Ownership and Control in 21st century Malaysia


January 17, 2018

Ownership and Control in 21st century Malaysia

by Charles Brophy

http://www.newmandala.org/ownership-control-21st-century-malaysia/

Image result for terence gomez book

In a series of public lectures beginning in 2016, Professor Terence Gomez began to distil the findings of his latest research into corporate governance in Malaysia. The first finding was a marked reduction in the holding of private directorships by members of the ruling Barisan Nasional coalition. The second was a major growth in the influence and power of Government Linked Companies (GLCs; individual state-owned enterprises) and Government Linked Investment Companies (GLICs; state-owned investment vehicles) over the Malaysian economy.

What such findings did was to challenge typical understandings of “money politics”, and the relationship between politics and business, in Malaysia. The data pointed not towards the direct influence of the political class over private enterprise, but rather a growing centralisation of economic and political power in the Office of the Prime Minister and the Minister of Finance (an office which is today held concurrently), and the influence of the state over the economy through the GLCs and seven large GLICs. The resulting book, Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia, written alongside Gomez’s team of research assistants, has brought into the spotlight not only problems of political centralisation and GLC/GLIC governance reform, but also the effect of the very structure of the Malaysian economy on the country’s continuing prospects for development. (Disclosure: the author works for Gerakbudaya, the Malaysia/Singapore publisher of Prof Gomez’s book, but writes here in a personal capacity.)

Malaysia’s state developmentalism

Many of the GLICs have their origins in the period from the 1950s to the 1970s, and during this time came to play an important role in the project of state developmentalism. Gomez, however, marks the Asian Financial Crisis—and the political and economic crisis it produced—as a crucial moment in the emergence of GLCs and GLICs. With highly indebted, “too-big-to-fail” companies in the private sector bankrupted by the crisis, GLICs were mobilised by the government to bail them out. After Anwar Ibrahim’s failed challenge to the leadership of Prime Minister Mahathir Mohamad, GLICs were mobilised to appropriate the businesses of Anwar’s cronies.

Image result for Barry Wain's Book

The growth of GLICs was then a means to resolve the contradictions and limitations of the political and economic development that arose under Mahathir. This was to continue during the fallout of the conflict between Mahathir and Daim Zainuddin—which saw the assets of Daim’s allies and proxies transferred to GLICs—and a program of bank consolidation which, in the name of rationalisation, drastically increased the role of government in the banking sector.

The growing importance of the GLICs to economic development seen in the attention paid to them by Malaysia’s next two prime ministers. Under Abdullah Badawi the GLC Transformation Programme was launched. It sought to have GLCs operate on a more commercial basis, divesting from non-core investments, offering higher dividend returns, cooperating more with the private sector, and internationalising their operations. Just as significantly, through the emphasis on the vendor system, they were to help link up Malaysia’s large SME sector with local and foreign supply chains.

When Najib came to power with his transformation agenda, he noted the way in which rent seeking and patronage was harming the economy. Through the New Economic Model he called for the reduction in the role of the state in business, an overhaul of the system of race-based affirmative action, and the reform and privatisation of GLCs. Nevertheless, pushback from prominent politicians such as Mahathir and right-wing Malay NGOs led to a reversal of this policy. By 2013, Najib had unveiled the Bumiputera Economic Empowerment (BEE) policy which, against the prescriptions of the New Economic Model, mobilised GLCs to promote “market friendly affirmative action” through the Bumiputera Vendor Development Programme. From 2009 onwards, Najib would increasingly tap GLCs to generate growth and infrastructure development, as well as to draw investments from foreign State Owned Enterprises (SOEs), particularly from China, which saw the state come to play an increasingly dominant role in the economy.

This about turn was more than anything rooted in the political legacy of the New Economic Policy, with its twin-pronged focus on state intervention to correct race-based distributional inequalities and to promote continuous economic development.

Ownership and control

Image result for james puthucheary

When James Puthucheary, from his cell in Changi Prison, embarked on his investigation into the structure and organisation of the Malayan economy, it was to the twin problems of ownership and control that he turned. Defined, he argued, by an uneven and unequal model of colonial development, the central economic problem of Malaya was not the role played by the Chinese middleman but the domination of foreign clearing houses and foreign capital over key areas of economic life. This structure was, he said, central to understanding the exploitation of the peasant as well as the limitations on the future development of the Malayan economy. To overcome this, Puthucheary would argue for a program of state intervention in the economy to mobilise the state to overcome existing inequalities and unevenness and to transform the dominant model of ownership and control.

Post-1969, intervention occurred under the New Economic Policy, but without reaching a fundamental resolution to the uneven patterns of ownership and control. While foreign ownership of the economy was reduced, this was largely undertaken without radically affecting major foreign interests in the economy. Malaysia’s development was to continue to depend heavily on foreign direct investment rather than domestic capital, ensuring that, unlike South Korea and Taiwan, Malaysia wasn’t to nurture domestic giants such as Samsung or Foxconn. Rather, the state, in alliance with wealthy tycoons, was to play an increasing role in the economy, maintaining a centralisation and inequality of assets and wealth, both through systems of selective privatisation and later through the GLCs.

More recently, one of the findings of Gomez’s research is the resurgence of foreign ownership in the Malaysian economy, with companies such as Digi, Nestlé, and British American Tobacco leading the list of Malaysian companies by market capitalisation, highlighting the continuing dependence and openness of the Malaysian economy. Meanwhile, in the realm of rural development, the focus was not on major land redistribution—which kickstarted economic miracles in South Korea and Taiwan—but more selective land distribution through FELDA and rural development schemes.

Central to Puthucheary’s analysis of ownership and control was the problem of national development, both in terms of the development of a nation out of the various races of Malaya and the mobilisation of the economy for the development and prosperity of such a nation. In similar terms, central to the critique of Gomez and others of the NEP has been its inability to promote such a meaningful and broad-based national development. Gomez’s research into relations between politics and business has been highly critical of the role of selective privatisation and bumiputera equity quotas in the promotion of money politics at the expense of meaningful economic development.

In a 2005 report, Gomez, alongside Lim Teck Ghee, was also to note how the focus on bumiputera equity had ignored the problem of the broad-based development of the Malay community and the growth of the country’s SMEs. He noted how within the SME sphere successful multi-ethnic business relations were being fostered outside of the scope of the NEP. In his latest book, Gomez has highlighted the role played by the concentration of economic control in the Ministry of Finance in disincentivising industrial growth and investment for fear of expropriation of business by the state—evidenced, he argues, by Malaysia’s premature deindustrialisation, and the growing dominance of the service sector within the Malaysian economy.

Image result for Malaysia Airlines

Here the problem of the middle-income trap emerges as central to the contemporary pattern of ownership and control as outlined by Gomez—and thus the problem of the inner limits of modes of development, as proposed by Puthucheary, becomes restated. Today, can a political economy model defined by high levels of centralisation, and dominated by the interests of GLICs, provide the kind of broad-based economic development that can move Malaysia, and bangsa Malaysia, towards high-income status? Or is a new model of ownership and control required?

