The case for China–Philippines joint resource development

Most claimants in the disputed South China Sea have shown interest and willingness to engage in joint resource development with co-claimant countries, especially on oil and gas exploration (no less than the late Chinese paramount leader Deng Xiaoping maintained a policy of setting aside the sovereignty debacle and pursuing joint development in the area).

But for this to happen, territorial disputes must be temporarily put aside in order to clearly demarcate areas where joint exploration can be conducted. Strong rhetoric must give way to sincere discussion, and pragmatism should prevail over virulent nationalism in order to address immediate economic realities and security needs.

The benefits of joint exploration for a resource-rich but capital- and infrastructure-deficient country like the Philippines includes attracting much needed investment and obtaining the necessary technologies to fully exploit its resources. Joint exploration and resource development could mitigate conflict and reduce tensions, and so diminish the pressure to expand national defence capabilities.

Conducting joint oil and gas exploration with the Philippines offers China a readily available source of energy with some political benefits on the side. By establishing a joint resource development program with a neighbour with whom it has maritime and territorial disputes, China can build its image as a good neighbour and a responsible regional and world power. This collaborative approach will allay the fears of many — notably other South China Sea claimants — that China is determined to gain complete and exclusive control of the South China Sea.

The 2002 Timor Sea Treaty between Timor-Leste and Australia is a good example of joint resource management. The treaty created a Joint Petroleum Development Area in disputed territorial waters between the two countries. The Timor Sea Treaty compromised neither country’s sovereignty because it did not draw a final boundary between the two neighbours. A designated authority was established to administrate all petroleum-related activities in the area, with the two governments equally represented. Australia gave enormous concessions to Timor-Leste under a sharing scheme of 90-to-10, with Dili getting 90 per cent and Canberra just 10 per cent of the revenue.

Signed on the day Timor-Leste gained full independence, the treaty was a great relief for the country, offering a promise of sustained economic benefits crucial for its nation-building process. It also saved Timor-Leste the huge expense of having to develop its external defence capacity to ensure sovereign control over its maritime territory at a time when it could not afford to do so.
For Australia, the deal offers a steady income from oil and gas while affirming Canberra’s credentials as a good neighbour.

One of the pitfalls of the Timor Sea Treaty from Dili’s perspective is that the resources extracted from one of the major fields in the joint development area, the Bayu-Undan field, are all processed in Australia, giving Dili less control over the end product despite its 90 per cent cut in royalties.

To avoid similar contentions, a joint hydrocarbon resource deal between the Philippines and China should place downstream activities in the Philippines, because it is closer to potential hydrocarbon-rich waters. In this way the Philippines could improve its local downstream resource industry, generate jobs, provide continuous energy supply and spur economic growth. State-owned Chinese energy companies such as CNOOC, CNPC and Sinopec have the capital, technology and expertise to help PNOC and local Filipino energy companies develop the country’s indigenous energy industry, reducing the country’s dependence on imported oil. For China, such a joint cooperation will provide it a proximate source of energy, reduce oil and gas imports from the volatile Middle East, help foster stability in its maritime corridor and win the goodwill of other claimant countries, as well as the international community. If the deal bore fruition, it may even be the start of other similar cooperative endeavours in extracting hydrocarbon resources in the hotly contested area. Joint resource exploration is a way to improve the stability and security of contested areas, avert conflicts, foster cooperation in sustainable resource extraction, environmental conservation, scientific studies and joint response to natural disasters.

The international community is closely watching the stand-off between the Philippines and China over the Panatag Shoal (Scarborough Shoal or Huangyan Island in Chinese). If China acts too aggressively, it will reinforce its neighbours’ anxiety over China’s willingness to use heavy-handed tactics. Other countries in the region, including Korea, Japan, and South China Sea claimants, are observing China’s behaviour in the hope that it may indicate how Beijing is likely to respond to their own maritime claims.

The actions of the Philippines will also be scrutinised at home and abroad. Manila wants to demonstrate that it is able to implement an independent foreign policy without being portrayed as part of a ‘grand conspiracy’ against China, which would doubtless harm Manila’s own image.

Joint resource development is a good way for Manila and Beijing to resolve their territorial disputes. Energy security, harmonious relations, good international image and overall peace and stability in one of the world’s busiest sea lanes are all at stake. The Philippines and China could prove that neighbours can peacefully resolve their differences, and though the decision may face short-term domestic opposition, it stands to improve regional stability in the long-run.

Lucio Blanco Pitlo III, is a MA Asian Studies candidate from the Asian Center, University of the Philippines, and Researcher for Forging a New Philippine Foreign Policy.

