Provider of in-depth & balanced analysis on hot issues around the world

Ladies and Gentlemen, It is very special for me to be in Manila and once again to experience first-hand the famous Filipino hospitality. Each time I visit, I am struck by the warmth, intelligence, and honesty of the people I meet. You make everyone feel at home, even 10,000 kilometres from home. While visiting your beautiful country, I have also learnt a proverb of yours. It says: ‘Be like a rice stalk: the more grain it bears, the lower it bows'. I believe a country's proverbs can tell a lot about its people.  And this proverb certainly describes the people of the Philippines: always humble, especially in success. Right now, the Philippines is booming. Thanks to your resilience, dynamism, and work ethic, your economy grew by close to 8% last year. You are among the fastest growing emerging markets. Your Development Plan, as outlined by President Marcos, is prioritising good governance, cutting red tape, and speeding up permitting for strategic investments, for example in renewables and semiconductors. Not only does this make the Philippines an even more attractive trade and investment destination for European firms, but Filipino companies are also beginning to thrive in the European market. IMI, for example, has expanded its micro-electronics business to become the 14th largest manufacturing solutions provider in Europe. Or consider the Philippine port-handling giant, ICTSI. It operates a container terminal in the Adriatic Sea, and recently signed another 30-year lease to operate a port in the Baltic. It is worth mentioning, as well, that there are around 50,000 Filipino sailors manning ships with European flags. You make trade happen. And you never boast about any of this. So allow me to begin by thanking all the Filipinos who are contributing every day to the friendship and economic partnership between Europe and the Philippines. These examples show that the ties between our countries are already strong. But the time has come to lift our partnership to the next level. Because we have much more in common than our geographic distance would suggest. I see three main fields where we share interests and values, and we are just made to work together. First of all, international security. Both the Philippines and Europe believe in a global order that is based on the principles of the UN Charter, such as the respect for every nation's sovereignty and territorial integrity. And this order is now threatened, in both our regions. Second, economic transformation. We are both modernising our economies, with a focus on the green and digital transitions. And in parallel, we are de-risking our trade and investment. Europe and the Philippines are natural economic partners more than ever before. And third, on democratic values. Because economic progress can only be coupled with social progress, for all people in our societies. Let me begin with security. The Philippines have helped build the rules-based global order, as a founding member of the United Nations, ASEAN, and the World Trade Organisation. And last year, you stood up to uphold the global order, when Russia sent its tanks into Ukraine. Both the European Union and the Philippines – along with over 140 countries – have clearly condemned Russia's war of aggression against a sovereign, independent member of the United Nations. And we Europeans will continue to support Ukraine and to uphold the UN Charter for as long as it takes. But another permanent member of the UN Security Council – China – has yet to assume fully its responsibility under the UN Charter to uphold the sovereignty and territorial integrity of Ukraine. This is happening against the backdrop of China's more assertive stance in your region. Europe has constantly called on China to respect the sovereign rights of states within their exclusive economic zones. China's show of military force in the South and East China Seas and in the Taiwan Strait directly affects the Philippines and our other partners in the region. But it could also have global repercussions. And any weakening of regional stability in Asia, the fastest-growing region in the world, affects global security, the free flow of trade, and our own interests in the region. So whether we talk about Ukraine or about the South China Sea, our security is connected. That is why the EU has been enhancing its engagement in the Indo-Pacific. We aim to promote a free and open Indo-Pacific, to reinforce respect of international law and address global challenges. With the Philippines, we are deepening our security partnership, particularly on maritime security and on cyber cooperation. And we want to do more.  Ladies and Gentlemen, We cannot choose our neighbours, but we can choose who we do business with, and on what terms. This leads me to my second point. We, Europeans, are clear-eyed when it comes to diversifying and de-risking our trade and investment. We made the mistake with Russia, thinking that we could manage our geopolitical differences through business. Before the full-scale invasion of Ukraine, Europe relied heavily on energy imports from Russia. When the Kremlin started the war, Russia tried to blackmail us with cutting its gas supplies. 