The new developmentalism in Southeast Asia

In an earlier co-edited volume, Government-Linked Companies and Sustainable, Equitable Development, Gomez and other scholars highlighted the growing importance of GLCs and SOEs in the aftermath of the 2008 economic crisis in challenging liberal capitalist understandings of economic development. Taking a broader view, Joshua Kurtlantzick has highlighted the contemporary resurgence of state capitalism within global political economy. Fundamental to this has been the growing importance of SOEs, from Petrobras in Brazil to Gazprom in Russia or Deutsche Bahn in Germany.

This tendency is becoming increasingly evident in Southeast Asia’s contemporary political economy.

In Indonesia, SOEs have formed the centrepiece of Joko Widodo’s developmental agenda, being mobilised to fill the gaps in the development of major infrastructure projects, where the private sector has been reluctant to invest in high-risk or capital intensive projects, while busying itself with rent-seeking behaviour. More recently, Danang Widoyoko has read the fall of former Jakarta governor Ahok as a struggle between Ahok’s SOE-centric development agenda—evident in the major land clearance projects in Jakarta—and politically-connected private interests who came to resent the increased role of SOEs in key economic sectors. The struggle in Jakarta was thus, on Widoyoko’s reading, a struggle between two factions of capital: state, and crony.

In the Philippines, Rodrigo Duterte has begun to pursue a similarly ambitious development agenda, headlined by massive infrastructure plans, under his “Build, Build, Build” program. Similar to the case of Indonesia, in the face of private sector inertia in infrastructure development the state has moved in to directly finance and organise such infrastructure projects both through the mobilisation of SOEs as well as through the promotion of public-private partnerships. The emphasis in the Philippines, however, is on the public sector’s leading projects through “Hybrid PPPs”, with projects then subsequently bid out to the private sector. Such a program relies heavily on Chinese official development assistance, with Duterte keen to see the Philippines integrated into China’s Belt and Road initiative.

In Thailand, control and reform of SOEs has been a point of struggle between the military and the followers of Thaksin Shinawatra. SOE reform has emerged as an important plank of junta policy, led by an attempt to form a strategic holding company capable of managing SOEs, similar to Singapore’s Temasek or Malaysia’s Khazanah. More recently, in response to a slowdown in the Thai economy, the government has ramped up spending through SOEs, in particular through a new series of infrastructure projects with the aim of boosting growth.

Yet this trend does not represent the re-emergence of a postcolonial developmental state, of the kind Puthucheary and his contemporaries examined. Instead, a new model is emerging, one which tends to blur the difference between the state and market, led by the growing importance of substantially commercialised GLCs, GLICs and SOEs.

 

If in the 1980s the emergence of “state corporatism”—with concepts such as Malaysia Incorporated—saw close cooperation between the corporate sector and the state, the growing importance of GLCs and GLICs has increasingly promoted parts of the state which do themselves function as corporate entities.  Such arrangements allow the state to assume the organisational effectiveness of the market-driven corporate organisation, in combination with the executive authority of the state and offering governments the ability to both financialise assets and render debts “off the books”.

Such strategies are not only economically useful, but also relevant in electoral terms in Southeast Asia. In the context of Indonesia, Eve Warburton has talked of the emergence of a new developmentalism, which places a developmental nationalism at the heart of the political arena—not dissimilar to the effect of Dutertenomics in the Philippines. In the Malaysian context Bridget Welsh has talked of a commercialisation of electoral politics, highlighting the importance of financial transactions emanating from the state and big business in the accrual of electoral support.

Image result for petronas twin towers

In both of these forms, GLCs and GLICs have emerged as central to electoral politics. In the case of Malaysia they have formed the direct vehicles through which the government can raise (or launder) campaign finances, and provide electoral groups with patronage resources during election periods. More generally, they have become vehicles to fill the gap created by the demise of the classic developmental state, exemplified by the establishment of GLC foundations from Yayasan 1MDB, to Yayasan Rakyat 1Malaysia and Yayasan Hasanah, and through the practice of corporate social responsibility. In the same way, GLCs are increasingly used as vehicles for policies of affirmative action or “sustainable” and “inclusive” development.

Alternative visions

This process does not continue uncontested. In Malaysia, a debate is emerging regarding the role played by GLCs and GLICs, and around the role of the state in the corporate sector. The liberal Institute for Democracy and Economic Affairs (IDEAS) has called for government divestment from GLCs, particularly highlighting the tendencies for GLCs to crowd out private sector investment (to which one prominent GLIC responded at length). The G25, a group of Malay thought leaders, has called in a new report for a review of the economic efficacy and impact of GLCs and GLICs, urging the privatisation of non-strategic GLCs and the regulation of existing GLCs to turn them into a catalyst of private sector growth.

Image result for Felda

 

Political contestation has also emerged within UMNO over the management of GLICs. Members of Najib’s inner circle and UMNO Youth executive council member Rahman Hussin have accused Khazanah Nasional of underperformance resulting in low dividend returns and a lack of reinvestment into the Malaysian economy. This comes at a time when Khazanah prepares for a change of top management in 2019 amid calls for a new strategic direction.

The opposition coalition Pakatan Harapan used its 2018 Alternative Budget to note the contemporary problem of premature deindustrialisation, and argued for an industrialisation policy driven by SMEs. A key component of this is the privatisation of GLCs, to produce a more level playing field for private enterprise. To this end, Pakatan Harapan proposes to promote a better environment for FDI as well as incentivising domestic direct investments through tax cuts. Yet whether or not this will remain possible, and whether or not it would lapse into FDI-driven privatisation and liberalisation, remains an important question.

 

For his part, Gomez has noted the ability of GLCs to perform well and contribute towards economic growth. Yet he remains a critic of their centralised political control, and of their use as mechanisms for race-based affirmative action by a predatory state. Such a dichotomy is also applicable to many developing states: while SOEs can help resolve some of the contradictions of economic liberalisation and privatisation, and can act as engines for growth, their ability to act as engines of economic transformation—raising states up the economic value chain—remains more doubtful, as does their ability to produce broad-based and inclusive economic development.

Today this realisation is itself at the centre of ongoing processes of reform within the developmental state. Yet such projects of reform have been undertaken within the context of self-imposed limits, guaranteeing such reforms remain largely conservative: the resurgence of the developmental state in its contemporary form does not imply a substantial redistribution of economic power, let alone its democratisation.

The political power of labour has continuously been suppressed through a curtailment of labour organisation. Welfare policy has been restricted to hardcore poverty alleviation largely through micro-credit schemes and cash transfers, as against more robust responses to marketplace disadvantage. In the area of investment, the emphasis upon fiscal restraint and debt management has meant not only a lack of industrial investment programs, but also a lack of meaningful investment in education and skills, particularly through higher education reform. Similarly, while the rationalisation of the state apparatus has been a central theme for many governments, a more meaningful redistribution of public funds towards development and away from traditional power centres, such as the security sector or bureaucracy, has been ignored. Most importantly, the question of inequality has been constrained to the arena of populist politics, leaving the economic and political problems of unequal distributions of wealth, income, and opportunity unresolved. In short, the “revolution from above” has been particularly wary of any “revolution from below”.

