Philippines: Buy Or Rent?


June 8, 2020: President Duterte continues to use the old Cold War tactic of playing two superpowers (U.S. and China) off against each other. Most Filipinos trust the U.S. more than China. That means a fundamental shift in government policy and diplomacy against the Americans is impossible. Despite, or because of that, Duterte says nice things about China will ignoring military, economic and diplomatic support received from the United States. China understands this but keeps offering loans and investments to the Philippines to show their “gratitude” to Duterte. The Chinese hope to eventually win some goodwill inside the Philippines with all this. This has been the Chinese strategy throughout the region. While this approach does little to shift public opinion, it does enable China to freely use their cash to buy as much support as they can. The more Chinese money that enters the country, the more locals are found who are willing to be bought or at least rented. This includes politicians, academics, journalists and celebrities of all sorts. This works, up to a point.

Duterte got elected and remains popular because of his aggressive efforts to find and prosecute corrupt officials. Now he is finding more and more of the corruption was paid for by China. This strategy has gained some favorable press and more access to foreign countries. Longer term the prospects are not so good. These same tactics were used by Germany worldwide in the 1930s, especially once the Nazis were in power. There were short term gains that evaporated once the German armies began moving into neighboring countries. China hopes to avoid that by invading slowly and with considerable stealth. But, as the situation in the South China Sea and the Indian border demonstrate, subtlety and stealth will only get you so far. Another question Chinese economists are quietly posing to CCP (Chinese Communist Party) leaders is how will the government deal with a lot of foreign countries refusing to pay back the loans or simply seize Chinese assets. What is an ambitious new superpower to do?

Queasy Quiet

While the health impact of covid19 has been minimal in most of the country, especially outside urban areas, the various Islamic terrorists and leftist rebels have been less active. Many of the rebels and Islamic terrorists are part-timers or have family nearby who are at least concerned about the virus showing up. Whatever the case the usual suspects have been less active since the start of the year. This is not expected to last, even though the security forces have continued chasing down the various outlaw groups.

June 6, 2020: In Manila police raided the third illegal clinic established in the city by Chinese gangsters to provide medical supplies for Chinese seeking testing or treatment for covid19. There are about 150,000 Chinese citizens in the Philippines, many of them illegally. Covid19 cases in the Philippines are concentrated in cities, especially the capital Manila, as are many of the illegal Chinese. So Chinese gangsters set up unregistered (and unregulated) covid19 clinics. Six of these clinics have been found and closed since April. Large quantities of scarce medical supplies were seized.

The Philippines has suffered nine covid19 (coronavirus) deaths per million population so far and has 200 known cases of the virus per million people. In early April the government ordered a nationwide lockdown to halt the spread of the virus and make it easier to treat those who have it. That quarantine is now being eliminated, especially in the rural areas where there have been far fewer covid19 cases.

Neighbors Malaysia have 257 cases and four deaths per million, Singapore has 6,483 confirmed cases per million and four deaths per million while Indonesia has 114 cases per million and seven deaths per million. The Philippines has an advantage having not land borders with any other nation. Moreover, the Philippines consists of 7,600 islands, which further limits the spread of the virus. The number of confirmed cases is more a matter of how many people could be tested. An accurate count of covid19 deaths depends on the ability to test those who die or are dying from covid19. This coronavirus has symptoms similar to many other existing diseases and the breathing problems that often kill covid19 victims is similar to those dying from pneumonia. This is a common cause of death for the elderly or those already weakened by other diseases. These comprise a disproportionate number of known covid19 fatalities.

