Respect the blacklist of Chinese firms

Through no fault of its own, the Sangley Point International Airport Project has found itself in the middle of the competition between the United States and China for dominance in the Asia-Pacific region.

China’s claim of ownership over several islands in the South China Sea and their conversion to military installations are being challenged by the United States through naval patrols in the area.

Corollary to that action, the Unites States has blacklisted 24 Chinese state-owned companies for their involvement or participation in the illegal activities.

The blacklist order prohi­bits US companies from exporting equipment to the Chinese companies without prior US government approval which, considering its position on the issue, would be difficult to secure, if at all.

Although the order is directed to US companies, its underlying message is addressed to other companies elsewhere in the world that are doing business or planning to do so with the Chinese companies.

China Communications Construction Co. Ltd., the Chinese partner of the local joint venture that was awarded the project (and which is also involved in other construction projects in the Philippines), is one of those companies.

Presidential spokesperson Harry Roque had said the Philippine government would not follow the US blacklist because “we are a free and independent nation” and that we need Chinese investments.

Wow! Fighting words.

This stance does not come as a surprise considering President Duterte’s repeated expression of admiration for Chinese leader Xi Jinping.

From the government’s standpoint, it seems China can do no wrong despite its unfulfilled promises of cheap loans and massive investments in our infrastructure projects.

If the government thinks the United States will take its “defiance” of the blacklist sitting down, it may be in for a surprise.

A review of past events shows that when the United Sates imposes economic sanctions on a country or company for geopolitical reasons, it does so forcefully and with scant regard to adverse diplomatic consequences.

The United States took economic punitive action against Iran when it allegedly viola­ted the terms of a multilateral nuclear reduction agreement, and against Russia when it annexed Crimea in the Ukraine, and against Venezuela when its president rigged his reelection.

Last year, the US government caused the arrest and detention in Canada of the CFO (and daughter of the owner) of China’s biggest telco, Huawei Technologies Co., for bank fraud in helping Iran evade the economic sanctions it had imposed on Iran.

No amount of protests or threats from China has deterred the United States from pursuing the extradition of that executive to the United States to face charges for that offense.

In other words, the United States puts its money where its mouth is on matters or issues it strongly feels about. And the same resolve is clear on the issue of China’s seizure, reclamation and militarization of some islands in the South China Sea.

For obvious reasons, the United States will not publicly put the squeeze on the Philippines to persuade it to go along with the blacklist.

But as the saying goes, there are several ways of skinning a cat.

To show that it means business on the blacklist, the US government can, for example, order US-based banks to adopt stricter measures in the release of the proceeds of loans for infrastructure projects in the Philippines to prevent their finding their way to the blacklisted Chinese companies.

The United States is a “pro” when it comes to finding ways and means to make countries that refuse to see things its way to have a change of heart. And the Philippines has been through that experience many times before.

With an economy hobbled by a recession, the Philippines is very vulnerable to that kind of pressure, something it cannot ignore during these trying times.

The irony of the whole thing is, the blacklist indirectly helps the Philippines protect its maritime resources from a rapacious China and our own government appears to be sabo­taging that effort. INQ

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