Romulo is out. Del Rosario is In.
The Inquirer reported on March 4, 2011 about the turnover of the DFA from Sec. Romulo to Sec. Del Rosario. DFA Sec Del Rosario’s statement, “the US will remain the Philippines’ “sole strategic partner,” – according to the Inquirer - signaled a gradual and measured path back into the US sphere of influence, after years of drift toward China during the previous Arroyo administration.” . It seems El Tabako’s admonition for heads to roll didn’t fall on deaf ears.
C’mon now – wasn’t it just recently that the Philippines under Aquino thumbed its nose at the US when it decided not to attend the Nobel Prize awarding ceremonies at China’s insistence.
In December 13, 2010, he was saying No need to justify PHL absence at Nobel rites
“The Philippine government does not need to justify to the United States (US) or to any country why it did not send a representative to the Nobel Peace Prize ceremony in Norway last week, President Benigno Simeon “Noynoy” Aquino III said on Monday.
Meanwhile, the Chinese government has earlier said it was pleased with the Philippines’ decision not to attend the Nobel ceremony.
Chinese ambassador to the Philippines Liu Jianchao said, “I appreciate the understanding shown by the Philippine government on the Chinese people and the Chinese government (in boycotting the Nobel peace prize award).”
Foreign Affairs Secretary Alberto Romulo, however, said the Philippines’ absence at the Nobel award rites should not be assumed as “taking sides with China.”
Noynoy Aquino’s foreign policy under Romulo was a continuation of Arroyo’s foreign policy of playing the China card. Noynoy boycotted the Nobel Prize in exchange for getting a stay of the execution of Filipino drug mules caught violating Chinese laws. As it turns out this comes at a hefty price and is not an insurance against possible incursions on Philippine territorial boundaries.
The Wall Street Journal reported on March 3, 2011 that “The Philippines’ armed forces sent two military aircraft to the disputed waters of the South China Sea after a Philippine oil-exploration vessel said it was confronted by two Chinese patrol boats, Philippine officials said Thursday.
The run-in, which took place Wednesday, is the latest incident to complicate the delicate balance of power in the waters, which are claimed in whole or part by China, the Philippines, Vietnam, Malaysia, Brunei and Taiwan.”
The US-China geopolitical tango in the Asian Region
The Philippines is now facing a rude awakening that China’s interest is.. well, China. It would pay to take heed of the 2003 hearings on how the US sees its relationship with China.
http://www.uscc.gov/hearings/2003hearings/written_testimonies/031030bios/mengesremarkscontents.htm
For nearly a quarter century US policy towards China has been one that can be termed “unconditional engagement” The hope, repeated by presidents of both major political parties was that free trade would bring political freedom to China and lead to its becoming evermore cooperative internationally.
This has not occurred and since 1990 China has both again defined the US as its “Main Enemy” and has used the increased wealth from its one sided unfair trade with the US and other democracies to support an ever expanding military and a strategy which can be called one of domination through stealth.
This requires realism and prudence on the part of the US. The US should pursue a strategy of “realistic engagement” with China which would include the following:
1. Strengthening defensive alliance relationships with friendly countries in Asia,
2. Deploying Asian regional missile defenses and a U.S. national missile defense;
3. Opposing the use of force and coercion by China in all of its territorial disputes including that with Taiwan;
4. A policy of strict reciprocity in trade, which permits China, with its restricted market access, to sell only as much in the U.S. market as the U.S. may sell in China unless China ceases its strategic nuclear buildup, its proliferation of weapons of mass destruction, and implements the human rights commitments to which it has obligated itself,
5. The US should consider multilateral agreements which would provide China reassurance for its future access to energy supplies under normal market conditions provided that the conditions stated in item 4 are met.
It should be understood and communicated to China that there are enough energy supplies for all countries and that reasonable projections to 2025 indicate total world energy capacity of 125 mbpd and total world wide demand of 119 even without considering the 280 billion barrels of sand based oil which will be come available in Canada as a result of new extraction technologies. A peaceful and cooperative China would be assured of adequate energy resources for the future.
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The first island chain of defense doctrine holds that to be secure China needs to control the entire region off its shores in a line from Japan to Taiwan and the Philippines [24] .
In addition to this geopolitical purpose, dominance over the South China Sea and other adjacent waters could help China meet its future energy needs. Current estimates are that there could be 8 billion barrels of oil beneath the waters of the South China Sea within the internationally recognized exclusive economic zone of China. This could mean large additional energy resources in the entire South China Sea.
