editorial The freedom to fish in Philippine seas

IN October 2016, President Rodrigo Duterte announced his “separation” from the United States, declaring he had realigned with China, which assured him that the South China Sea dispute will be resolved via diplomacy.

Duterte’s Beijing-friendly postures, however, failed to change China’s assertiveness in the South China Sea. The Philippine government has filed 231 diplomatic protests against Chinese activities in the West Philippine Sea in the six years that Duterte was in Malacañang. China continued to disregard the Philippines’ national sovereignty and territorial integrity in pursuit of its expansionist policy.

From Bloomberg, February 5, 2023: “Two Chinese coast guard ships and two militia vessels tailed a Philippine warship near Mischief Reef in the South China Sea, the Southeast Asian nation said. The navy’s BRP Andres Bonifacio was conducting a patrol and search mission on Feb. 1 when it was monitored and tailed by the Chinese vessels near the reef, which is within the Philippines’ 200-nautical mile exclusive economic zone, said Armand Balilo, a spokesman for the coast guard. The militia boats “even conducted an intercept course,” he added.”

As tensions continue to rise between Manila and Beijing because of China’s incursions in the Philippines’ exclusive economic zone, the US and the Philippines have agreed to resume joint patrols in the South China Sea. The decision was reached on Thursday between US Defense Secretary Lloyd Austin and Defense Secretary Carlito Galvez, according to the Pentagon website.

The joint US-Philippines patrols were among the key recommendations by a US private group, whose members are composed of former government officials, security experts and members of think tanks, to the administration of President Joe Biden as America seeks to revitalize its moribund bilateral relations with the Philippines, which was strained during the Duterte administration.

Besides the joint patrols, the Department of National Defense said it has agreed to designate four more additional locations for rotating American troops under the Enhanced Defense Cooperation Agreement (EDCA).

The announcements drew a fiery response from Beijing, which has long protested against the US military presence in the South China Sea. China’s Foreign Ministry spokeswoman Mao Ning said the US has “adhered to a Cold War zero-sum mentality” through a regional military expansion. “This is an act that escalates tensions in the region and endangers regional peace and stability,” Mao said.

The government’s announcement of a “restart” for joint maritime patrols with the United States has raised questions, including whether it could stop China’s incursions in the Kalayaan Island Group and West Philippine Sea (WPS).

While the country’s new maritime security arrangement with its treaty partner poses the greatest challenge yet to Beijing’s presence in disputed waters, the question remains: can it halt China’s march in those maritime waters?

(Read, “Can PHL-US joint patrols scale back China’s moves in Kalayaan, WPS zone?,” in the BusinessMirror, February 6, 2023)

For some legislators and even the Department of National Defense, the joint maritime patrols will limit, if not stop, Beijing’s unchallenged intrusions in the Kalayaan Island Group and WPS, and revert the use of its vast waters to Filipino fishermen.

“Senator Francis Escudero also emphasized that joint patrols would help reduce encroachments and acts of harassment in the area,” Defense Secretary Carlito Galvez Jr. said, as he recalled reactions to the agreement announced in last week’s visit of US Defense Secretary Lloyd Austin III.

It will also challenge China’s presence in Scarborough Shoal near Zambales, whose control it wrested from the Philippines in 2012 following a standoff. Beijing has sealed off the shoal from Filipinos who have made it their traditional fishing grounds for centuries.The agreement on joint maritime patrols was the most important arrangement so far that the country has notched with the US in years, returning US-Philippines defense relations to a significant level.

The joint patrols, seen to counter China’s incursions in the country’s exclusive economic zone, should help stop incidents of harassment against Filipino fishermen and other local vessels in the West Philippine Sea. After all, Filipino fishermen have the freedom to fish in our seas.

Inflationary screw-up

John Mangun

Outside The Box

EvERyThINg was normal until July 2022. For 25 years, Philippine inflation followed—lagging sometimes, leading occasionally—the price of Brent crude oil. A price chart of the two together is understandable to an eight-year-old child, let alone super educated economists. “gee Papa, the lines go in the same direction”.

After a spike in March 2022 following the Russian invasion, Brent hit another high in June and has been in a downtrend since then from $121 to $82. July saw Philippine inflation year-on-year at 6.4 percent. August came in at 6.3 percent even as Brent went to $96.

But September inflation went up to 6.9 percent (Brent at $85) and October inflation went to 7.7 percent.

In my column on August 8, 2022, titled “Inflationary psychology,” I wrote: “Production costs for agricultural products in the Philippines are primarily fertilizer and transportation. And both of these prices reflect the global price of crude oil. But inflation is not only an economic event. It is also a psychological event. Because there is a genuine “inflation psychology,” once prices start going higher, people believe that the trend will continue.”

“Even if oil and other input prices suppliers and that may take a year or so to kick in.” Food costs have both local and imported supplier competition. go down, end-user prices may not follow. Inflationary psychology is why when prices go higher, they do not go back down as fast if at all.”

One condition is needed to stop inflation psychology: “The only factor that will bring consumer prices down is “price competition” between suppliers and that may take a year or so to kick in”. Food costs have both local and imported supplier competition.