Image result for Duterte's Reform of GLCs

This program of limited reformism has reproduced a limited model of development, one which a growing source of discontent. On the one hand a politician such as Rodrigo Duterte has been able to rise to power on an impatience with the outcomes of state-led reform, while on the other hand there has emerged a growing politicisation of current models of development in the form of growing labour activism, popular protests (such as those in Malaysia against GST and the TPP), as well the growth of political movements that place at the centre of their politics problems of labour, welfare, investment, state reform, and inequality.

What is needed today is a critique of contemporary processes of reform capable of exposing their limitations and contradictions, and which therefore lays the groundwork for a politics of development that brings into question contemporary patterns of ownership and control, and their effect on development. Terence Gomez’s critique of government–business ties in Malaysia’s current model of development, and their relationship to the rise of GLCs and GLICs, marks a particularly important step in this direction.

 

 

The ‘United States Factor’ in Southeast Asia: The Philippine and Singaporean (Re)assesments


December 31, 2017

Image result for asia-pacific bulletin

Number 408 | December 27, 2017

ANALYSIS

The ‘United States Factor’ in Southeast Asia: The Philippine and Singaporean (Re)assesments

By Ithrana Lawrence

Despite reports on the unpredictability of Washington’s Asia policy, the Trump Administration, through telephone diplomacy, high-level bilateral visits, attendance at the Asia Pacific Economic Cooperation (APEC), East Asian Summit (EAS) and bilateral meetings in Vietnam and the Philippines, has displayed a “post-pivot” US commitment to the region and its multilateral initiatives. This aside, its engagement framed by collective action on North Korea, and a lack of specific concrete regional cooperatives, plays into Southeast Asia’s long-term anxiety.

This anxiety is addressed by Southeast Asian  leaders recalibrating their external engagements, including relations with the United States, in their strategic pursuit of policy maneuverability, autonomy, and prosperity. The cases of the Philippines and Singapore highlight how regional countries are coping with “The United States Factor”.

The Philippines’ Realignment under President Rodrigo Duterte

Image result for duterte and trump

Under President Rodrigo Duterte, the Philippines’ perception of the US role in the region has changed. Although recognized as a major non-NATO US ally since 2003, the Philippines increasingly views China as an important and economically attractive source of support, and Manila has shown an increasing willingness to accommodate Beijing’s assertiveness in the South China Sea (SCS). Despite a 66 year-old alliance, the Philippines is diverging from the United States on issues of security and governance.

Duterte’s announced “separation” from the United States and refusal to visit Washington despite Trump’s invitation are efforts to chart an independent foreign policy. Distance from the U.S. is a price President Duterte seems eager to pay. Although the Obama-Aquino administrations’ Enhanced Defense Cooperation Agreement (EDCA) allowing US military forces and weapons to be stationed in the Philippines was ruled constitutional and has not been abrogated, Manila is wary of implementation. For example, the Philippine Defense Secretary remarked it was “unlikely” that the United States would be allowed to conduct Freedom of Navigation Operations (FONOPS) from the Philippines “to avoid any provocative actions that can escalate tensions” as the “US can fly over there coming from other bases.” Similarly, Duterte downplayed US assistance in Marawi despite the US Embassy in Manila reporting a donation of planes, weapons, technical assistance, and humanitarian aid worth $56 million in 2017 – recognizing instead the contributions of China and Russia on the same day Secretary of Defense Mattis arrived in Manila.

Doubts about US commitment of the United States to defend the Philippines in the event of a conflict with China in the South China Sea have driven President Duterte to chart an engagement strategy avoiding over-reliance on Washington. China’s symbolic $14.4 million arms package was delivered as the US Congress disapproved a sale of assault rifles for the Philippine National Police (PNP) due to concerns of state sanctioned human rights violations in the ‘war on drugs’. The Philippines has leveraged competition in the region, securing Beijing’s pledge of $24 billion in infrastructure (including free infrastructure) projects in Davao and Manila, and $22.7 million in Marawi; alongside Tokyo’s $8.8 billion “maximum support” to rebuild Marawi.

Duterte’s Philippines has shown selective accommodation to China’s assertiveness as it recognizes the opportunities of engaging a rising China. Recent examples include the removal of a hut on a sandbar upon Beijing’s protest, not openly protesting territorial incursions, and allowing Chinese ships to survey within Philippine territory. That being said, the Philippines remains committed to its territorial sovereignty, with the Philippine Navy deployed to guard current claims.

The Trump administration’s generally absent rhetoric on human rights, and praise for the war on drugs has improved bilateral leadership camaraderie. All anti-US outbursts over the year aside, President Duterte’s ‘karaoke diplomacy’ at the ASEAN Summit gala dinner signals an affinity for the commander in chief of the United States.

Singapore’s Longstanding Alignment

Image result for trump's asia policy

 

Despite China’s growing economic significance, political assertiveness, and security provocations in the SCS, Singapore’s alignment responses have been different than those of the Philippines. Singapore is partnering closer with Washington than with Beijing on most issues, and the United States is still viewed as an indispensable partner, significant to the development and security of the island state. While Singapore boasts a high degree of military technology, interoperability, and physical infrastructure to host the U.S. Pacific Fleet’s logistics command, its refusal to be recognized as a major non-NATO US ally reflects the island-state’s maintenance of a public non-aligned strategic engagement.

Although China is the island-state’s top trading partner, the United States remains its largest foreign investor with stock totaling $228 billion and an annual bilateral trade surplus. Singapore’s open support of the Permanent Court of Arbitration’s July 2016 ruling and non-claimant concern over freedom of navigation in its regional waters faced high-cost pressure from Beijing: seizure of military equipment in Hong Kong en-route from exercises in Taiwan, cancellation of the 2016 high level Joint Council for Bilateral Cooperation (JCBC) and apparent non-invitation of Prime Minister Lee Hsien Loong to the Belt and Road Forum in Beijing. Although showing resolve to face China’s growing pressure, a subsequent delegation of high-level officials to Beijing followed by Prime Minister Lee’s own visit is symbolic of Beijing’s growing significance as a partner not to be openly defied. Singapore looks to harness China’s economic engagement with the region specifically as a global financial services hub for the Belt and Road Initiative and Asian Infrastructure Investment Bank.

Image result for Singapore hosts US 7th Fleet

Singapore remains a strong advocate for US engagement in the region, with a pledge to facilitate initiatives for regional counter-terrorism efforts upon assuming ASEAN Chairmanship in 2018. Bilaterally, Prime Minister Lee’s pledge to extend to 2018 his country’s support for the anti-IS coalition in the Middle East (the only Asian country to contribute personnel) and deployment of helicopters to hurricane relief efforts in Texas are symbolic of Singapore’s activism and the leadership’s institutionalized affinity for the United States. The progressive deepening of defense cooperatives also witnessed the first bilateral naval exercise taking place off the coast of Guam, following the deployment of the Singapore Air Force (RSAF) there for joint training in April.

