DECEMBER 7, 1999 PRIVILEGE SPEECH OF ROILO GOLEZ ON CHINA'S INTRUSIONS IN THE SOUTH CHINA SEA

DECEMBER 7, 1999 PRIVILEGE SPEECH OF ROILO GOLEZ ON CHINA'S INTRUSIONS IN THE SOUTH CHINA SEA

Thank you very much, Mr. Speaker.

Mr. Speaker, twice this year a "minor" incident occurred within our exclusive economic zone, in a place of no apparent economic consequence whatsoever, but one that, nevertheless, created a great diplomatic uproar across the ocean. I am referring to incidents at Scarborough Shoal, only 16 kilometers in circumference, uninhabited and underwater during high tide.

From the energy-rich island grouping of the Spratlys, after grabbing Mischief Reef, also within our exclusive economic zone, our colossal neighbor, China, has turned its attention to this sandbank

located east of the South China Sea, 128 nautical miles off Zambales and around 1,000 nautical miles from Mainland China.

China first made much diplomatic noise over the accidental collision of our navy ship, BRP Rizal, conducting a routine maritime patrol in the area with a Chinese-manned fishing vessel. Last month, they raised another diplomatic issue when a Filipino navy landing ship, BRP Benguet, ran aground the shoal.

Why would a military behemoth and an emerging economic power such as China be so preoccupied with microscopic Scarborough Shoal which rightly belongs to us in the first place?

When US naval forces were still occupying Subic, the area was used for naval gunfire target practice by the US Navy. China did not make even a whimper.  Obviously, the reason was that the US Navy was too big to handle.

No less than the United Nations Convention on the Law of the Sea sealed off our territorial jurisdiction on Scarborough Shoal which is situated well within the 200-mile exclusive economic zone.

The answer, Mr. Speaker, is military posturing. Scarborough Shoal is part of China’s military projection at the South China Sea.

In Scarborough Shoal, China has found a perfect forward fortress at the east to back up its slow but nonstop political and naval march towards the north, where there are Korea, Japan, Taiwan, among others. China has unleashed a blob at the South China Sea, floating eastward, growing slowly, menacingly, nearly unopposed, devouring every speck, every shoal and reef along the way.

Chinese military contingents are already positioned in various reefs, islets, and rocks of the South China Sea Region, particularly in the Spratlys and the Paracels. Scarborough Shoal is just one more step forward in their bid to secure full control of the world’s second busiest international sea lane.

The US Energy Information Administration (US-EIA) has described the South China Sea Region as the world’s second busiest international sea lane, encompassing a portion of the Pacific Ocean stretching roughly from Singapore and the Strait of Malacca in the southwest, to the Strait of Taiwan in the northeast.

More than half of the world’s supertanker traffic passes through its waters. In addition, it contains oil and gas resources strategically located near large energy-consuming countries.

The Spratlys alone sit atop 25-billion cubic meters of natural gas, 370,000 tons of phosphorous, and 105 billion barrels of oil with an additional 91 billion barrels of oil in the James Shoal. At current prices, the oil deposits are separately worth around US $3 trillion or 40 times the Philippine GNP.

US-EIA said the potential energy resource locked in the water region had garnered attention throughout the Asia-Pacific Region, with East Asia’s economic growth rates being one of the highest in the world until the financial debacle. The region’s long-term economic growth prospects remain among the best despite the economic crunch.

But this economic growth will be accompanied by increasing demand for fuel, US-EIA pointed out. Over the next 20 years, oil consumption of developing Asian economies is expected to rise by four percent annually on the average, with two percent of the increase coming from China. If this growth rate is maintained, oil demand for these nations will reach 25 million barrels per day, more than double the current consumption levels – by the year 2020.

In sea commerce, the South China Sea also plays a crucial role, serving as a major water link. It is estimated that tanker traffic through the Strait of Malacca leading into the South China Sea is more than three times greater than the Suez Canal traffic, and well over five times more than that at the Panama Canal. Virtually, all shipping that passes through the Malacca and the Sunda Straits must pass near the Spratlys.

Shipping in the South China Sea is denominated by raw

materials en route to East Asian countries. Tonnage via Malacca and the Spratlys is dominated by liquid bulk such as crude oil and liquefied natural gas (LNG) with dry bulk, mostly coal and iron ore, in second place. Nearly two-thirds of the tonnage passing through the Strait of Malacca and half of the volume passing the Spratlys, is crude oil from the Persian Gulf. Oil flows through the Strait of Malacca rose to 8.2 million barrels per day in 1996, and the rising Asian oil demand could result in a doubling of these flows over the next two decades.

LNG shipments through the South China Sea constitute twothirds of the world’s overall LNG trade. Japan is the recipient of the bulk of these shipments. In 1996, Japan was depended upon

LNG for over 11 percent of its total energy supplies, South Korea

for over seven percent of its energy consumption and Taiwan, over four percent.

