (at US$36.4 billion).

Will the lending portfolio of the AIIB follow suit? Asia's present infrastructure needs and China's use of the existing development banks suggest it should.

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Vice-President Jejomar Binay. (Flickr/ISS.)

Elections are rarely decided by foreign policy issues, but election results can decide foreign policy issues.

The 2016 Philippines presidential election looks like it could lead to a sharp change in Manila's approach to its maritime boundary disputes with China in the West Philippine Sea. The US, Indonesia and Vietnam are taking firmer and more active positions on the South China Sea disputes involving China in the face of Beijing's aggressive reclamation activities targeting Philippine claims. President Aquino has won international support for the Philippines' firm stance.

But his most likely successor could significantly soften Philippine policy towards China on this issue.

Vice-President Jejomar Binay, despite being the focus of a Senate Blue Ribbon Committee investigating alleged corruption, is the clear front-runner for the 2016 elections. In the latest Pulse Asia poll on 2016 presidential candidates, Binay garnered 29% support, a clear 15% ahead of Senator Grace Poe in second at 14% and a full 25% ahead of Manuel 'Mar' Roxas (Aquino's presumed favoured candidate), at 4%.

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Binay has no foreign policy experience, having risen to national prominence as long-time Mayor of Makati, the wealthiest city in Metro Manila and the country. In one of his first extended interviews addressing foreign policy issues, Binay focused on the prospects for joint Philippines-Chinese development of natural resources in the West Philippine Sea, and downplayed the case filed by the Aquino Administration to the International Tribunal on the Law of the Sea regarding the Philippines' maritime boundary disputes with China. The ruling on this landmark case is expected to be delivered in mid-2016, potentially at the same time Binay takes over as president.

If Binay wins and follows through on these views, it would be a return to the policy preferred by Aquino's predecessor, President Macapagal-Arroyo. Macapagal-Arroyo's joint development plans with China were widely viewed as unconstitutional. In the face of this furore, in 2009, the Macapagal-Arroyo Administration did not renew the 2004 joint seismic study agreement signed in China covering the disputed waters. When Aquino took office in 2010, he and Foreign Secretary Albert del Rosario quickly adopted a much firmer stance.

The foreshadowing of a second reversal of Philippines policy on its maritime boundary dispute with China in two presidential terms shows how divided the Philippine political elite and their financial backers are on this issue and its place in Philippines-China relations. A second reversal in two presidential terms would rightfully reinforce views within ASEAN, and in Washington and Tokyo, about the unreliability of the flip-flopping Philippines, and would throw into doubt the wisdom of aligning their South China Sea approaches with the policy prevailing in Manila at any given moment.

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The best chance for peace in Muslim Mindanao in the Philippines has just noticeably faded.

The deadly clash in the early morning of Sunday 25 January between the Special Action Force of the Philippine National Police and the local command of the Moro Islamic Liberation Front (MILF) and the Bangsamoro Islamic Freedom Fighters (BIFF), in an MILF stronghold in Maguindanao, left five MILF fighters and between 30 to 60 police officers dead and up to eight captured. This is the largest number of police officers killed on duty in Philippines history.

The term 'misencounter', used by both the government and the MILF to describe the clash, seems euphemistically inadequate, as noted by opposition Senator JV Ejercito.

Four different but intertwined elements of the massacre will aggravate its damaging, potentially disastrous, impact on the progress of the peace deal signed between Manila and the MILF command in March 2014:

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  1. The massacre occurred at a sensitive time in the legislative deliberations over the draft Bangsamoro Basic Law. The Basic Law is meant to turn the March 2014 peace deal into a national law, establishing a new, more autonomous, regional government for the Moro Islamic community. This process is already months behind President Aquino's ambitious timeline, which calls for elections to this new regional government to coincide with the 2016 presidential poll and the end of Aquino's single term. With at least two of the 13 senators who co-sponsored the senate version of the draft Basic Law withdrawing their support due to the massacre, further delays are a certainty.
  2. Opposition to the draft law and the 2014 peace deal among local Mindanao politicians (Muslim and Christian) and national legal and political figures was already mounting before the massacre. The massacre will increase the number of politicians at both levels opposed to the peace deal and the Basic Law, and provides them a powerful new emotive rationale for their opposition.
  3. The fact that the slain police detachment was hunting for a known Malaysian terrorist and suspected that this senior Jemaah Islamiyah figure, 'Marwan', and his associate Basit Usman, were hiding out in the house of the local MILF commander, focuses new attention on the multiple personal links between senior personnel in MILF and regional terrorists seeking safe haven in Mindanao. Multiple reports that BIFF fighters joined in the fighting further reinforces recognition of the strong, often familial, connections between the MILF that struck the latest peace agreement with Manila and insurgent groups that reject the deal.
  4. It is reported that the nearby Philippine Army detachment was unable to provide support to the cornered and outgunned police during the 'dusk to dawn' fighting due the stipulations of the ceasefire agreement between the MILF and the Philippines Government. This could well undermine support for the ceasefire conditions among local Army and police personnel mourning their fallen peers and smarting from the seemingly one-sided outcome of the clash.