80% in eight months. This triggered a severe energy crisis, but we withstood. We saved energy, we diversified to like-minded partners, and we invested massively in home-grown renewable energy. Today, we are stronger than before and more independent. And we have learnt our lesson. We will not make the same mistake again. When it comes to the key inputs needed for our competitiveness, such as critical raw materials, we should never rely on one single supplier. This is the core of our de-risking strategy. And I know that this is not only Europe's strategy. The Philippines, for instance, exports 90% of its nickel ore to China, instead of processing it inside the country to create more jobs and added value. But this can change. That is also why I am here in Manila today. The Philippines and the EU have a major opportunity to step up our partnership on both trade and investments. Let me focus on investments, first. Europe has just launched a plan for boosting infrastructure investments in strategic sectors in partner countries. It is called Global Gateway, and for ASEAN, we have put forward an investment package worth EUR 10 billion in public funds until 2027. But it is not only about the money. It is also about the method. European investments come with the highest environmental and labour standards, as well as with a strong focus on creating local value chains. Take the raw materials examples. Unlike other foreign investors, we do not want to invest only in the extraction of raw materials. We can also support you in building local capacity for processing, powered by new clean energy infrastructure. Global Gateway seeks to create good jobs right here because this also strengthens our supply lines. Global Gateway seeks to promote investments that move Filipino sectors up the value-chain. And we look forward to working with the Asia Development Bank, based right here in Manila.  You are experts in the region, and we share similar priorities.  So it is only natural that we work hand-in-hand. Moreover, the Philippines are a natural leader in digital innovation. The Philippine Venture Capital Report of 2023 observed an explosion of new activity in the country's start-up ecosystem. Your e-commerce market value increased by 33% in the last three years alone. The people of the Philippines are five years younger than the global average. So it is no surprise that your economy is so dynamic. The Philippines can become a new digital hub in the region. But as entrepreneurs everywhere, Filipino entrepreneurs need infrastructure investment. This is where Global Gateway can truly make a difference. And we are already working on the ground, or rather, in space. Together with the Philippines Space Agency, we are building the first earth observation system in Southeast Asia. In parallel, Nokia is investing in 5G infrastructure. Why does this matter to Filipino innovators? Because the European Copernicus satellites will be made available for space-based services here in the Philippines, like disaster risk management against typhoons, or satellite navigation, which is fundamental for aviation, drones, and autonomous driving. This is part of a larger digital economy package that we are finalising with the government. We are even exploring a possible extension of the new fibre submarine cable that will connect Europe to Japan via the Arctic. We would create a direct data connection between our regions to de-risk and open up new opportunities for both our economies. New investments could also lead the way for more trade between Europe and the Philippines. The EU is your fourth largest trading partner, accounting for nearly 8% of your trade. This is thanks to our current trade preferences scheme. But there is much untapped potential in our trade relationship. Let me give you an example: A few months ago, I was in South Korea. There I saw the impressive positive impact of the trade deal we have concluded. In a little over a decade, EU trade with Korea has more than doubled. This is what happens when you give people and business the opportunity to work across borders. New doors open for innovation. And the most important: People benefit. So let us make progress. Our trade agreements with Singapore and Vietnam are already delivering. And Europe wants to conclude free trade agreements with other ASEAN countries. I believe, like President Marcos, that the timing and conditions are right for us to solidify our bilateral trade relations. That is why we have taken the decision to relaunch our negotiations for a free trade agreement between the Philippines and the EU. Our teams will begin right away a scoping process to identify what we need to do to overcome any remaining gaps before we can get back to negotiating. This should take no more than a few months. Let us seize this window of opportunity, and make it work. Trade agreements today are about much more than eliminating tariffs and quotas. They are about shared commitments, values, and principles, including on human and labour rights. And this leads me to my last point. Our democracies – all of them – are work in progress. None of them is perfect. But they are all perfectible. Your new government has taken some important steps for human rights here in the Philippines. Each one of our democracies is different. But we all share the same universal values, and the same direction of travel. The path towards better democracies is one that we can and should walk together. Ladies and Gentlemen, The Philippines and the European Union may stand at the opposite sides of the world, but our destinies are linked more than ever before. We see it with geopolitics and climate change. We see it in the connection of our value chains. We have a similar outlook on the Indo-Pacific. And we have strong economic ties. Europe wants to be a trusted partner to the Philippines as it grows into its economic potential. We want to be partners who stand eye to eye. Partners who put people and their values first. Having met so many wonderful people here in the Philippines, who are proud of their country, hardworking, and humble, I am excited for what we can achieve together. I know you are proud of your Bayanihan spirit. And I really hope that we can build the same spirit of community between us, in Europe and the Philippines. Salamat, thank you very much and have a wonderful evening.

