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I. Executive Summary

Philippines (ECOP), Asia Society Philippines, Harvard Kennedy School Alumni Group (Philippines), American Chamber of Commerce (Philippines), Chevron Philippines and Friedrich Ebert Stiftung, hosted a forum entitled US, China and ASEAN: The Evolving Realities in the West Philippine Sea at the Soriano-Velasco Room, Asian Institute of Management last October 4, 2013. 160 guests from the academe, the government, the business sector, the national security sector, civil society groups, and the media attended the event.

he Asian Institute of Management (AIM) Policy Center, together with the Management Association of the Philippines (MAP), Former Senior Government Officials (FSGO), Makati Business Club(MBC), Employers Confederation of the

SECURITY IS CRUCIAL The speakers highlighted the importance of strengthening ties among the countries in the ASEAN region.

The forum featured policy discussions with Mr. Walter B. Slocombe, Former US Defense Undersecretary for Intelligence, Admiral Dennis C. Blair, Former United States Director of National Intelligence and Commander in Chief of the US Pacific Command, and Senior Associate Justice Antonio T. Carpio of the Supreme Court. The forum focused on the increasingly important role of China in international affairs and the possible ramifications of the recent activities of the United States in the Asia-Pacific. The speakers highlighted the importance of strengthening ties among the countries in the region (including the United States), and the need for policymakers to craft decisions based on agreed-upon multi-lateral principles. These issues are expected to have implications on the ASEAN region, composed of countries whose economic interdependence is expected to further deepen with the establishment of the ASEAN Economic Community (AEC) in 2015.

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The closed-door forum was followed by a press conference held at the GDLC Room, G/F Asian Institute of Management. The press conference was well-attended by the foreign correspondents and local media raising questions on current events including the implication of President Obamas cancelled visit to the Philippines, and the reforms needed by the countrys national security forces, among others.

The event is part of a series of forums which aims to synthesize and facilitate sharing of information and evidence by experts and scholars on the relevant issues, and establish a platform through which policymakers can engage scholars, experts and other stakeholders in an evidence-based discussion. A public forum entitled The Philippines, China and ASEAN: Prospects for Cooperation and Regional Public Goods in the South China Sea, was held last December 7, 2012 which touched on the issue of the South China Sea dispute and possible areas for cooperation and conflict prevention.

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II. Investing in our National Security

The following article was written by former DILG Secretary Rafael M. Alunan III and Dr. Ronald U. Mendoza, and was posted in Rappler.com1 on 28 October 2013.

R
sense.

ecently, the AIM Policy Center in cooperation with the Management Association of the Philippines, Makati Business Club, Employers Confederation of the Philippines, Asia Society, Chevron Philippines, American Chamber of Commerce of the

Philippines, Inc., Former Senior Government Officials (FSGO), Friedrich Ebert Stiftung, and Harvard Kennedy School and Tufts University Alumni organized a policy forum on US, China, and ASEAN: The Evolving Realities in the West Philippine Sea. Over 200 high-level officials and representatives from government, academe, business sector, civil society, and the security sector were handpicked to attend the event at the Asian Institute of Management (AIM). The starting point for the discussion is the understanding that the defense of the Philippines against any threat both foreign and domestic rests primarily with us Filipinos. This in turn could lead to a common understanding of what it would take to secure the nation in its total

Along these lines, three experts shared their views on the rising security challenges linked to the West Philippine Sea and related maritime disputes in the Asian region: Walter Slocombe (Undersecretary of Defense for Policy during the Clinton Administration), Dennis Blair (retired US navy admiral, former Commander in Chief of the US Pacific Command, and former Director of National Intelligence of the United States) and Justice Antonio Carpio (Senior Associate Justice of the Supreme Court of the Philippines). Their presentations helped clarify a range of issues in this area, which we will attempt to synthesize here briefly.

http://www.rappler.com/thought-leaders/42334-investing-in-our-national-security

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Credible defense posture In his presentation, Admiral Dennis Blair expressed concern over the grave security challenges faced by the country, noting the (then unfolding) Zamboanga crisis in our South and the renewed concerns over Bajo de Masinloc (or Scarborough Shoal).

PHILIPPINE MILITARY CAPABILITY Admiral Dennis Blair talked about the need for a firm and deliberate Philippine policy that can set limits on Chinese action in the West Philippine Sea.

Blair emphasized that the Philippines is actually in a position to build a small but effective naval force that could deny a much larger navy free access to Philippine territory. He noted examples of other countrys naval forces that have managed to accomplish this, including Sweden, which faced down the Soviet navy during the Cold War, or Iran, which has faced much larger naval coalitions (led by among others, the US Navy) in the Persian Gulf. Blair noted that it is perfectly feasible for a country like the Philippines [] to think about things like swarm tactics, small fast patrol boats, anti-ship missiles launched from various platforms, mines, aircraft, small submarines these can all make it very dangerous and difficult for even big navies to operate near your coasts. Blair then emphasized what he thought was one of the principal challenges in Philippine defense policy (having worked with the countrys armed forces for many years as Commander in Chief of the US Pacific Command) the need for sustained and competent strategic

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planning, program planning and execution, budgeting and controlling systems, acquisition programs, audit and follow up. All of this should be underpinned by a cadre of professional officers and officials who can carry those out consistently and without the taint of corruption. Despite the presence of an existing plan (crafted in 2004) to improve the management and equipment of the Armed Forces of the Philippines, succeeding Secretaries of Defense, according to Blair, failed to carry it out consistently. And since 2004, there have been 5 Secretaries of Defense, 3 major reorganizations and 7 Chiefs of Staff of the Armed Forces of the Philippines, providing a tumultuous leadership platform for executing this multi-year plan. Clearly this needs to be addressed. Developing the legal case

RULE OF LAW IN THE WEST PHILIPPINE SEA Justice Carpio talked about the importance of the faithful application of UNCLOS.