Competing territorial claims over the South China Sea and its resources are numerous. But in most cases, China figures prominently, to wit:

1. Indonesia’s ownership of the gas-rich Natuna Island group was undisputed until China released an official map indicating that the Natunas were in the Chinese-claimed waters.

2. The Philippines’ Malampaya and Camago natural gas and condensate fields are in Chinese-claimed waters.

3. Many of Malaysia’s natural gas fields located offshore of Sarawak also fall under Chinese claims.

4. Vietnam and China have overlapping claims to underdeveloped blocks off Vietnamese coasts. A block referred to

by the Chinese as Wan Bei-21 (WAB-21) west of the Spratlys is being claimed by the Vietnamese in their blocks, 133, 134 and 135. In addition, Vietnam’s Dai Hung (Big Bear) oil field is at the boundary of waters claimed by the Chinese.

Economic and political strength is obviously the Chinese objective. The South China Sea Region offers a formidable wellspring that could transform a less-advanced state into a world power, surpassing even existing ones.

This should explain why China refuses to settle the Spratlys issue amicably. It has been snubbing other legitimate claims over the region, bolstering its strong-arm claim that all islands in the South China Sea are part of China under an antiquated colonial belief during the Ching Dynasty.

A book issued after the Chinese embassy bombing in Belgrade entitled: The 21st Century China’s Super Aircraft Carrier states, and I quote:

A country’s pride and international status do not come from nothing. They have to be backed up by strength… The amount of natural gas in the South China Sea taken every year by foreign powers is worth tens of billions of US dollars. A vast area of territorial waters has also been occupied and controlled, depriving our fishermen of their means of living.

Last March, buckling under pressure to stop increasing its presence in the Spratlys, China sent its Foreign Assistant Minister Wang Yi to this country. This was the first diplomatic act it initiated since 1995 when Filipino fishermen discovered Chinese installations at the Mischief Reef.

That meeting, however, only demonstrated further China’s resolve to keep the Spratlys for itself. Wang later admitted that they cannot share the facilities constructed in Mischief Reef. And even as China insisted that structures are merely shelters for Chinese fishermen, local newspapers the next day splashed photos of a happy, crew-cut male crowd in Mischief Reef and their banner scripted with “Welcome to our Leaders.”

The same thing has happened in the recently concluded two-day ASEAN summit. Chinese Prime Minister Zhu Rongji arrived with aplomb and gestures of peace saying, and I quote: “Beijing

would be a good neighbor.” He left without even carefully looking up the proposed code of conduct.

The Chinese strategy is apparently not to enter into any multilateral agreement to solve the Spratlys issue and other territorial disputes in the South China Sea Region. Such approach would bind its hands. It has instead insisted on bilateral talks. Because by doing so, it can delay resolution of the issue, apply political suasion and wring out of the deal a poor, militarily ill-equipped nation such as ours, the Philippines.

They had assured us, sweet-talked our government into believing that we have nothing to be worried about in that part of our territorial boundary and beyond. But even as they do it, they had not stopped putting up more barracks, sending more troops and installing more military equipment and facilities.

Alone, we cannot do it. We have to bring our ASEAN neighbors and other sympathetic allies to take stock of the situation. The Spratlys and Scarborough are not only for the local headlines. They loom as large as an international crisis, a veritable flashpoint that could make Kosovo a child’s game in comparison. Let me point out why.

A report by the Wisconsin Project on Nuclear Arms Control

entitled: US Exports to China, 1988 - 1998: Fuelling Proliferation calculated that total US exports of strategic goods to China had reached $15 billion in the 10-year period. The strategic technology transfer includes equipment used in nuclear weapons production, cruise missiles, aircraft, radar and other military goods.

Dual-use equipment was licensed directly to leading Chinese nuclear, missile and military sites, the main vertebrae of China’s strategic backbone. Several of the Chinese buyers later supplied nuclear, missiles and military equipment to Iran and Pakistan.

Last May, General Zhang Wannian, vice-chairman of the Central Military Commission, announced the Chinese Communist Party Central Committee and State Council’s approval of a $10-billion allocation to implement the so-called “strategic” request made by the Ministry of National Defense and Armed Services General Staff. The requests involve additional high-tech and strategic nuclear weapons.

The reason given for the large outlay is to empower China to counterattack possible military strikes from US after the  Yugoslavia bombing. I quote the Chinese general’s speech:

        "US armed intervention in Yugoslavia is an important mark of the development of US hegemony. The possibility of a third world war has increased with the havoc wreaked by the United States in practicing the new gunboat policy and the spread of the concept of common values practiced by the US-manipulated NATO. Therefore, we must upgrade the modern high-technology weapons and equipment of the three armed services while developing the economy."

Of the $10 billion, China earmarked $9.7 billion to boost its nuclear second-strike capabilities, including miniaturization of nuclear warheads for submarine launch and the development of missiles capable of carrying more than one warhead and hitting multiple targets.