Brent is still in a downtrend and Philippine inflation is in an uptrend maybe even stronger than before. Why?

To combat “inflationary psychology,” we need to believe that we have seen the inflationary peak. I thought that was going to happen when Brent started a strong decline in early November. But November inflation came in at 8 percent with the uptick in the food inflation primarily influenced by the higher annual price increases in vegetables, tubers, and cooking bananas at 25.8 percent. The rice index only increased by 3.1 percent.

One condition is needed to stop inflation psychology: “The only factor that will bring consumer prices down is “price competition” between

Vegetable prices spiking, as exemplified by onions (not to mention salt to sugar), is the example. We import a lot of produce. However, there are imported onions through the front door and through the back door. Those suppliers are in competition. The legit importers must pay duty, which cuts into profit margins. The underground importers have to risk confiscation and fines. But the majority of end user prices are fairly much the same.

March 29, 2022: “Senators grilled officials for their supposed failure to stop the influx of imported agricultural products. Local vegetable farmers were losing an average of P2.5 million a day due to the influx of smuggled vegetables.”

September 28, 2022: “President Ferdinand Marcos Jr. has strict orders to stop agricultural smuggling.” Cutting off the supply of smuggled goods should be benefi- cial for honest importers. Except the number of “honest” import permits was reduced. But apparently, high prices are the fault of the “hoarders.”

Every grower of produce or livestock will hold products from the market if feasible to get a higher price.

Joseph and Pharaoh stored grain at “normal” prices for seven years to sell when famine had people selling their land to buy that grain.

October 4, 2021: “Farmers blame trade liberalization, urge government for stronger protection against agricultural imports both smuggled and legally imported.” Yet, January 28, 2023: “Philippines Posts Record Onion Harvest in 2022.”

Now the government intends to import onions. “We can’t sit idly because one of the drivers of inflation is the price of onions,” says the Department of Agriculture. However, “The purchase would be a “temporary solution” and there are no further plans to import for now.”

That’s great to know. So, the 50kilo bag of local onions I have been hoarding will still stay in the closet until all the imported onions are gone and then, like Joseph and the Pharaoh, I will make a financial killing. But the real question is, why is government so often on the wrong side of the trade?

E-mail me at mangun@gmail.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis provided by AAA Southeast Equities Inc.

Did China’s balloon violate international law?

WAS the balloon that suddenly appeared over the US last week undertaking surveillance? Or was it engaging in research, as China has claimed?

While the answers to these questions may not be immediately known, one thing is clear: the incursion of the Chinese balloon tested the bounds of international law.

This incident has also added another layer of complexity to the already strained relations between the US and China. US Secretary of State Antony Blinken’s planned visit to Beijing has been postponed. And China has reacted to the shooting down of the balloon with diplomatic fury.

Both sides have long disagreed over the presence of US warships in the South China Sea and Taiwan Strait, which China claims as its own waters and the US considers international waters. Will the air be the next realm to be contested by the two superpowers?

A long military history HOT air balloons have a somewhat benign public image. But they also have a long military history that extends back to the Napoleonic era in Europe during the late 18th century and early 19th century when they were used for surveillance and bombing missions. The early laws of war even included some specific measures designed to address the military use of balloons during armed conflict.

The modern military significance of balloons now appears to be understated, especially in an era of uncrewed aerial vehicles or drones, which have proven effective during the current Ukraine war.

However, while balloons may no longer be valued for their warfighting ability, they retain a unique capacity to undertake surveillance because they fly at higher altitudes than aircraft, can remain stationary over sensitive sites, are harder to detect on radar, and can be camouflaged as civilian weather craft.

Who has sovereignty over the air?

THE international law is clear with respect to the use of these balloons over other countries’ airspace.

China initially attempted to suggest the balloon malfunctioned and drifted into US airspace, claiming force majeure. If the balloon was autonomous, it would have been entirely dependent on wind patterns. However, a report in Scientific American said the balloon appeared to have a high level of maneuverability, especially when it appeared to linger over sensitive US defense facilities in Montana.

Every country has complete sovereignty and control over its waters extending 12 nautical miles (about 22 kilometers) from its land territory. Every country likewise has “complete and exclusive sovereignty over the airspace above its territory” under international conventions. This means each country controls all access to its airspace, which includes both commercial and government aircraft.

But the upper limit of sovereign airspace is unsettled in international law. In practice, it generally extends to the maximum height at which commercial and military aircraft operate, which is around 45,000 feet (about 13.7km). The supersonic Concorde jet, however, operated at 60,000 feet (over 18km). The Chinese balloon was also reported to be operating at a distance of 60,000 feet. International law does not extend to the distance at which satellites operate, which is traditionally seen as falling within the realm of space law. There are international legal frameworks in place that allow for permission to be sought to enter a country’s airspace, such as the 1944 Chicago Convention on International Civil Aviation. The International Civil Aviation Organization has set an additional layer of rules on airspace access, including for hot air balloons, but it does not regulate military activities.

The US also has its own “air defence identification zone,” a legacy of the Cold War. It requires all aircraft entering US airspace to identify themselves. Canada has its own complementary zone. During the height of Cold War tensions, the US would routinely scramble fighter jets

See “China” A11