Both the MILF and the Aquino Administration have called for the peace process to continue unimpeded despite this apparent massacre, which stands out even by the violent standards of Mindanao. Many opponents to the peace deal in Manila and in Mindanao will disagree.

The decades-long search for peace in Muslim Mindanao has seen many false dawns and the recurrence of low-intensity war. While the 25 January clash may not, by itself, spoil the latest and most comprehensive peace deal, it will not be easily overcome. The delays to the peace process will put the search for peace at risk yet again. 

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Thanks to Hugh White for continuing our debate on the China-Australia FTA and the intersection between Strategic Studies and Economics. Like Hugh, I do not think that 'Australia's economic weight and sophistication is such an irresistible magnet for China that we can dictate the terms of the relationship and compel it to accept without demur whatever strategic positions we choose to adopt'.

Each of the last four Australian governments has felt the tongue-lashings of the Chinese when their positions on various issues differed from those of the Chinese Communist Party (positions Australia was far from alone in the region in adopting). Even as a callow program director at the Lowy Institute, a private think tank, I was castigated more than once by Chinese officials in Australia for demurring against Chinese views. But although China forthrightly pushes back against those with a different worldview, that does not mean it lets such differences undercut Chinese interests.

I agree with Hugh that measuring the benefits of a bilateral preferential trade deal and divining its policy weight against assumed strategic imperatives is fiendishly difficult. But I think Hugh is underestimating the importance of the China-Australia deal for Beijing, for three reasons:

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  1. Leon Berkelmans indicated why the dated and modest estimates Hugh references are no longer a credible guide to the deal signed.
  2. As trade economists remind us every time a trade deal is done, the dynamic gains from structural change to the affected economies are likely to be much greater than the static gains to bilateral trade flows, which are the focus of traditional models such as the one Hugh cites.
  3. As shown by both Japanese and Chinese private sector firms getting the same elevated foreign direct investment ceilings through their respective deals with Australia, the same ceiling first granted to US firms a decade ago in the US-Australia preferential trade deal, the effects of any trade deal cannot be treated in isolation. Rather, each should be seen as part of a much larger whole. This explains why an economy the size of China would bother to negotiate a bilateral deal with Iceland, an economy less than 1% the size of Australia.

China's trade diplomacy seems to be following Deng Xiaoping's maxim to 'cross the river, feeling for the stones.' As shown by the Korea and Australia deals, China under Xi Jinping is signing broader and deeper trade deals with larger trading partners.

Through the ongoing Regional Comprehensive Economic Partnership process, China is now also in serious negotiations with its largest regional trading partner, Japan. And President Xi's embrace of the decade-old Free Trade Agreement for the Asia-Pacific idea indicates China is willing to consider trade talks with its largest national trading partner, the US. Lastly, China's trade deals with European Free Trade Area members suggest that China has 'felt the stones' towards trade talks with the European Union, China's largest collective trading partner.

Undoubtedly, Japan, the US and the EU will look at China's commitments in the China-Australia FTA as a minimum standard to be much improved upon, given their greater economic weight and sophistication.

Economic interests and strategic ones are both important, and these interests certainly do intersect. But in the case of the China-Australia FTA, I think Hugh understates the deal's economic importance to China and overstates the intersection between China's global economic interests and regional security interests. He also overstates the prominence of these regional security interests in this intersection.

Economics does explain the China-Australia FTA better than Strategic Studies.

Photo by Flickr user Alexander Kesselaar.

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Thanks to Hugh White for responding to my post on the China-Australia free trade agreement (FTA). Hugh lays out three options for interpreting China's decision to go ahead with the FTA despite the Abbott Government's pro-Japan and pro-US stances. I am not an Option 1 believer ('Beijing doesn't really care much about these strategic/political issues, and their importance is outweighed by the economic value to China of the FTA and the diplomatic value of a warmer relationship with Australia'), as Hugh suggests.

Rather I think Option 4 — China's primary motivation for signing the trade deal with Australia is its global (not regional) trade diplomacy strategy aimed at domestic structural reform – is the most compelling. In this case, China is telling the truth when it says its foreign policy is primarily driven by the domestic concerns of a developing, previously centrally planned, economy in rapid transition.

Australia is the fourth developed economy to sign a preferential trade deal with China in 2014, following after Iceland, Switzerland and South Korea. More are on the way. These four were preceded by deals with Singapore, New Zealand, Hong Kong and Taiwan. Not only is China under Xi Jinping increasing the number of trade deals with advanced economies, the scope of these deals, as we can see with the Australian and Korean FTAs, is increasing.

For me, the China-Australia deal is motivated more by China's global trade diplomacy aimed at domestic economic goals than it is by the regional strategic order in East Asia and Australia's perceived position in this order in relation to China and the US. I imagine the same is true for Australia as well.

If Option 4 is the best explanation, this is a good sign for the regional security order and a strong caution against over-interpreting the scope and effect of regional strategic competition. If the Abbott Government is an Option 4 follower, then the China-Australia trade deal is even more of a coup than advertised, and is the sign of a mature, not adolescent, Australia in Asia.

Photo by Flickr user gp1974.

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