The long and short of it – it’s all about oil – and what oil can do in terms of energy security to China’s economy – a whole lot! What it also means is that the Philippines needs to take hard-nosed look into its strategic interests in relation to the geopolitical powers. The pronouncement by Del Rosario to approach this from an ASEAN-centric view seems to be a fresh approach albeit more complicated due to our current interesting challenges with our ASEAN partners like Malaysia and the Sabah issue, Indonesia and the JI issue, plus the Spratly issues between ASEAN members as well.
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What can new oil finds do for the Philippines? Same as China – a lot!
BMI forecasts on the Philippine Oil and Gas sector show that the Philippines share for Asia/Pacific regional oil demand of an earlier forecast of 1.28% in 2010 is projected to go down to 1.02% by 2014 by a more recent BMI forecast. The Philippines will provide 0.77% of supply in in 2010 going down to 0.75% in 2014.
Excerpts of the BMI reports are provided below
Key Insights into the Oil & Gas Sector of Philippines
The latest Philippines Oil & Gas Report from BMI forecasts that the country will account for 1.28% of Asia/Pacific regional oil demand by 2010, while providing 0.77% of supply. Asia/Pacific regional oil demand rose to an estimated 24.74mn b/d last year and should average 25.36mn b/d in 2007, before reaching 27.64mn b/d by 2010. Asia/Pacific gas consumption in 2006 is estimated at 419bcm, with demand of 602bcm targeted for 2010. Production last year of 342bcm should reach 490bcm by the end of the decade. The Philippines’ share of consumption in 2006 was an estimated 1.43%, while its share of production is put at 1.75%. By 2010, its share of demand is forecast to be 5.81%, with the country accounting for 7.14% of supply.
For details, click here
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Research and Markets: Philippines Oil and Gas Report Q4 2010
January 12, 2011 02:58 PM Eastern TimeDUBLIN–(BUSINESS WIRE)–“Philippines Oil and Gas Report Q4 2010”
Business Monitor International’s Philippines Oil and Gas Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the Philippines’ oil and gas industry.
The latest Philippines Oil & Gas Report from BMI forecasts that the country will account for just 1.02% of Asia Pacific regional oil demand by 2014, while providing 0.75% of supply. Regional oil use of 21.42mn barrels per day (b/d) in 2001 is set to reach a forecast 27.15mn b/d in 2010, then to rise to around 30.21mn b/d by 2014. Regional oil production was around 8.35mn b/d in 2001 and is forecast to average an estimated 8.82mn b/d in 2010. It is set to increase only slightly to 8.89mn b/d by 2014. Oil imports are growing rapidly, because demand growth is outstripping the pace of supply expansion. In 2001 the region was importing an average of 13.07mn b/d. This total will rise to a projected 18.32mn b/d in 2010 and is forecast to reach 21.32mn b/d by 2014. The principal importers will be China, Japan, India and South Korea. By 2014 the only net exporter will be Malaysia.
The 2010 average global gasoil price, calculated by BMI, is US$92.67/bbl, against US$68.96 in 2009. The 2010 average naphtha price is estimated at US$83.09 compared with US$59.30/bbl in 2009. For global unleaded gasoline, BMI is now forecasting an average of US$95.66/bbl in 2010, up from around US$70.17/bbl in 2009.
For details, click here.
For the Energy Profile of the Philippines, please click here.
Alternatives
Bulatlat.com presented the fact that
“At present, of the 16 biggest crude oil exporters in the world, the Philippines sources its crude oil imports from seven countries but five of them only account for 14 percent while the rest come from Saudi Arabia (51 percent) and Iran (35 percent). On the other hand, the country exported a total value of $3.1 billion to 11 of these countries, but with Malaysia alone covering more than 80 percent of the amount. The country has no trade relations (for petroleum or other commodities) with major crude oil exporting countries Algeria, Iraq, Libya, and Kazakhstan which have a combined export capacity of 5.6 million barrels per day.
The main imports of these countries include agriculture, food and consumer goods, which the Philippine government has already been promoting for exports. All this shows that the country has a lot of trade opportunities to explore if it would look for possible commodity swap partners”
While Bulatlat.com advocates centralized government procurement to bring stable prices – I advocate economic liberalization to allow foreign companies to compete in the Philippines Oil and Gas industry. I would also advocate fiscal and non-fiscal incentives for foreign companies investing in the Philippines Oil and Gas industry to attract more players both upstream and downstream.