Since 1999, China has expressed its readiness to sign the SEANWFZ Protocol and is the only Nuclear Weapon State willing to do so without reservations. This Long Read explores China’s strategic considerations behind this stance. INTRODUCTION The Southeast Asia Nuclear Weapon-Free Zone (SEANWFZ) or Bangkok Treaty was signed on 15 December 1995 by the ten Southeast Asian states and entered into force on 28 March 1997. The States Parties to the Treaty are therewith obliged to ensure peaceful use of nuclear energy, and not to develop or acquire nuclear weapons, test nuclear explosive devices, or dump radioactive wastes within the zone. The Treaty includes a Protocol that is open to accession by the five recognised Nuclear Weapon States (NWS or P5), namely China, France, Russia, the United Kingdom (UK) and the United States (US), whose support and recognition are critical to the efficacy of SEANWFZ. The NWSs’ accession to the Protocol would entail their obligation to respect the Treaty, refrain from acts that may violate the Treaty, and provide negative security assurances (NSA), i.e., not use or threaten to use nuclear weapons against the SEANWFZ States Parties and within the zone. SEANWFZ is one of five nuclear weapon-free zones (NWFZ), which are seen as providing “the regional pathway” towards the ultimate goal of a nuclear weapon-free world. SEANWFZ was also considered an interim measure towards achieving the 1971 Zone of Peace, Freedom and Neutrality (ZOPFAN). Spearheaded by Malaysia, ZOPFAN aimed to achieve a Southeast Asia “free from any form or manner of interference by outside powers” but its realisation has been elusive, given that Southeast Asia is historically and geographically intertwined with the major powers’ strategic interests, and some regional states still maintain security alliances or close security ties with external powers. ZOPFAN’s ahistorical idealism was embedded in SEANWFZ’s key provisions regarding its expansive geographical coverage and the extensive scope of the NSA. This is the underlying reason for the lack of progress in getting the P5 – except China – to sign its Protocol up to now. China has been an outlier among the P5 in that it has expressed its intent to sign the Protocol since the late 1990s, shortly after the Treaty’s entry into force. The regional security environment has since deteriorated drastically with the intensification of US-China strategic tensions. Yet, China’s interest in SEANWFZ remains strong, and arguably has even increased as it sees itself as the target of a US-led strategy of “containment, encirclement and suppression”. This Perspective examines the legal and geopolitical intricacies of SEANWFZ that underlie China’s longstanding willingness to sign its Protocol in contrast to other NWSs. It argues that beyond non-proliferation considerations, supporting SEANWFZ serves China’s security interests amid its heightened tensions with the US and its allies. THE LONG JOURNEY OF GETTING THE P5 TO SIGN THE PROTOCOL The SEANWFZ States Parties – which are also the ten ASEAN member states – have held many consultations with the NWSs to persuade the latter to accede to the Protocol. The NWSs have objections and concerns regarding some substantive provisions of the Treaty and its Protocol (Table 1). • Expansive geographical scope Article 2 of the SEANWFZ Treaty states that the Treaty and its Protocol shall apply to the territories, exclusive economic zones (EEZ) and continental shelves (CS) of its States Parties. The inclusion of EEZ and CS is a unique feature of SEANWFZ that exceeds the standard coverage of only territories as in other NWFZs. It also goes beyond the 1982 United Nations Convention on the Law of the Sea (UNCLOS) which prescribes the sovereign rights of a coastal state only with respect to the living and non-living resources in its EEZ and CS. The legal regime of EEZ and CS under UNCLOS is a delicate balance between the rights of coastal states and the freedoms of ocean user states. It remains a subject of contention between the majority of UN members, which hold that all states have the right to conduct military operations in any EEZ, and a minority of around 20 states (including China and some Southeast Asian states such as Indonesia, Malaysia and Thailand), which impose restrictions on military operations by foreign powers in their EEZ. The inclusion of EEZ and CS in the geographical coverage of SEANWFZ is even more problematic due to the unresolved competing territorial and maritime claims in the South China Sea (SCS) among some Southeast Asian states and China. • Port visits and transit rights Article 3.2 of the Treaty forbids a State Party from developing, manufacturing, possessing, having control over, stationing, transporting, testing or using nuclear weapons. The US, UK and France maintain that there is a conflict between this article and Article 7 on the prerogative of a State Party to allow visits by foreign ships/aircraft to its ports/airfields or their transit in its territorial sea. These NWSs want to ensure that the Treaty would not impinge on their port visits and transit rights in the region (since these NWSs maintain the policy to neither confirm nor deny [NCND] the presence of nuclear weapons at a given location, the possibility that their visiting/transiting ships/aircraft in the region are nuclear-armed cannot be entirely ruled out). They insist on a clarification to ensure that Article 7 takes precedence over Article 3.2.