Aussie Defence boss uses rare tools to build foreign friendships

With a song in his armoury … General David Hurley. Photo: Alex Ellinghausen

THE Chief of the Defence Force, David Hurley, has three unusual weapons in his ''soft power'' armoury: karaoke, dinner and golf.

They are the ingredients, he says, for successful get-togethers of a little-known but influential military alumni association he helped set up in Jakarta last year with an old acquaintance, the former chief of the Indonesian General Staff, Edy Harjoko.

Membership of the association, called ''Ikahan'', is open to anyone in the Australian or Indonesian military who has studied in the other's country, or served with the other's forces on an extended exercise or posting.

While the Prime Minister, Julia Gillard, and the Minister for Defence, Stephen Smith, have been working on the political relationship with the Indonesian President, Susilo Bambang Yudhoyono, in Darwin this week, General Hurley is focused on the defence grassroots.

His goal is to ''get the militaries comfortable, confident in working with each other'', he told the Herald.

It is also the message he is hammering into students and officer trainees at defence colleges around the country.

''I say to them, 'In one sense, I don't care what academic mark you get. Your success for me is if you know two of the international students so well by the end of this course that you can pick up the phone and talk to them for the rest of your lives.' ''

Ikahan is branching out into a talent contest which kicks off at the Four Seasons Hotel in Jakarta next month.

The two sides will be vying for vocal and dance-floor supremacy in a good-natured tussle which, leaders hope, might one day make for easier conflict resolution should tensions start rising.

Thirteen years ago there was a near-confrontation between Indonesian and Australian troops in East Timor.

General Hurley has lent his own singing prowess to the cause, belting out a number at Ikahan's launch last year.

The network now has about 500 members and the model is being trialled with Malaysia, Thailand and Singapore.

''So that's four big countries for whom the person-to-person links, the understanding, can be improved enormously through these sorts of initiatives,'' General Hurley says.

He's hoping that spirit will feed through into regional joint defence exercises. The ADF is at present planning a trilateral disaster relief exercise with the US and Indonesia, and possibly China, which has ''indicated an interest in participating''.

General Hurley says he is aiming for a ''very mature relationship with the PLA [China's People's Liberation Army]''.

In recent unreported comments, he expressed concern about the relationship between the US and Chinese militaries. This, he says, was a reflection on the ''long-term framework for interaction'' between the two.

''What mechanisms do they put in place for their regular contact, what's the breadth and width of their range of engagements? When we understand how that will solidify … then we know where we can plug into it to best support it and influence it.

''You have to keep working that to the advantage of all the players in the region.''

Read more: http://www.smh.com.au/national/defence-boss-uses-rare-tools-to-build-foreign-friendships-20120706-21mfw.html#ixzz1ztW2SQSH

Eyes on Timor's testing election

EAST Timor is about to face a crucial test of its fragile democracy in parliamentary elections that will determine if UN peacekeepers can leave.

The UN, after presidential polls were held peacefully over two rounds in March and April, says it will pull out its remaining 1300 troops within six months if the general election tomorrow goes well.
There are concerns that violence will reignite in the oil-rich but underdeveloped state if none of the 21 parties wins an outright majority and a fragile coalition takes power.

Following the end of Portuguese rule in 1975, East Timor was occupied by Indonesia for 24 years. About 183,000 people died from fighting, disease and starvation before the half-island state voted for independence in 1999.

The country has offshore fields of oil and natural gas. Its Petroleum Fund has swelled to $US10 billion ($A9.72 billion), but corruption is common and half its 1.1 million people are classified as living in poverty.

In the elections, the left-wing Fretilin party, which became synonymous with the pro-independence struggle, has a populist platform for spending the oil money to lift income and education levels.
The centre-left National Congress for Timorese Reconstruction (CNRT) wants instead to establish a plan for longer-term investment on major infrastructure projects.

Tomorrow's polls are due to be the last big test before East Timor, which in May celebrated a decade of formal independence, takes full responsibility for its own security.

The United Nations Integrated Mission in Timor-Leste (UNMIT) was deployed in 2006 after a political crisis.

The only major violence since then was a failed assassination attempt in 2008 on president Jose Ramos-Horta, who lost to Taur Matan Ruak in the recent presidential election. SMH

Indonesia rejects Abbott 'tow back boats' vow

THE Indonesian government has confirmed that it would not accept the towing back of asylum seeker boats to its shores.

The policy puts an incoming Coalition government in Canberra on a collision course with Indonesia after the Opposition Leader, Tony Abbott, reiterated the stance yesterday.

And, as the Australian Navy brought 160 asylum seekers to safety on Christmas Island on Wednesday, there are increasing reports that passengers on such boats are refusing to deal with Indonesian authorities for fear of being sent back.