The turmoil in the Middle East poses challenges to the Philippines energy security and its economy. The Philippines already has the highest electric power rates in the world. It doesn’t help that the Philippines restrictive economy prevents competitive FDI from easing market pressures on the Filipino consumers. Other than the direly needed economic liberalization and changes on consumption patterns, the Philippines should also consider diversifying its sources and considering sourcing oil from the Russians. The Oil-Price.Net website noted that the EU is now looking at Russia as an alternative to the Middle East.
The Russian Federation supplies almost 65% of the European Union’s energy needs through oil and natural gas exports. Owing to the fact that Russian oil & gas pipelines are state owned and have been used as political leverage in the past, Europe and other nations were of the opinion that Russian is not a reliable source of oil. This point of view has been undergoing a paradigm shift due to the Middle East woes and steps taken by the Prime Minister of Russia, Vladimir Putin himself.
For the longest time Gazprom, Russia’s number one oil & gas producer has held monopoly over market and infrastructure, hindering the growth of other Russian oil majors and concerning Wester European nations who perceive Gazprom as a remnant of the cold war era. In February 2011, Putin has set the ball rolling and Gazprom will now have to open their gas pipelines to competitors like Rosneft, Novatek and one of the largest oil producers in the country, Surgutneftegaz. Once this is accomplished, dependence on the Kremlin will ease making Russia the best option for the world to rely on. Middle Eastern Islamic nations are no longer the world’s best bet. The ways of capitalism and matters of national security are suggesting a move to greener pastures, which is Russia right now.
Greater engagement with Russia for oil can help. Another source of oil is Brazil. Note that Brazil had a massive oil find in October 2010 . The BBC reported that
A newly-tapped oil field off the coast of Brazil could contain up to 15 billion barrels of oil, officials say.
Brazil’s national petroleum agency said the Libra field most probably held around 8 billion barrels.
That matches the size of the giant Tupi oil field, whose discovery in 2007 drew attention to Brazil’s potential as a major oil producer.
If the 15 billion barrel figure were confirmed it would double Brazil’s known oil reserves.
It would also be the biggest oil field discovered in the Americas since 1976, when Mexico found the giant Cantarell field in the Gulf of Mexico.
The Libra exploratory well is located 183km (114 miles) offshore from Rio de Janeiro.
Another technology in the waiting is shale oil – Oilprice.com reports that
“There is a lot of shale oil out there. Using a the Fischer Assay, which yields a heating value, across the planet’s known reserves turns up numbers like 3.3 billion tons with 2.8 billion, more than 78% in the U.S. Most of that is in the Green River Formation out in Colorado. It’s a huge reserve. No other known reserve exceeds 20% of the Green River deposit and most come in under 10%. Not that those others are small, the Green River deposit very conservatively holds more than 200 years of U.S. needs at current use rates.
On the consumption side, standards for fuel efficiency are being raised as gas prices at the pump hit record highs – and fuel prices are still projected to go higher. Ford is introducing a line of vehicles that include biofuels, electric fuel, and a mix. A significant challenge to electric cars will be the disposal of discarded batteries. Can’t have ‘em all – choose your poison as my older buddies would say.
Enter Da O Ep Dobol Yu
Of course, all these don’t mean much when you are facing a deluge of OFW war refugees returning to the Philippines to join the ranks of the unemployed. This will pose more problems to an already burdened humungous government machinery which isn’t known for fiscal restraint. The headlines say that each returning OFW will receive PhP 10,000. What’s not being said is that they will probably receive PhP 5,000 – after all “processing fees and charges” – in three months.
It gets further “complicated”. FIlipino labor recruiters requested a one stop processing center for workers destined to Taiwan during the 1st week of February only to be followed by retaliatory measures a week or two after. GMA reported that
“Taiwan had adopted retaliatory moves against the Philippines for the deportation of 14 Taiwanese to Mainland China last Feb. 2.
In a bid to show its displeasure, Taiwan tightened the requirements on Filipino workers wishing to work in Taiwan.
President Benigno Aquino III sent former Senator Manuel Roxas II to Taiwan last week to iron out the kinks but refused to give the apology Taiwan had demanded.
The Philippines follows the One-China Policy, where it maintains diplomatic ties with Mainland China, which considers Taiwan a province.
However, the Philippines also maintains economic ties with Taiwan.
Other punitive measures Taiwan enforced after the Feb. 2 deportation included lengthening the process for screening applications by Filipino nationals seeking to work in Taiwan to four months, from no more than 12 days.
That move was also seen as a temporary freeze on hiring new Filipino workers, the CNA report said.”