• Extensive negative security assurances The NSA clause in the SEANWFZ Protocol requires that the NWSs commit not to use or threaten to use nuclear weapons against any SEANWFZ State Party and not to use or threaten to use nuclear weapons within the zone. The latter part – “within the zone” – is problematic to the NWSs on two levels. First, the geographical application of SEANWFZ is not only expansive (involving the EEZ and CS of its States Parties) but also indeterminate (because of the territorial and maritime disputes in the SCS). Second, it would mean that an NWS cannot use nuclear weapons against another NWS within this expansive and indeterminate zone and cannot use nuclear weapons from within this expansive and indeterminate zone against targets outside the zone. This is well beyond the NSA that the NWSs traditionally extend to other NWFZs, which is limited to not using or threatening to use nuclear weapons against the territories of the zonal countries. • China’s sovereignty and maritime interests Unlike France, Russia, the UK and the US (the P4), China rarely stakes out its position with regard to the above-mentioned outstanding issues. China’s only stated concern vis-à-vis SEANWFZ is that the Treaty and its Protocol might contradict or undermine its territorial and maritime rights and interests in the SCS. To address this concern, during the consultations in 2010-2012, the SEANWFZ States Parties and China agreed that they would sign a Memorandum of Understanding (MoU) stating that the Treaty and its Protocol shall not affect their respective territories, EEZ and CS. Table 1: Outstanding Issues Regarding NWS’s Accession to the SEANWFZ Protocol Source: Author Despite several consultations between the SEANWFZ States Parties and the P5 held in the late 1990s and early 2000s, these outstanding issues were not resolved, and the matter was put on the backburner. The momentum to get the P5 to sign the Protocol was revived in 2010-2011, in part due to the importance that the Obama administration accorded to strengthening the international non-proliferation regime. To address the outstanding issues, the SEANWFZ States Parties and the P5 negotiated a revised Protocol to the effect that: (i) in the EEZ and CS of the SEANWFZ States Parties, the P5 shall adhere to only Article 3.3 of the Treaty that bans the dumping of radioactive material/wastes; (ii) the SEANWFZ States Parties shall retain the prerogative to allow port visits and transit of foreign ships/aircraft pursuant to Article 7; and (iii) the P5’s NSA commitment shall be limited to not using or threatening to use nuclear weapons against the SEANWFZ States Parties. The scheduled signing of the revised Protocol by the P5 in July 2012 was forestalled by the reservations lodged at the eleventh hour by France, Russia and the UK. Some reservations by France or the UK state that accession to the Protocol shall not impair a NWS’ right of self-defence; a NWS can retract/review its obligations vis-à-vis a SEANWFZ State Party that ceases to be a party to the NPT, or breaches its non-proliferation obligations under the SEANWFZ Treaty, or develops other weapons of mass destruction. The most controversial reservation was made by Russia, which stated that it would not consider itself bound by the Protocol if a Southeast Asian state allowed foreign ships/aircraft carrying nuclear weapons to enter its territorial waters/airspace or to visit its ports/airfields. Given the NCND policy of some NWSs, the Russian reservation would put undue pressure on the SEANWFZ States Parties and challenge their prerogative to exercise their rights under Article 7. Due to the objection of some SEANWFZ States Parties to some or all of these reservations, the P5’s accession to the Protocol was put on hold, and the issue has been in hiatus since 2012. CHINA’S POSITION AND INTEREST VIS-À-VIZ SEANWFZ China’s readiness to sign the Protocol is a longstanding position that was registered as early as 1999. Beijing has indicated on various occasions that it is willing to be the first NWS to sign the Protocol, and to do so without reservations. The Chinese intent was reiterated by Chinese Foreign Minister Qin Gang during his meeting with the ASEAN secretary-general in March 2023. This article argues that China adopts a favourable approach towards SEANWFZ because the Treaty fits in with its nuclear doctrine and national security strategy, and accession to the Protocol could provide both geostrategic and diplomatic dividends for China. China’s No First Use policy China’s nuclear doctrine has been evolving in keeping with its growing nuclear capabilities and the changes in its external security environment. Yet, it still retains the self-defensive posture and the policy of unconditional No First Use (NFU) of nuclear weapons, which is reiterated in China’s 2019 Defence White Paper: “China is always committed to a nuclear policy of no first use of nuclear weapons at any time and under any circumstances, and not using or threatening to use nuclear weaponsagainst non-nuclear-weapon states or nuclear-weapon-free zones unconditionally (emphasis added).” To China’s credit, it