WikiLeaks cables: Arroyo scandals affected Spratlys, Scarborough

by Jojo Malig,

Posted at Apr 17 2012 11:03 PM | Updated as of Apr 18 2012 07:47 AM

View Spratly Islands in a larger map

China used 'carrot and stick' to pressure Arroyo administration

US embassy memos support the Philippines' claim

MANILA, Philippines - Corruption scandals during the Arroyo administration that involved Chinese investments broke the fragile situation in the disputed Spratly Islands and Scarborough Shoal, US embassy cables leaked by anti-secrecy group WikiLeaks said.

Cable 08MANILA1838, classified confidential and sent August 1, 2008 in the name of then US Ambassador to the Philippines Kristie Kenney, discussed the allegations that Arroyo's husband, Mike, had accepted multimillion-dollar kickbacks from the Chinese in return for facilitating a $349 million telecommunications deal between the Chinese ZTE Corporation and the Philippines' National Broadband Network (NBN).

The Arroyos have since been charged with graft over the botched deal but have claimed innocence on the allegations.

"This and other recent scandals involving the Chinese led to charges in Congress and media circles that the Arroyo administration had likewise assented to the Spratlys joint seismic exploration deal in exchange for bribe-tainted loans, and that the government's attempts to get Congress to back off on inclusion of the Spratlys in Philippine baselines was similarly motivated by illicit Chinese influence," said the memo addressed to the US Secretary of State.

The memo was referring to the 2005 Joint Marine Seismic Undertaking (JMSU) agreement between China, Vietnam, and the Philippines that coordinated "pre-exploration" of possible hydrocarbon reserves in the Spratlys.

The JMSU was not extended when it expired because of the corruption scandals involving Chinese projects in the country, according to another confidential cable, 09MANILA428, that was sent by the US embassy in Manila on February 26, 2009.

"Following allegations of kickbacks and corruption, the Arroyo administration had little choice but to allow the JMSU agreement to lapse when in expired at the end of June 2008," it said.

Cable 08MANILA998, dated April 28, 2008 directly linked the controversy over the failed ZTE broadband deal with the JMSU in the Spratlys. 

"In the wake of the ZTE scandal, allegations emerged that the Arroyo administration allowed the seismic exploration deal in exchange for bribe-tainted loans," the cable said. "Legislative and media critics of Arroyo have suggested that the administration is dragging its feet in meeting a 2009 UN Convention on the Law of the Sea (UNCLOS) deadline for defining the Philippine archipelago's baselines."

Under UNCLOS, the Philippines retains an Exclusive Economic Zone (EEZ) of 200 nautical miles, and may claim an extended continental shelf of 350 nautical miles.

"Even the Philippines' 200 nm EEZ includes most of the islands, while the 200 nm EEZs of China, Taiwan, and Vietnam include few or none," cable 09MANILA428 said.

Arroyo did sign a compromise baselines bill into law, just barely making the deadline.

US embassy memos, however, pointed out that the law did not include the disputed territory in the Philippines' baselines and left the Spratlys and Scarborough classed as "regimes of islands."

According to cable 09MANILA428, Arroyo saw the compromise bill as the best way to prevent the tension over the disputed territories from worsening "and partly out of recognition that the Philippines lacks the military capacity to defend the Spratlys, if it should ever come to that."

The memo believes that with the compromise bill, Arroyo hoped that she may have "placated" China's simmering anger.

Other leaked US embassy cables also discussed several Chinese projects in the country that got entangled in controversy, as well as the Spratlys dispute.

They include the primarily Chinese-financed and Chinese-contracted North Luzon Railways (Northrail) project, which entails the construction of an 80-kilometer railway from metropolitan Manila to the Clark Freeport, as well as the expansion of the airport at the former Clark airbase.

"However, allegations of overpricing and kickbacks in China-financed and -built infrastructure projects arguably led China to withdraw its offer of concessionary financing for the project in order to avoid the controversy that might follow the contract. The scrutiny of Chinese-funded projects has intensified and expanded to cover the Bauang pump irrigation project, the General Santos Fish Port Complex, the Northrail Project, and others," cable 08MANILA998 said.

China threatened Philippines

China used carrot and stick to pressure the Philippine government during the Arroyo administration, according to a confidential cable sent March 5, 2009 by the US embassy in Beijing.

Cable 09BEIJING579 said a high-ranking Philippine embassy official in China, whose name is withholding because of a "strictly protect" tag in the memo, told a US political officer that Beijing's official protests against the Philippines' baseline bill had raised concerns that China was hardening its policy on the South China Sea.

"We had never been nudged before like that," the Philippine official said.

The official revealed that a February 18, 2009 summons meeting, Chinese Vice Foreign Minister Wang Guangya reiterated his government's position on the South China Sea, rejecting any Philippines' claim to the Spratly Islands and Scarborough Shoal.

The Chinese official asked that the Philippine government take action to prevent enactment of the baselines bill, and reserved "the right of China to take action" over the issue.

The Philippine official expected Arroyo to sign the bill into despite China's protests "given that the Philippines believed it had already made concessions to China on this issue."

Arroyo befuddled by Spratlys

Cable 08MANILA1838 said the Spratlys controversy was "a strategic conundrum to the Arroyo administration."

"Filipino nationalism and widespread suspicion over China's intentions in the region militate in favor of the government taking a more aggressive stance in advocating for Philippine sovereignty over the islands, and the terms of the UNCLOS likewise tend to favor such a position," it said.

"On the other hand, the Philippines is the weaker party in an increasingly asymmetric relationship with China, and Philippine military forces are sufficiently occupied in addressing the nation's insurgent groups, without the added worry of projecting power in the South China Sea," it added. "It is clearly not in the Philippines' best interests to allow tensions in the South China Sea to escalate to the level of armed confrontations."

While the American government supported the Philippines' stand that international law must prevail to settle its territorial dispute with China, US embassy in Manila maintained a hands-off policy on the issue.

"When questioned by the Philippine media about the US position on the Spratlys, the Ambassador and other USG officials have consistently stressed that the US is not a party to territorial disputes in the region, and that it is our hope that all such conflicts will be resolved peacefully among the relevant parties in accordance with applicable international law," cable 08MANILA1838 said.

The cable cited the embassy's response to questions regarding military war games between the Philippines and the US and how they are related to the Spratlys.

"We carefully responded that the purpose of the bilateral naval exercise in question was to build capacity for interoperability and bilateral cooperation, that the exercise would not be carried out in the Spratlys area, and that the US calls on all claimants to resolve the issue peacefully," it said.