Image result for china malaysia relations

The lack of transparency on Malaysia’s deals with China is worrying

 

The Philippine and Singaporean alignments demonstrate models that can be expanded to other Southeast Asian countries. There are signs countries like Indonesia and Malaysia are reassessing the traditional role of the United States and to a certain extent adjusting their external engagements as the systemic conditions that placed the United States as the key security protector, economic patron, and diplomatic partner at the end of the Cold War are changing. Future research on asymmetrical alignment under uncertainty should examine these states.

About the Author

Ithrana Lawrence, is a former Visiting Fellow at the East-West Center in Washington. She can be contacted at Ithrana.L@gmail.com

The East-West Center promotes better relations and understanding among the people and nations of the United States, Asia, and the Pacific through cooperative study, research, and dialogue.

Established by the US Congress in 1960, the Center serves as a resource for information and analysis on critical issues of common concern, bringing people together to exchange views, build expertise, and develop policy options.

The Asia Pacific Bulletin (APB) series is produced by the East-West Center in Washington.

APB Series Editor: Dr. Satu Limaye, Director, East-West Center in Washington
APB Series Coordinator: Peter Valente, East-West Center in Washington

The views expressed in this publication are those of the authors and do not necessarily reflect the policy or position of the East-West Center or any organization with which the author is affiliated.

For comments/responses on APB issues or article submissions, please contact washington@eastwestcenter.org.

East-West Center | 1601 East-West Road | Honolulu, HI | 808.944.7111

East-West Center in Washington | 1819 L Street, NW, Suite 600 | Washington, DC | 202.293.3995

Duterte as ASEAN Chair in 2017


November 20, 2017

Duterte as ASEAN Chair in 2017

by  Purple Romero

https://www.asiasentinel.com/politics/rodrigo-duterte-as-asean-leader/

Image result for Duterte as 2017 ASEAN Chair

President Rodrigo Duterte, who took over the chairmanship of the Association of Southeast Asian Nations a year ago, is responsible for a decision to mute controversy over ownership of the South China Sea that has drastically changed ASEAN’s role in the resolution of the longstanding territorial dispute between its claimant-states and China.

Duterte’s year-long leadership of the 10-member pact was hardly a watershed. Overall, the Philippines did put ASEAN towards a more productive path on some points by steering clear of the more contentious issues of addressing human rights issues or giving claimant states much-needed regional support in their territorial conflict with China.

“Given ASEAN’s constraints and limitations, its modus operandi and increasing workload of consultations and discussions, it is difficult to see what else it [the Philippines] could have done within the one-year chairmanship that could make ASEAN more progressive and more productive,” said Jay Batongbacal, director of the UP Institute for Maritime Affairs and Law of the Sea.

 “It was enough for [the Philippines] to have been able to competently chair and host the meetings without potential serious controversies (particularly regarding the South China Sea and the Rohingya) paralyzing its processes.”

Image result for china on south china sea

On the issue of the South China Sea and China’s claim to virtually all of it via its so-called Nine-Dash Line, the events of the last year draw a clear contrast to previous actions. Two decades ago, the Philippines had to ask for the help of the Association of Southeast Asian Nations (ASEAN) over China’s reported military installations in Mischief reef, an atoll claimed by both Manila and Beijing.

ASEAN came to the rescue with a joint communique calling for a code of conduct in 1996, designed to set restrictions on the construction of buildings and military activity in the sea, which was being claimed by ASEAN members Malaysia and Brunei. Vietnam, another claimant, joined ASEAN later.

Fast forward to 2017. ASEAN, under Duterte’s chairmanship, and China has endorsed a framework for the code of conduct. It was Chinese foreign minister Wang Yi – and not ASEAN – which announced the adoption of the framework at the ASEAN Foreign Ministers’ Meeting in August.

Wang said both parties would discuss “the principles, and plan for the next stage of consultation of the COC” and build a “consensus.”

Image result for ASEAN and China

ASEAN and China now have announced their commitment to negotiate, saying it “is important that we cooperate to maintain peace.” After 21 years since ASEAN first raised the need for a code of conduct, the negotiations will start next year.

It won’t ultimately show ASEAN’s unity. Ironically, even as it signals an important milestone in the history of resolving the maritime rows between China and clamant-states, it also cements the return to settling the territorial discord over South China Sea through bilateral talks – just the way China wants it.

Duterte’s pivot: Good to a point

As the height of irony, the first sign of the thawing of Manila’s cold relations with Beijing started when the Philippines won its dispute against the latter when an international court in The Hague struck down China’s nine-dash claim in July 2016, scoring a significant win for the Philippines which, devoid of military might, had to cast its lot in the international court of arbitration.

It was a historic win in a David-vs-Goliath scenario. But Duterte was quick to change the tone of the triumph, calling “on all those concerned to exercise restraint and sobriety” instead of celebrating the stunning rebuke to China.

There are two major explanations behind Duterte’s lackluster reaction. US President Barack Obama chastised the Philippine leader for alleged human rights violations allegedly committed under Duterte’s violent and murderous war on drugs, sparking a furious response from Duterte, who responds to criticism of his actions with hair-raising rhetoric.

But in addition, Duterte has always maintained that the Philippines is no match for the military and economic superpower China and that as an Asian neighbor it is in the Philippines’ interest to make its own pivot.

That is a mantra that defined the Philippines’ ASEAN chairmanship. And, while it marked a shocking turnaround for the Philippines – which used to be counted on as one of the most aggressive and vocal ASEAN-member states in its opposition to China’s expansionism in South China Sea – it did help keep China at the negotiating table until a framework on the COC was finalized.

“The Duterte administration’s ‘softly’ approach on its disputes with China in South China Sea permitted the framework agreement to be realized,” said Malcolm Cook, Senior Fellow at the Institute of Southeast Asian Studies (ISEAS)-Yusof Ishak Institute.

Prior to Duterte’s reign, his predecessor Benigno Aquino III explored different ways to strengthen the position of the ASEAN claimant-states. The Philippine Department of Foreign Affairs proposed a Zone of Peace, Freedom and Cooperation in the South China Sea in 2011 to enclave the Spratly and Paracel islands and turn them into a Joint Cooperation Area.

The proposal, however, did not gain much support from other ASEAN members. The following year, China and the Philippines would engage in a standoff in the Scarborough Shoal, pushing the Philippines to consider taking the legal route – and eventually winning – against China.

ASEAN, however, was divided over the Philippines’ victory in 2016.  While Vietnam lauded it, Cambodia – which considers China a major economic ally – objected to it being referenced in the joint communique at the 2016 ASEAN Foreign Ministers Meeting in Vientiane, Laos, resulting in the first time the organization failed to agree on a joint communique.

When the Philippines chaired ASEAN in 2017, it adopted Cambodia’s stance, negating the mention of Manila’s momentous victory in any forum involving ASEAN and China. The Philippines took that a step further by opposing the inclusion of any objection to China’s alleged militarization and land reclamation in South China Sea in the joint communique in August.