The illegal Chinese clinics are just another manifestation of the Chinese gangster problem that came with increased Chinese investment. In the last year over two thousand illegal aliens, most of them Chinese, have been arrested in the capital alone. Most of those arrested were participating in the growing Internet based criminal activities. After 2008 t he Philippines slowly became a hotspot for computer hacking groups, and for nearly a decade the computer crime gangs were able to survive by bribing the right officials. Only when the cybercrime involved Islamic terrorism did the bribes not work. In 2016 the government legalized online gambling operations. These were to be regulated and taxed. Filipinos were forbidden to use the new online gaming sites because popular opinion in the country was that the online gambling sites were addictive and sometimes rigged. There was also an effort to eliminate a lot of the bribery that often caused things like online gambling to become more of a problem than economic benefit. All this was complicated by new (since 2016) Chinese investment activity, which was part of the government effort to boost the economy. While the government was also at odds with China over the illegal South China Sea claims, the Chinese were using large investments to reduce the popular hostility to what was going in in the South China Sea. The Chinese investments came with the usual demands that more Chinese be allowed to work in the Philippines. In return, more Filipinos would be allowed to work in China. In 2016 the Filipino police were ordered by the new president (Rodrigo Duterte) to aggressively go after corruption and criminal activity. This was soon applied to the online gambling business, which had quickly been dominated by Chinese gangs. In addition to corrupting legal online gaming operations the new flood of Chinese gangsters led to the establishment of illegal online gaming operations. All this Chinese gangster activity led to more arrests and prosecutions. The Chinese government often cooperated because many of these gangsters moving to the Philippines because police pressure in China was more intense. In foreign countries, it was often possible to exploit the legal system and extradition treaties to avoid being sent back to China to face even more serious criminal charges. A growing number of recent Chinese arrests were the result of information provided by the American FBI, which had been investigating international computer and phone fraud and the hackers behind it. China has also provided information about Internet based criminals preying on individuals and businesses in China. In 2019 nearly two thousand illegal aliens were arrested in the Philippines, most of them Chinese. For all of 2018, only 500 illegal aliens were arrested. In 2019 nearly two million Chinese traveled to the Philippines, most of them tourists. Tourism has always been good for the economy but the growing number of Chinese tourists beings with it more Chinese gangsters looking for a safer place to work and skilled at corrupting local officials.

June 5, 2020: In the south (Jolo Island) four soldiers were killed and 17 wounded during a 40 minute battle with 40 Abu Sayyaf gunmen. At least two of the Islamic terrorists were killed but the Abu Sayyaf men took other dead and wounded with them as they retreated before army reinforcements showed up.

May 16, 2020: In the south (Sulu province) an army patrol clashed with twenty armed Abu Sayyaf men, killing two of them before the rest fled, taking their wounded with them.

May 13, 2020: In the south (Agusan del Norte and Misamis Oriental provinces) three days of military operations against NPA rebels in the area left four NPA leaders and eleven gunmen dead. Several camps and safe houses were also seized along with weapons, documents and equipment. Nearly 200 NPA rebels have been killed so far in 2020 and many more were wounded or surrendered.

NPA is the illegal armed wing of the local Communist Party that now depends on extortion, theft and other criminal activity to survive. This is causing much anger and protest in areas where the NPA still operates “for the good of the people.” Yet the NPA can no longer do much political work when their very survival is at risk. The government is trying, without much success, to negotiate a peace deal with the NPA. The leadership, as well as the commanders of various armed factions, are split on a peace agreement and most are continuing to operate (fighting and stealing). The NPA, to most Filipinos, are seen as bandits with a veneer of communist ideology to justify their crimes. The banditry option is not working well enough to assure the long-term survival of the organization. This can also be seen when factions run short of money. Those actions begin to suffer from desertions. The army will grant amnesty to NPA members who surrender, especially if they bring their weapons and some useful information with them. Information on where NPA camps or weapons storage sites are considered useful and the fact that more NPA camps are being attacked and weapons storage sites seized indicates that NPA is losing secrets as well as people and popular support. Some NPA leaders feel this is all a temporary setback and that a peace deal would enable a revitalized Philippines Communist Party to become a major political power. These delusions make negotiating a peace deal more difficult. Meanwhile, the NPA has become a major source of criminal (as opposed to Islamic terrorist) activity in the country. Most of the NPA senior leadership live in Europe and are considered somewhat out of touch with the reality of what the NPA has become in the Philippines.


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