Senior sources familiar with discussions in Darwin this week between the Indonesian and Australian governments said ''Indonesia made it clear to us'' that it would not tolerate what is a key element of the Coalition's strategy. The Herald has been told that one of those who conveyed this message was the Indonesian Foreign Minister, Marty Natalegawa.

One senior Australian official said it was obvious it would be impossible to tow back boats and have a constructive relationship with Jakarta.

''It would take the relationship off a cliff,'' the official said.

The refusal of the crew of a boat to return to Indonesia when ordered on Wednesday had the opposition saying again yesterday it would tow back boats where safe to do so, whereas the government's policy had been shown to be impotent.

Mr Abbott said a Coalition government would back the navy using whatever ''steps that are necessary to get that boat turned around''.

This included a repeat of a procedure used by the Howard government to confiscate extra fuel from the vessel, which would render it unable to complete the voyage to Australian waters.
The latest arrivals on Christmas Island are 160 men, women and children from Iraq - including Palestinians living there - Iran and Afghanistan, according to sources on Christmas Island.

Gagah Prakoso, a spokesman for the Indonesian search and rescue agency Basarnas, does not know if people smugglers are now instructing their passengers to call Australia directly, but he does know that when his agency tries to contact boats in distress, ''they hang up''.

''Perhaps they know it's not a call from Australia,'' he said.

A number of recent vessels, including two that sank with the loss of 94 or more lives, and one that didn't, have directly contacted the Australian Maritime Safety Authority or the Australian Federal Police.

The head of the law enforcement unit at the Banten maritime police has told the Herald that asylum seekers would do almost anything to avoid Indonesian authorities. ''From my experience they do refuse to be arrested by Indonesian authorities, in particular by the immigration department, because they would be detained in immigration detention - and it could be for years,''.

Recent sinkings have shown that asylum seekers will risk high seas even if their boat is crippled.
The leaking boat that sank on June 21, killing 90 or more people, had been warned by phone about 30 hours before it sank to return to Indonesia, but it kept going, slowly, towards Christmas Island.
Asylum seekers in distress had recently begun using satellite phones. The phones were equipped with the numbers of Australian agencies and they refused to speak to Indonesians, he said.

By Phillip Coorey, Tony Wright, Daniel Flitton, Michael Bachelard for the National Times

An Indonesian Tribute to American Enterprise

America’s foreign policy is shifting its gaze. From former President George W. Bush’s overture to India to President Barack Obama’s “Pacific pivot,” the vast machinery of Washington is slowly fixing its eye on this part of the world.

Indonesia has been a grateful beneficiary of this twist, as Obama’s landmark trip here in late 2010 demonstrated. It has the beginnings of a long, productive engagement, one that has to date been characterized by mutual understanding and interest.

While our present trade relationship is still small — Indonesia is the United States’ 28th-largest two-way goods trading partner, with the products exchanged being of low strategic importance — this relationship is poised for growth. The renewed importance of Indonesia and the outward orientation of the United States means it is in the interest of businesses in both countries to engage each other. As Southeast Asia finally sheds the vestiges of the 1990s crisis, there are many opportunities left unexplored.

What needs to happen to expand this relationship is not complicated. Indonesia must continue reforming and building production capacity. US companies will continue to engage with local ventures in productive ways.

But more than any practical program, it is moral influence that the United States has traditionally excelled at. Its greatest role in the world has been as a beacon of free enterprise, innovation and restrained government — all features that traditionally attracted outsiders to it.

Nearly 30 years ago, when English journalist Henry Fairlie celebrated the Fourth of July in The New Republic, he praised his adopted country’s “bewitching power” of invention and improvisation.

“If houses are insufferably cold, you invent a stove, and then you invent central heating. … Ben Franklin invented a prefabricated stove which could be produced for the common man; such a stove in Europe at the time would have been produced by craftsmen for the few. But then it has always been the American way as well … to say that ‘it ain’t necessarily so’ and to do something about it.”

“It ain’t necessarily so” — it is precisely this can-do attitude, the sense of boundlessness and ambition, that is for many of us the great strength of America. Recently, as a result of a financial crisis, optimism has somewhat diminished, a fact that has not escaped notice here. Even some protectionist ideas have gained currency, justified by the sentiment that “even the United States does it.” I am hopeful these do not become a permanent fixture on the policy circuit, because they would leave everyone worse off.

America has always been a kind of North Star for the rest of the world, a fixed signpost of policy rectitude. On this year’s Fourth of July, I was happy to pay tribute to the values that have made America great.

It is in the interests of Indonesia for the luster of this bright star to remain undiminished.

John Riady is the chairman of Kikas-Kadin, the US-Indonesia Bilateral Committee within the Indonesian Chamber of Commerce and Industry, and editor at large for BeritaSatu Media Holdings.