Justice Antonio Carpio discussed the potential case on the Philippine side of the maritime claims, reassuring and clarifying to many that the countrys legal case is robust. Justice Carpio also explained some of the main weaknesses of Chinas case: China has made its first official reference to its claim to the area covered by the 9-

dashed line in its Exclusive Economic Zone and Continental Shelf Law enacted in 1998. In this case, a domestic law cannot supersede a customary international law or a convention (as in the case of UNCLOS) in matters related to the rights of a state under the international law.

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The area covered by the 9-dashed line cannot be considered as part of the internal

waters of China as it is located in an open sea and that there has been freedom of navigation and freedom of overflight in it for the past years. It also cannot be part of Chinas territoria l sea since a 1992 law limits Chinas territorial sea to areas that are up to 12 nautical miles away from its baselines. The area is also beyond the Exclusive Economic Zone (EEZ) and Extended Continental Shelf (ECS) of China (as drawn from its baselines), and so the area cannot be classified as any of all possible maritime zones (i.e., internal waters, territorial sea, EEZ, ECS) that can be claimed by a coastal state under UNCLOS. China has only officially notified the world of its 9-dashed line claim in 2009, and that

it has not effectively implemented its claim during both the pre-UNCLOS (from 1947 when the 9-dashed line claim was first included in an official Chinese map to 1994) and UNCLOS eras. Further, not all countries recognize Chinas claim. In this case, the necessary conditions for a claim to historical rights are not satisfied. Need for a balanced strategy

A BALANCED APPROACH Walter Slocombe emphasized how disputes should be resolved peacefully without threats or use of force.

Walter Slocombe noted that maritime disputes in the region are not a matter of inevitable conflict. To mitigate the risk of conflict, he underscored a more balanced approach that would persuade and empower reformist elements in the Chinese government to maintain a peaceful and constructive relationship with its Asian neighbors.

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Ultimately, the message is that China needs a peaceful world around it, so it can continue on its own economic development trajectory. A recent analysis by the AIM Policy Center lays out the importance of peaceful economic and political relations between China and its neighbors, as these also underpin the economic relationships that have served China very well. Think of the multi-trillion dollar international production chains (involving many Asian economies linked to China in input trade) that see China as the main assembly and export hub to major industrial country markets. These form part of the blue economy that links many Asian economies in maritime trade and extraction and management of marine resources necessary for food security and inclusive growth in the region for many decades (hopefully generations) to come. In due course China will also benefit from the development of its neighbors (and vice versa) given the growing export market that ASEAN and other Asian economies represent. Chinas own internal challenges (not entirely dissimilar to our own countrys internal challenges by the way) include, among many others, the standing challenge to lift well over 100 million people out of poverty, to critically address the rising inequity in its society and to respond to rising food, energy and other demands that come with industrialization. Indeed, China, like all countries, contains many groups within it that espouses different views. It is critical to work with those that see Chinas future as part of a peaceful and prosperous Asia in which the rights of all nations, large and small, and people/ individuals are respected. These require, according to Slocombe, a balance between firmness and restraint. Preparing for the long haul Our own takeaway from these expert views is that the country needs to seriously invest in its national security. Our defense build-up is on catch-up mode and should have taken place after the US security umbrella was lifted in the early 1990s. Our sustained underinvestment in defense has probably emboldened incursions into our sovereign territory since then, spanning those in Mischief Reef (1995) and more recently in Bajo de Masinloc (2012).

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The present administration has taken steps to modernize the armed forces, such as the upgrade of the countrys naval and aerial capabilities with the purchase of Navy frigates BRP Gregorio del Pilar and BRP Ramon Alcaraz and 12 brand new fighter jets from South Korea (worth around P18.9 billion), and the enactment of the Revised AFP Modernization Act last year (which provides for an initial funding of P75 billion and the establishment of the Revised AFP Modernization Trust Fund to finance the 15-year modernization program). However, it would appear that the Philippines is still under-investing in its national defense given its level of income and when compared to other countries in the world. If we draw a trend-line to estimate the relationship between national income and military spending, the Philippines is well below the trend. Bringing the country to the average defense spending that its income level would imply, suggests an increase of up to PhP70 billion in additional defense investments every year. And what is the ROI (return on investment)? Every year we already lose billions to smuggling, poaching, and illegal incursions into our sovereign territory. This doesnt even begin to quantify the costs to future generations of future possible incursions into our territory. We will continue to suffer these losses if we do not invest to protect these resources for our future generations. (Our own fishermen, incidentally, are now unable to fish in some of the disputed areas, thus depriving them of their livelihoodswhile leaving these areas vulnerable to unsustainable fishing and extraction by others.) An important caveat here is that endemic corruption (affecting even the defense establishment) needs to be addressed urgently corruption now very clearly compromises national security as well. The peoples vigilance and the strength of our democratic institutions to root out corruption and bring back confidence and trust in public finance are now more important than ever. Addressing our national security challenges requires a form of collective action that will involve no less than an entire generation of leaders, spanning several presidential administrations and involving all of our local governments pulling together to ensure our security despite our archipelagic challenges.

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Perhaps Justice Carpio framed it best, by noting that the nation faces an inter-generational struggle to maintain our sovereignty and territorial integrity. Just as in generations past, the investments the present generation makes today to uphold our sovereignty will shape the freedom of future generations. The time to act is now.

Rafael Alunan leads the security cluster of the FSGO, while Ronald Mendoza is Associate Professor of Economics at AIM and executive director of the AIM Policy Center. The event held last October 4 is the second of a series of policy discussions linked to AIM's research on the West Philippine Sea, ASEAN Regional Cooperation and the Blue Economy.

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