In the ASEAN Regional Forum in August 2017, Philippine foreign affairs Sec. Alan Peter Cayetano admitted that the Philippines wanted references to land reclamation and militarization in South China Sea dropped in the joint communique, forcing Vietnam into a corner. “They’re not reclaiming land anymore, so why will you put it again this year?” he said.

In the end though, consensus prevailed and the chairman had to give in. The Philippines withdrew its opposition and the joint communique contained language showing concerns over China’s reported militarization and land reclamation activities.

But up until the 31st ASEAN Summit in November, even as the Philippines was caught in another standoff –   albeit briefly – with China in Thitu (Pag-asa) island, the Philippines was still generally cordial in its approach.

The most that Duterte did is to bring up with China the concerns of ASEAN about freedom of navigation in the strategic trade route, which China said it wouldn’t impede.

 “The warmer ties between Philippines and China, combined with the chairmanship of the Philippines, were instrumental in drawing down the prominence of the (South China Sea) SCS disputes on the ASEAN agenda, from being a divisive issue in 2013 into a practically peripheral matter in 2017,” Jay Bongalo, director of the UP Institute for Maritime Affairs and Law of the Sea said.

“This will allow ASEAN to essentially remove the controversial aspects of the SCS issues from its agenda, move on from playing any really significant role in the resolution of the territorial and jurisdictional rows, and allow the ASEAN claimant countries to deal with their respective issues bilaterally with China.”

Even if the Philippines was able to get the negotiations on the COC going, ASEAN as whole and at its best, will now largely focus on crisis management or prevention. When it comes to resolving territorial tiff, each country will now be left on its own – a crucial victory for Beijing.

 ASEAN’s expected “lowest point:” human rights

In the 31st ASEAN Summit, allegations by a long list of human rights organizations over violations and extrajudicial killings in the Philippines were brought up by the US (though this was denied by the Philippines), Canada and New Zealand, countries that are external partners of ASEAN, but not by ASEAN members themselves.

The Philippines, which decried any criticism over the issue from other countries, was also silent on another human rights concern, the plight of the Rohingya in Myanmar. The Rohingya ethnic group had to flee the Rakhine state in Myanmar due to cases of persecution and discrimination.

This was a curious reaction as Duterte appeared sympathetic to the state of refugees from the Middle East, even saying that they are welcome to the Philippines. In the case of the Rohingya however, the Philippines drew the line when it did not mention the “Rohingya” in its statement at the UN General Assembly in New York in September. This was challenged by Malaysia, which slammed the statement as a “misrepresentation of reality.””

Image result for *The Rohingya Crisis

Malaysia has yet to find an ally from ASEAN. At the ASEAN defense ministers’ meeting, Philippine Defense Sec. Delfina Lorenzana said that ASEAN agreed the Rohingya problem is an “internal matter” in Myanmar.

ASEAN’s hands-off attitude over the human rights problems in the Philippines and Myanmar were to be expected, however according to political analysts given the body’s principle of non-interference.

“ASEAN’s handling of the most prominent human rights issues such as the Rohingya crisis and the drug-related killings in the Philippines are definitely the lowest points in its performance,” Batongbacal said. “However, this is to be expected given ASEAN’s non-interference principle and reluctance to discuss human rights issues, as both directly involve the domestic policies of member-states.”

Malcolm agreed, saying ASEAN’s hands are further tied by its principle to act based on consensus. While saying that ASEAN’s response to the reported human rights violations in the Philippines and Myanmar were far from sufficient, one should not expect much from it.

“As ASEAN is an inter-governmental, consensus-based body, one should not expect much from ASEAN in relation to human rights abuses undertaken by member-states,” Malcolm said. “Quiet diplomacy and moral suasion is the best ASEAN will do in this front.”

There’s one bright spot, however when it comes to ASEAN’s action on rights – and that is the signing of the ASEAN Consensus on the Protection and Promotion of the Rights of Migrant Workers. The agreement, which gives allows migrant workers to form unions apart from enjoying other rights, came 10 years after ASEAN member-states adopted the Declaration on the Protection and Promotion of the Rights of Migrant Workers in Cebu, Philippines.

United against extremism

ASEAN, while divided on a number of issues, was united when it comes to tackling terrorism, a problem faced by the Philippines, Indonesia and Malaysia. The Philippines in particular just ended a five-month siege in Marawi city, Mindanao which was caused by the ISIS-inspired Maute group.

ASEAN said it will take on additional preventive measures to stop the growth of terrorism in the region. These include education and enlisting the help of the women and youth sector to counter extremist leanings.

Image result for ASEAN and North  Korea Issue

When it comes to another threat to security, however – the nuclear ambition of North Korea – ASEAN, while one with the rest of the international community in condemning its launching of intercontinental ballistic missiles, did not go as far as asking its member-countries to cut ties with North Korea.

“Cambodia and Laos in particular have close relations with North Korea and this has not changed despite the focus on international pressure in North Korea,” Malcolm said.

In trademark ASEAN diplomacy, the regional bloc also kept its doors open to North Korea in the ASEAN Regional Forum (ARF). The ARF has previously been touted by ASEAN as a venue for the six-party talks between North Korea, South Korea, the US, Russia, China and Japan.

 Not paralyzed by controversy

Under the Philippine chairmanship, Malcom said ASEAN gained some headway when it comes to trade, signing the ASEAN-Hong Kong, China Free Trade Agreement (AHKFTA) and the ASEAN-Hong Kong Investment Agreement which could spur business opportunities in the region. The regional bloc has yet to gain significant progress though in the negotiations on the Regional Comprehensive Economic Agreement, which aims to lower tariffs and strengthen regional economic integration and cooperation.

Batongbacal said that ASEAN also deserved some plus points for putting the spotlight on the role of micro, small and medium economic enterprises in economic growth.

Remarks by President Trump on His Trip to Asia (Full Text)


November 16, 2017

Remarks by President Trump on His Trip to Asia

Source: The White House, Washington DC

Image result for President Trump addresses Americans on his trip to Asia

“I explained to all of the world leaders, and across Asia, how well the United States is doing. Economic growth has been over 3 percent the last two quarters and is going higher. Unemployment is at its lowest level in 17 years. The stock market has gained trillions of dollars in value since my election and has reached record highs. We are massively increasing our military budget to historic levels .–President Donald J. Trump

 

Last night, I returned from a historic 12-day trip to Asia. This journey took us to five nations to meet with dozens of foreign leaders, participate in three formal state visits, and attend three key regional summits. It was the longest visit to the region by an American President in more than a quarter of a century.

Everywhere we went, our foreign hosts greeted the American delegation, myself included, with incredible warmth, hospitality, and most importantly respect. And this great respect showed very well our country is — further evidence that America’s renewed confidence and standing in the world has never been stronger than it is right now.

When we are confident in ourselves, our strength, our flag, our history, our values — other nations are confident in us. And when we treat our citizens with the respect they deserve, other countries treat America with the respect that our country so richly deserves.

During our travels, this is exactly what the world saw: a strong, proud, and confident America.

Today, I want to update the American people on the tremendous success of this trip and the progress we’ve made to advance American security and prosperity throughout the year.