A report by the Congressional Select Committee led by US Congressman Cris Cox concluded that there are more than 3,000 companies in the US fronting for the Chinese to obtain American technology for military purposes. The report stated that China continues to use hundreds of US-based front companies, many of which are concentrated in high-tech centers in California and New England with connections to Chinese intelligence agencies and military industrial corporations. In addition, China has required thousands of students, tourists and other visitors to the US to seek bits of information that the military could use.

Former CIA Director John Deutch, who chairs the US Commission on Nonproliferation said that a possible link between China and the US capital markets for both military and commercial purposes exists. Currently, issues of US financial securities are not subject to a national security review.

China is also actively into research and testing a full range of information warfare. During the air campaign against Serbia, computer hackers with addresses in Mainland China effectively

mounted a cyberblitz against US and North Atlantic Treaty Organization (NATO) forces. Lieutenant General William

Donahue, commander of the US Air Force Communication and Information Center at the Pentagon, recalled that hackers from China and Serbia “came at us daily, hell-bent on taking down NATO networks.”

These and a lot more preparation details which I am leaving out for now are reportedly ongoing and have led Taipei’s Defense Minister Tang Fei to say that China will have air superiority over

the Taiwan Strait in a short span of three to five years.

US Congressman Dana Rohrabacher has testified before the Senate Armed Service Committee about a developing threat to US security in Panama where a Chinese company, Hutchison Whampoa, has a 50-year lease on the Atlantic Pacific Ocean ends of the Canal. According to him, the company’s chairman, Li Ka-Shing, is closely connected to Beijing leaders. “Despite being a billionaire and international tycoon, Li is a prominent player in the Communist Chinese inner leadership circle,” Rohrabacher said. Li is a founding member of CITIC which is the main funding arm of the Chinese government. CITIC chairman Wang Jun is also the Chairman of the Poly Group which was created by the People’s Liberation Army for arms trading abroad and indicted for illegally smuggling thousands of weapons into the US that are intended for street gangs. Li has also been listed as a director and close business partner of giant Chinese government shipping firm, COSCO, which, in addition to commercial transport, acts as the merchant marine for the Chinese military.

Mr. Speaker, a Hong Kong newspaper reported that the Chinese Navy is now refitting COSCO merchant ships for use in war. These COSCO container ships can be used for both sea and ground operations, ferrying troops and armored vehicles to launch attacks or land on beachheads. In addition, some can be fitted with large-caliber artillery and multi-barrel rocket launchers, medium- and small-caliber anti-aircraft guns and guided missiles.

The ships can also be used for laying anti-ship mines and antisubmarine warfare and for the installation of electronic-deception devices. Of course, the very same vessels, out of the South China Sea from the Mischief Reef and probably from Scarborough Shoal, can be deployed in a naval blockade of Taiwan and serve as a platform for attack helicopters or jump-jets and unmanned aero vehicles (UAVs).

Like the US, we experience other Chinese actions that do not appear military in nature but could have very serious security implications. We experience serious drug problems because of shabu coming from the Mainland. Most drug traffickers arrested are Chinese nationals.

The Americans cited the trafficking in of illegal drugs similar to shabu into Japan coming from North Korea but believed to be manufactured in China. These drug manufacturers could generate hard currency for China and help in the military buildup while weakening the societies that are the landing points of the harmful substances. It is the classic strategy of hitting two birds with one stone.

Then, we have a huge inflow of illegal Chinese nationals into the country. The Bureau of Immigration and Deportation recently reported the entry of around 120,000 illegal Chinese nationals. Even the Chinese-Filipinos here are alarmed about this development as they see these Chinese nationals scurrying around in many places including the Divisoria market. There is also an emerging pattern of economic sabotaging caused by the proliferation of cheap, smuggled goods made from China. The Economic Intelligence and Investigation Bureau has been hauling in sizable amounts of fake cigarettes and cheap garments from China that could undermine and kill local Filipino producers.

Today, Chinese toys, shoes, garments and finished oil products flood the Philippine market. Our balance of trade shows that from January to September of this year alone, our exports to China totaled only $395 million. In contrast, imports from China reached $814 million, representing a trade imbalance of about $418 million. Apparently, we are witnessing a very politically and economically aggressive China, and the Philippines is at the losing streak in this Chinese showdown.

Last week, the Philippine Navy finally extricated its grounded ship at Scarborough. The world could see this as a retreat in the face of a growling, giant nation.

Mr. Speaker, it is apparent from the foregoing that what the Philippines is facing is not a gentle, lovable Chinese panda, but a fire-breathing highly awakened Chinese dragon. It is a delicate, complex and crucial policy issue that we must resolve for the sake of the next generation. To me, it is a security threat that could overshadow all threats that we faced in the century that is about to end.

Thank you very much, Mr. Speaker. Thank you very much,