Aquino’s New Foreign Policy: The Del Rosario Doctrine
Sec Romulo’s departure from the DFA should sends sighs of relief to career officers in the DFA. It should also give a breathing spell from Aquino’s break neck speed towards a foreign policy fallout.
On national security, Del Rosario said “the Association of Southeast Asian Nations would be the bedrock of Philippine foreign policy.”.
“On economic diplomacy, we will give priority to the directive of President Aquino to address poverty alleviation through pushing for measures that are affordable and sustainable for the DFA,” he said.
As for the protection of Filipinos abroad, he said “we already have a good system compared to other developing countries, especially with the new Migrant Workers Act.”
“But we will continue looking at regulations and bilateral agreements to strengthen this protection of our nationals,” he said.
There’s more to poverty alleviation than the migrant workers act. Filipinos migrate due to poverty and lack of opportunities that they feel are commensurate to their abilities and needs. Thus attending to OFWs only addresses the symptoms. It does not address the root causes of the OFW phenomenon – a lethargic local economy under an oligarchy that has been effectively shelved from competition by the Philippine constitution.
Short of sounding like, well I don’t care sounding like, a broken record. I can’t emphasize enough that we need to liberalize the economy so we can bring the jobs home instead of sending our professionals and workers overseas. That’s like 10 million Filipinos overseas – 10 million reasons why we should liberalize the economy and get on the road towards constitutional reform. What better way to alleviate poverty in terms of magnitude than to remove the artificial constitutional restrictions on foreign investments. Let the law of supply and demand, the market come into play – and unleash the power of a consumer market of 90 million Filipinos.
Our economy ought to be a core consideration of our national security. Our economic diplomacy ought to be built around investments, trade and tourism – not in pimping out our countrymen.
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4 Comments on “Philippine Foreign Policy, the Oil and Gas Industry, and the OFW Refugees”
Our Foreign Policy is REACTIVE…we don’t have any standing plans…we don’t stand for anything…we fall for anything that comes to us…
SuperPower countries will always dominate the international scene…for trade, or for national pride.
Oil/Petro based economy countries have troubles; because for long, they have been under Dictators or Monarchies…And we are now the age of Information Technology. You cannot censor anything in the Internet. Anybody who have an internet can have any information…
We have depended too much on fossil fuels, to build the world’s economy…oil is now a Political, as well as foreign policy tool. However, I am looking that: we are now moving away from this oil base economy…an efficient energy fuel, is being researched and developed. It is cheap; it is efficient; and it does not pollute the environment.
If a nation that depends on its OFW slaves to float its economy…this is what you get. Your OFW slaves coming back in droves; when trouble arise among their slave masters…
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Jomar T. Sadie Reply:
March 7th, 2011 at 10:00 pm
“an efficient energy fuel, is being researched and developed. “
I see the wisdom in saying: the greater the number of people or institutions that are looking for a discovery or innovation, as well as the greater the perceived profit is from finding that discovery/innovation, the greater the chances are of actually finding it.
Although the elusive search for the cure for cancer may not be the best example to illustrate that point (only history will tell) it is hard not to find comfort in its logic.
However how soon is soon? When oil finally runs out in 30 or 50 years (please update me on this if I havent googled it up yet) 1st world countries may suffer a hit but what about the third world?
The former may have the wealth, the technology and the foresight to adapt but developing countries currently have little, if any, such capacity.
How soon will our policies and vision as a society turn that around when we see that the non-poor clearly understand that phenomenon and are fleeing in droves to build homes in the first world?
Soon even the non-rich but sensible (and bold) will realize the high possibility of a gloomy future that’s about to happen when oil runs-out – and flee the third world countries themselves.
[Reply]
BongV Reply:
March 7th, 2011 at 10:38 pm
Jomar – there’s a new shale oil technology being developed – the US has 68% of the world’s supplies in the Colorado River Green River Basin. Using these supplies the world will have another 200 years.
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We are on an Epoch. Its the end of days as we see it. OFW all of them will come back to PH unfortunately. The Illuminati who control both China and US have sinister plan for the world. Saudi Arabia is next as was told by an insider Lindsey Williams on infowar. Oil will shoot upto 200 USD a barrel.
Saudi Arabia will be worse than Libya.
There will be political chaos all over the world, when it comes to Saudi Arabia by March 12, it will be the beginning of the end. Prepare yourself, save your family, buy food and LPG gas now itself..the price will be unbearable, there could also be looting, buy a gun etc etc..
There is no truth in the world only conspiracy. PH, India, Korea, Taiwan all asian country will be in Choas….The world rulers want one world government with one world army, there is also a fake alien invasion planned. Thanks
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