When I came into office, our country was faced with a series of growing dangers. These threats included rogue regimes pursuing deadly weapons, foreign powers challenging America’s influence, the spread of the murderous terror group ISIS, and years of unfair trade practices that had dangerously depleted our manufacturing base and wiped out millions and millions of middle-class jobs.

The challenges were inherited, and these products really showed what previous mistakes were made over many years — and even decades — by other administrations. Some of these mistakes were born of indifference and neglect. Others from naïve thinking and misguided judgement. In some cases, the negative influence of partisan politics and special interests was to blame. But the one common thread behind all of these problems was a failure to protect and promote the interests of the American people and American workers.

Upon my inauguration, I pledged that we would rebuild America, restore its economic strength, and defend its national security. With this goal in mind, I vowed that we would reaffirm old alliances and form new friendships in pursuit of shared goals. Above all, I swore that in every decision, with every action, I would put the best interests of the American people first.

Over the past 10 months, traveling across the globe and meeting with world leaders, that is exactly what I have done.

Earlier this year, in Saudi Arabia, I spoke to the leaders of more than 50 Arab and Muslim nations about our strategy to defeat terrorists by stripping them of financing, territory, and ideological support. And I urged the leaders to drive out the terrorists and extremists from their societies. Since that time, we have dealt ISIS one crushing defeat after another.

In Israel, I reaffirmed the unbreakable bond between America and the Jewish State, and I met with leaders of the Palestinian Authority and initiated an effort to facilitate lasting peace between the Israelis and the Palestinians.

In Brussels, I urged our NATO allies to do more to strengthen our crucial alliance and set the stage for significant increases in member contributions. Billions and billions of dollars are pouring in because of that initiative. NATO, believe me, is very happy with Donald Trump and what I did.

In Warsaw, I declared to the world America’s resolve to preserve and protect Western civilization and the values we hold so dear.

In Rome, Sicily, Hamburg, and Paris, I strengthened our friendships with key allies to promote our shared interests of security and prosperity.

In September, at the United Nations General Assembly in New York, I urged that the nations of the world join in confronting rogue regimes that threaten humanity and laid out a model for international cooperation grounded in respect for sovereignty and the responsibilities that come with it.

On each trip, I have worked to advance American interests and leadership in the world.

And to each of these places, I have carried our vision for a better — a vision for something stronger and sovereign — so important — sovereign and independent nations, rooted in their histories, confident in their destinies, and cooperating together to advance their security, prosperity, and the noble cause of peace.

It was this same vision that I carried to Asia two weeks ago. And it was this same commitment to you, the American people, that was always at the forefront of my mind and my thinking.

Our trip was defined by three core goals. First: to unite the world against the nuclear menace posed by the North Korean regime, a threat that has increased steadily through many administrations and now requires urgent action.

Second: to strengthen America’s alliances and economic partnerships in a free and open Indo-Pacific, made up of thriving, independent nations, respectful of other countries and their own citizens, and safe from foreign domination and economic servitude.

And third: to finally — after many years — insist on fair and reciprocal trade. Fair and reciprocal trade — so important. These two words — fairness and reciprocity — are an open invitation to every country that seeks to do business with the United States, and they are a firm warning to every country that cheats, breaks the rules, and engages in economic aggression — like they’ve been doing in the past, especially in the recent past.

That is why we have almost an $800-billion-a-year trade deficit with other nations. Unacceptable. We are going to start whittling that down, and as fast as possible.

With these goals, it was my profound honor to travel on this journey as your representative. I explained to all of the world leaders, and across Asia, how well the United States is doing. Economic growth has been over 3 percent the last two quarters and is going higher. Unemployment is at its lowest level in 17 years. The stock market has gained trillions of dollars in value since my election and has reached record highs. We are massively increasing our military budget to historic levels. The House has just passed a nearly $700 billion defense package, and it could not come at a better time for our nation.

Once again our country is optimistic about the future, confident in our values, and proud of our history and a role in the world.

I want to thank every citizen of this country for the part you have played in making this great American comeback possible. In Asia, our message was clear and well received: America is here to compete, to do business, and to defend our values and our security.

We began our trip in Hawaii to pay our respects to brave American service members at Pearl Harbor and the United States Pacific Command, the guardian of our security and freedom across the Indo-Pacific region.

As our country prepared to observe Veterans Day, we remembered the incredible sacrifices and courage of all of the veterans whose service has preserved our liberty and a way of life that is very special. We also thanked military families for their support for our brave servicemen and women.

From Hawaii, we traveled to Japan, a crucial U.S. ally and partner in the region . Upon landing in Japan, my first act was to thank the American service members and Japanese Self-Defense Forces who personify the strength of our enduring alliance.

Image result for President Trump with Abe in Japan

Prime Minister Abe and I agreed on our absolute determination to remain united to achieve the goal of denuclearized North Korea. Shortly following our visit, Japan announced additional sanctions on 35 North Korean entities and individuals. Japan also committed to shouldering more of the burden of our common defense by reimbursing costs borne by American taxpayers, as well as by making deep investments in Japan’s own military. This will include purchases of U.S. advanced capabilities — from jet fighters to missile defense systems worth many, many billions of dollars — and jobs for the American worker.

The Prime Minister and I also discussed ways we can deepen our trade relationship based on the core principles of fairness and reciprocity. I am pleased that since January of this year, Japanese companies have announced investments in the United States worth more than $8 billion — 17,000 jobs. Thank you.

Oh, they don’t have water? That’s okay. What? That’s okay.

(Drinks water.)

THE PRESIDENT: Japanese manufacturers, Toyota and Mazda, announced that they will be opening a new plant in the United States that will create 4,000 jobs.

We also signed agreements between our nations to enhance infrastructure development, increase access to affordable energy, and advance our foreign policy goals through economic investment.

From Japan, we traveled to another key American ally in Asia — the Republic of Korea. My official state visit to South Korea was the first by an American President in 25 years.

Speaking before the National Assembly of the Republic of Korea, I spoke the truth about the evil crimes of the North Korean regime, and I made clear that we will not allow this twisted dictatorship to hold the world hostage to nuclear blackmail.

I called on every nation, including China and Russia, to unite in isolating the North Korean regime — cutting off all ties of trade and commerce — until it stops its dangerous provocation on — and this is the whole key to what we’re doing — on denuclearization. We have to denuclearize North Korea.

We have ended the failed strategy of strategic patience, and, as a result, we have already seen important progress — including tough new sanctions from the U.N. council — we have a Security Council that has been with us and just about with us from the beginning.

South Korea agreed to harmonize sanctions and joined the United States in sanctioning additional rogue actors whose fund and funds have helped North Korea and North Korea’s nuclear and ballistic missile programs. It’s unacceptable to us.

The United States welcomed the decision of President Moon to remove the payload restrictions on missiles to combat the North Korean threat. And together we reaffirmed our commitment to a campaign of maximum pressure.

Like Japan, South Korea is increasing its defense contributions. During our meetings, President Moon acknowledged his desire for equitable cost-sharing for the United States military forces stationed in South Korea. And I visited soldiers at Camp Humphreys, a brand-new, joint American-South Korean base, paid for almost entirely by the South Korean government. At that base, I discussed with the United States and South Korean military leaders both military options and readiness to respond to North Korean provocation or offensive actions.

