The Millennium Challenge Corporation (MCC), the US aid agency which sought to focus Philippine President Rodrigo Duterte’s attention on the error of his ways – in the conduct of his war on drugs, in particular – is now discovering the error of its ways; that threatening to close-off assistance funding to the island republic succeeded in pushing it closer into a Chinese embrace … just about the last thing the Washington administration needed right now.
Duterte has virtually told the US that it can ‘stick its money’ as new funding from China – we have to say, predictably – will be forthcoming and which will more than compensate for the potential loss of the MCC grant. The Philippine president didn’t dress it up: “We can survive without American money,” he said.
This, then, has turned out to be a fairly reckless throw of the dice by the MCC; certainly an expensive gamble. Two days ago, following the funding agency’s announcement last week that grant aid for the Philippines would need to be reassessed over human-rights and rule-of-law concerns, Duterte said that two military pacts are now in danger of being scrapped – American boots off the ground – smashing the ball back squarely into the American court and leaving US diplomats in Manila rushing for the fire extinguisher.
The US Embassy in Manila has now issued a statement to the effect that Washington would “work closely” with the Duterte administration to address any concerns it may have. But this looks like a case of too little, too late – for Finance Secretary, Carlos Dominguez, had already held meetings in the Philippine capital with the president of the China-led Asia Infrastructure Investment Bank (AIIB), Jin Liqun. And what they discussed was funding.
The Beijing-headquartered AIIB, seen by some as a rival to the World Bank, is a global financial institution capitalised at US$100 billion; and the Philippines is a fully paid-up member. In fact, with 1.11% voting rights, it’s the third largest stakeholder in the lender of any country in the Association of Southeast Asian Nations – Indonesia has 3.17% and Thailand has 1.50%.
There’s no clear indication of how much the MCC package would be worth, though it’s believed to be considerably less that the US$434 million which the agency made available in its 2011-2016 grant. Much clearer is what the AIIB will be facilitating – it will jointly fund, along with the World Bank, the US$470 million Manila flood-control project, and jointly fund, along with the Asian Development Bank, the US$756 million Edsa Bus Rapid Transit System.
These two large projects which aim to end much of the transport chaos of Metro Manila, are part of Duterte’s pledged PHP8.2 trillion spend for his “Golden Age of Infrastructure” to be carried out over the term of his presidency.
“The Philippines’ membership to the AIIB would provide the government another source of long-term funding … for the Duterte administration’s unprecedented infrastructure buildup,” Dominguez said yesterday in a statement. In it he quoted Jin as saying: “We are all very eager to finalise the infrastructure projects … This time, we are very happy we can really talk about something to do in your country”.
So there we have it, this is now a done deal as far as these projects are concerned. But this isn’t just about funding pieces of infrastructure – this is about something far bigger; and Washington knows it because it’s been in the same game for a long time. This is about buying influence and right now more of that is being done right across Southeast Asia with renminbi than it is with US dollars. And here’s the simple reason why …
China wants trade; basically that’s it. It wants to mop up as much of it as it can, and particularly in its extended neighbourhood – everywhere that can geographically be described as Asia. It’s not concerned with the internal politics of these countries – in fact, it makes a point of not being for the oft-stated reason that it doesn’t want anyone meddling in its internal affairs.
America also wants trade and as much of it globally as possible. But it wants more; it believes that it has a mission to export its particular brand of democracy – along with burgers and computers – to its overseas markets. And more than that, it wants compliance – not just with US-forged rules, regulations and standards, but with its notions of how societies should (or rather, must) operate.
China doesn’t seek to change the cultural norms of a country; the US does if that country doesn’t comply with its norms. Washington – this Washington; the one presided over by Barack Obama – has little tolerance (forget understanding) for nations whose laws fail to meet its progressive-Left standard. Such countries are regarded as ‘rogue’ and need to be corrected.
Ideally, it would like to win the hearts and minds of nations it deems ripe for conversion – often small, developing economies – through the shrewd use of aid programmes and by promoting American ideals as that greener grass on the other side. But if the carrot doesn’t work, it’ll bring out the stick. And that’s what we’ve been witnessing in its treatment of Duterte’s Philippines. It’s not followed instructions; its not come to heel – so publicly criticise its leader and threaten sanctions. Right. How’s that working out?
China, meanwhile, only had to sit back and watch the inevitable unfold and then, by means of precision pragmatism, extend a helping hand to its Asian neighbour, to help it out of a difficulty. And so, through trade and a much clearer cultural understanding it was able to bring it into its fold. It’s not so much that China won the tug-of-war for the Philippines with its offers of aid and trade, it’s that America lost it with its demands and reprimands. The one attracted, the other repelled.
The question now is will Washington – which includes the Prog-Left fellow travellers in the media and the civil liberties establishment – continue to dig itself deeper into this sink-hole over the Philippines, or will it realise that if it stops banging its head against the wall it’s headache might stop?
Actually, at this stage that’s academic – as Duterte remarked: “I will let Obama fade away and if he disappears, then I will begin to reassess”. The new reality is that Washington’s about to be washed clean of Liberal ideologues who believe they have the divine right (figuratively speaking because most don’t subscribe to “notions of God”) to impose their gospels of human rights and rule of law universally.
The good news for US-Philippines relations is that incoming President Donald Trump has zero interest in ideology and less in foisting any of it on anyone else. His approach will be more in line with that of Beijing; after all, he’s also a pragmatist. And that makes 2017 look a whole lot rosier than 2016 on both sides of the Pacific.