During our visit, President Moon and I also discussed America’s commitment to reducing our trade deficit with South Korea. At my discretion and direction, we are currently renegotiating the disastrous U.S.-Korea trade agreement signed under the previous administration. It has been a disaster for the United States.

Last week, 42 South Korean companies announced their intent to invest in projects worth more than $17 billion dollars in the United States, and 24 companies announced plans to purchase $58 billion dollars in American goods and services.

From South Korea, Melania and I traveled to China, where, as in Japan and South Korea, we were greatly honored by the splendor of our reception. Our trip included the first official dinner held for a foreign leader in the Forbidden City since the founding of the modern China, where we enjoyed a very productive evening hosted by President Xi and his wonderful wife, Madam Pung.

Image result for President Trump with President Xi in Beijing

During our visit, President Xi pledged to faithfully implement United Nations Security Council resolutions on North Korea and to use his great economic influence over the regime to achieve our common goal of a denuclearized Korean Peninsula.

President Xi recognizes that a nuclear North Korea is a grave threat to China, and we agreed that we would not accept a so-called “freeze for freeze” agreement like those that have consistently failed in the past. We made that time is running out and we made it clear, and all options remain on the table.

I also had very candid conversations with President Xi about the need to reduce our staggering trade deficit with China and for our trading relationship to be conducted on a truly fair and equitable basis. We can no longer tolerate unfair trading practices that steal American jobs, wealth, and intellectual property. The days of the United States being taken advantage of are over.

In China, we also announced $250 billion worth in trade-investment deals that will create jobs in the United States.

From China, I flew to the city of Da Nang in Vietnam, to attend the Leaders Meeting for APEC — Asia Pacific Economic Cooperation. There, I spoke to a major gathering of business leaders, where I reminded the world of America’s historic role in the Pacific as a force for freedom and for peace.

Image result for President Trump at APEC DanangU.S. President Donald Trump speaks on the final day of the APEC CEO Summit on the sidelines of the Asia-Pacific Economic Cooperation (APEC) leaders’ summit in Danang, Vietnam, Friday, Nov. 10, 2017. (Photo | Associated Press)

 

Standing on this proud history, I offered our vision for robust trading relationships in which Indo-Pacific nations can all prosper and grow together. I announced that the United States is ready to make bilateral trade deals with any nation in the region that wants to be our partner in fair and reciprocal trade.

We will never again turn a blind eye to trading abuses, to cheating, economic aggression, or anything else from countries that profess a belief in open trade, but do not follow the rules or live by its principles themselves.

No international trading organization can function if members are allowed to exploit the openness of others for unfair economic gain. Trade abuses harm the United States and its workers — but no more. No more.

We will take every trade action necessary to achieve the fair and reciprocal treatment that the United States has offered to the rest of the world for decades.

My message has resonated. The 21 APEC leaders — for the first time ever — recognized the importance of fair and reciprocal trade, recognized the need to address unfair trade practices, and acknowledged that the WTO is in strong need of reform. These leaders also noted that countries must do a better job following the rules to which they agreed.

I also made very clear that the United States will promote a free and open Indo-Pacific in which nations enjoy the independence and respect they deserve.

In Vietnam, during a state visit in Hanoi, I also met with President Quang and Prime Minister Fook to discuss the growing friendship between our countries. Our Vietnamese partners are taking new actions to enforce sanctions on North Korea. In addition, we committed to expand trade and investment between our countries, and we pledged to address the imbalances. I am particularly pleased that the United States and Vietnam recently announced $12 billion in commercial agreements, which will include $10 billion in U.S. content.

 

Finally, I visited the Philippines, where I met with numerous world leaders at the U.S.-ASEAN and East Asia Summits. At ASEAN — the Association of Southeast Asian Nations — we made it clear that no one owns the ocean. Freedom of navigation and overflight are critical to the security and prosperity of all nations.

I also met with the Prime Ministers of India, Australia, and Japan to discuss our shared commitment to a free and open Indo-Pacific.

Image result for Trump with Duterte in Manila

During our visit, President Duterte of the Philippines thanked the American people and our armed forces for supporting the recent liberation of Marawi from ISIS. We pledged to strengthen and deepen our long-standing alliance.

At the East Asia Summit, the United States negotiated and signed four important leaders’ statements on the use of chemical weapons, money laundering, poverty alleviation, and countering terrorist propaganda and financing.

And crucially, at both summits and throughout the trip, we asked all nations to support our campaign of maximum pressure for North Korean denuclearization. And they are responding by cutting trade with North Korea, restricting financial ties to the regime, and expelling North Korean diplomats and workers.

Over the last two weeks, we have made historic strides in reasserting American leadership, restoring American security, and reawakening American confidence.

Everywhere we went, I reaffirmed our vision for cooperation between proud, independent and sovereign countries — and I made clear that the United States will be a reliable friend, a strong partner, and a powerful advocate for its own citizens.

The momentum from our trip will launch us on our continued effort to accomplish the three core objectives I outlined: to unite the world against North Korean nuclear threat, to promote a free and open Indo-Pacific region, and to advance fair and reciprocal economic relations with our trading partners and allies in the region.

We have established a new framework for trade that will ensure reciprocity through enforcement actions, reform of international organizations, and new fair trade deals that benefit the United States and our partners.

And we have laid out a pathway toward peace and security in our world where sovereign nations can thrive, flourish, and prosper side-by-side.

This is our beautiful vision for the future. This is a where this vision — this dream — is only possible if America is strong, proud, and free.

As long as we are true to ourselves, faithful to our founding, and loyal to our citizens, then there is no task too great, no dream too large, no goal beyond our reach.

My fellow citizens: America is back. And the future has never looked brighter.

Thank you. God Bless you and God Bless the United States of America. Thank you very much. Thank you. Thank you all.

Asia Trip: President Donald Trump reports to The American People


November 16,2017

Asia Trip: President Donald Trump reports to The American People

– President Trump Delivers Statement on Asia Trip – President Trump Delivers Remarks to the American People, November 15, 2017–The White House, Washington D.C

Full Text of President’s Statement to follow when it is available.–Din Merican

CNN Reports:

In Asia, Trump again finds success overseas easier than at home

US finds unlikely ally in Vietnam as Philippine President Duterte tilts to China


November 10, 2017

US finds unlikely ally in Vietnam as  Philippine President Duterte tilts to China

http://edition.cnn.com/2017/11/09/asia/trump-vietnam-philippines/index.html

Image result for trump goes to vietnam

US President Donald Trump may have left China for the final leg of his Asia tour, but the specter of Beijing will loom large over his discussions with Southeast Asian nations on the issues dominating the region.

At the core of much of what Trump will do, and what those nations hope he will accomplish during his visit, will depend on America’s ability to counter China’s growth and its ambitions.

China’s used development aid, closer diplomatic ties with nations like the Philippines, and its military expansiveness to spread its footprint in the region. How Trump decides to respond to this will be evidenced during a series of key meetings.

On Friday, Trump will come face-to-face with the outwardly anti-American president of the Philippines, Rodrigo Duterte at the APEC summit in Danang, Vietnam. The US President will then participate in the Asia-Pacific Economic Cooperation Leaders’ Meeting, before delivering a speech at the APEC CEO Summit, the White House has said.

On Saturday, he will travel to Hanoi for an official visit and bilateral meetings with Vietnamese President Tran Dai Quang and other senior Vietnamese officials.

‘America has lost now’

Image result for trump goes to vietnam

Being an American ally has been in the DNA of the Philippines for decades, says Alexander Neill, a Shangri-La Dialogue Senior Fellow for Asia-Pacific Security at the International Institute for Strategic Studies in Singapore. The former American colony is the oldest partner the United States has had in the region, but it is a tumultuous history the two nations share, with political, defense and economic challenges that have at times caused friction that has brought them to the brink of diplomatic divorce.

“It’s a relationship that, if handled in the right way, could be promising,” Neill told CNN. “As a businessman, Trump is going to be wanting to convince the Philippines of the risks of putting too many eggs in the Chinese basket.”

It was this time last year that Philippines’ Duterte announced in Beijing that “America has lost now. I’ve realigned myself in your ideological flow.” He told his Chinese hosts that he may also “go to Russia to talk to (President Vladimir) Putin and tell him that there are three of us against the world: China, Philippines and Russia. It’s the only way.”

Duterte, known for speaking brashly later backtracked on his comments, insisting what he’d referred to in Beijing was not “a severance of ties,” and that he wasn’t cutting diplomatic relations. “What I was really saying,” he told reporters, “was a separation of foreign policy.”

Whether this so-called “separation” bears out will likely depend on Duterte and Trump’s personal relationship. Duterte, whose savage dislike of former President Barack Obama was well known, has promised to “deal with President Trump in the most righteous way,” when the two meet in Manila. Though he has also said he will “listen to him, what he has to say.”  Trump has invited Duterte to the White House

“If you’re going to do a character analysis Trump and Duterte are a perfect match,” said Neil. “These two guys see eye to eye and I think there’s evidence to suggest that all of this animosity and rhetoric between the US and the Philippines has died down quite considerably.”

Trump, in a phone call to the Philippines leader in May, told Duterte he was doing an “unbelievable job on the drug problem,” referring to the 14-month long crackdown on the drug trade in the Philippines which human rights groups claim thousands of people have been killed, many without due process. Duterte has rejected international criticism of the campaign.

But it is also possible that the two leaders’ personal dynamic could become damaging, says Aaron Connelly from the Lowy Institute. “Duterte is a lot like Trump, he’s sort of an unpredictable character and clearly the leaders who work best with Trump are the ones who are sort of willing to bury their ego and do things that appeal to Trump’s ego,” Connelly said.

As examples, he pointed to French President Emmanuel Macron’s hosting Trump during Bastille Day celebrations, or Japanese Prime Minister Shinzo Abe’s gifting of a golden golf club that helped mollify the American president.

 

Duterte may not be able to overcome his animosity towards the United States, Connelly said. “He’s the first Philippines president from Mindanao and he brings with him all the baggage that involves,” he said. “He grew up with his grandmother telling him stories of American atrocities on Moro during the colonial period.
One of Duterte’s grandparents was Muslim and some of his grandchildren are Muslim, and he regards himself as half Muslim because he’s half-Moro, so he has some real anti-American feelings and he’s very loathe to acknowledge any of the assistance the US has provided in Marawi,” added Connelly, referring to the embattled city where US forces have helped Philippine security forces battle ISIS fighters.
And he has turned to China most effusively, joining the One Belt, One Road trade and investment initiative Beijing launched earlier this year, which offers billions in funding to developing countries. He has also reportedly muted his opposition of China’s claims in the disputed South China Sea, even as the US beefs up its maritime presence in the region.

Vietnam’s pivot to the West

In contrast, Vietnam, which since the Clinton administration has been the subject of back-and-forth diplomacy, is now viewed as a key partner for Washington and worthy of a more sustained relationship.
President Bill Clinton’s visit to Hanoi was the first by a sitting US president since the end of the Vietnam War. It paved the way for a meeting in 2015 between President Obama and the general secretary of the Vietnamese Communist Party, Nguyen Phu Trong.
The meeting violated protocol, the Atlantic reported, because the general secretary was not a head of state. “But the goals trumped decorum: Obama wanted to lobby the Vietnamese on the Trans-Pacific Partnership — his negotiators soon extracted a promise from the Vietnamese that they would legalize independent labor unions — and he wanted to deepen cooperation on strategic issues.”
The Obama administration officials also reportedly said that Vietnam would “one day soon host a permanent US military presence to check the ambitions of the country it now fears most, China.”
Trump pulled the US out of the Trans-Pacific Partnership trade deal but military cooperation with Hanoi continues. Defense Secretary James Mattis told his Vietnamese counterparts in August to expect a visit from a US aircraft carrier next year, the first such visit since the Vietnam War ended in 1975.
Vietnam’s growing closeness to the United States is an increasing irritant to China, says Connelly. “For the Vietnamese, the threat has always come from the north. They would say ‘we’ve been aggressively visited by many great powers over the course of our history, whether it’s the French or the US, but the longterm strategic concern has always been China,'” he said.
These concerns are underscored by the two countries’ ongoing dispute over islands in the South China Sea. China’s claims to the South China Sea stretch roughly 1,000 miles from its southern shores, and include energy rich areas also claimed by Vietnam.
In July of this year, Vietnam suspended oil drilling in contested waters in the South China Sea, after alleged threats from China. “Over the course of a millennia they (the Vietnamese) were able to maintain their independence from China throughout that period, and they’re incredibly proud of that,” added Connelly. “For them, having partners like the US to help them build up their maritime abilities and to continue to make sure the US is engaged in the region is really important.”

An opportunity for Trump to exploit

During the Vietnamese prime minister’s visit to the White House in May, the two countries signed $8 billion worth of commercial deals and discussed the transfer of a decommissioned US Coast Guard cutter to the Vietnamese coast guard which is designed to patrol coastal waters. The US has also transferred six patrol boats to Vietnam.
Washington has relaxed its arms embargo against Hanoi and its solidifying relationship with the Vietnamese stands in marked contrast to Hanoi’s seemingly deteriorating one with Beijing.
In June representatives from Vietnam and China met in Hanoi, but the gathering finished early when Chinese officials broke off the summit reportedly over Vietnam’s outreach to Japan and the US, as well as its objections to China’s continued buildup of disputed islands in the South China Sea.
“The Sino-Vietnamese relationship is quite fraught in many ways, but that said, I think the business community and potential investors and cross-border trade, it’s a huge relationship there,” said Alexander Neill.
“China’s economic weight is on Vietnam’s doorstep, but the military to military relationship is not good at the moment. If the US decides to exploit that to some degree it will serve as an irritant to President Xi Jinping and the People’s Liberation Army.”