is the only P5 country maintaining an unconditional NFU policy, which makes the Chinese nuclear doctrine less aggressive than those of other NWSs. Since China’s NSA commitment to Southeast Asian countries is well within the bounds of its NFU policy, its accession to the Protocol is more straightforward than that of the P4. China’s sea-based nuclear force China’s self-defensive nuclear policy seeks to maintain a “lean and effective” nuclear deterrence based on first-strike survival and second-strike capabilities. In the nuclear triad of an NWS – i.e., land-based nuclear missiles, strategic bombers, and ballistic missile submarines (SSBNs) – SSBNs are considered “the primary guarantor of second-strike capabilities” given their advantages in stealth and survivability. However, noisiness is the Achilles’ heel of Chinese SSBNs – from the Type 092 Xia-class in the 1970s-1990s to the newer Type 094 Jin-class – which makes them vulnerable to anti-submarine warfare and limits their ability to navigate far beyond the Chinese shores. It should be noted that the Chinese submarine fleet is home-ported at Yulin Naval Base on Hainan Island in the SCS; given its expansive claims in the SCS, China could justify the presence and operations of its SSBNs in these waters as falling well within its sovereignty and jurisdiction. Meanwhile, if the P4 respected the expansive geographic coverage of the SEANWFZ Treaty and the extensive NSA in the original Protocol – which is extremely unlikely, if not impossible – it would significantly undercut the deployment of their nuclear assets – particularly SSBNs – in a large swathe of maritime area in China’s southern vicinity, which would in turn enhance China’s strategic security and the defence of its sea-based nuclear deterrence. China’s anti-access/area-denial strategy China’s support for SEANWFZ is rooted in the strategic assessment that such an extended zone – if implemented – would contribute to the country’s anti-access/area-denial (A2/AD) strategy which is aimed at denying the military power projection of superior adversaries in China’s near neighbourhood. Apart from investing in anti-ship, anti-air, anti-ballistic weapons and anti-submarine capabilities for its A2/AD system, China has also fostered regional arrangements and agreements that could be leveraged to delegitimise or discredit the military presence of foreign powers in the region. These include the SEANWFZ Treaty, as well as China’s proposal for a treaty on good neighbourliness, friendship and cooperation with ASEAN, China’s attempt to prevent Southeast Asian countries from conducting military exercises with foreign powers through a code of conduct in the SCS (COC), and its recent Global Security Initiative that embraces the ‘indivisible security’ concept. China’s sovereignty and maritime claims in the SCS Theoretically, if all NWSs accede to the SEANWFZ Protocol, they would be bound by the same legal obligations therein. However, the strategic security effect for the P4 and China would be significantly different because only the latter is located within the region. While the P4 are concerned about the undefined geographical scope of the zone due to the ongoing territorial and maritime disputes in the SCS, such ambiguity may work to China’s advantage. China has excessive sovereignty and maritime claims within its Nine-Dash Line that covers around 90% of the SCS. The coverage of China’s claims has been extended further with its ‘Four Sha’ concept whereby China asserts all maritime zones, including internal waters, territorial seas, contiguous zone, EEZ and CS, based on the so-called “four outlying archipelagos” in the SCS (Pratas, Paracels, Spratlys and Macclesfield Bank), which it is not allowed to do under UNCLOS as a continental state. China has demanded that an MoU be signed to ensure that neither the Treaty nor the Protocol shall affect its territory and maritime entitlements. This would effectively guarantee China’s free hand in defining the geographical scope of SEANWFZ in a flexible and selective manner that best serves its interests. For example, China may challenge nuclear deployments of other NWSs in the zone as violations of SEANWFZ but it can justify the presence of its nuclear assets in the zone on the grounds that such deployment takes place within China’s (claimed) territory and jurisdiction. Responsible nuclear weapon state discourse Since France, Russia, the UK and the US do not accept the extraordinary terms of the SEANWFZ Treaty and its original Protocol regarding the inclusion of EEZ and CS and the NSA commitment within the zone, SEANFWZ has no legal effect in preventing these countries from deploying their nuclear assets in regional waters beyond the territories of its States Parties. However, by signalling its readiness to sign the Protocol first and without reservations, China can turn SEANWFZ into a discursive and political weapon to project itself as a responsible nuclear power and claim the moral high ground in criticising the nuclear policy of the US and its allies as well as their nuclear assets in regional waters. Hence, SEANWFZ – and China’s interest in signing its Protocol – has gained greater salience in China’s regional diplomacy after the launch of the Australia-UK-US (AUKUS) tripartite security partnership in 2021, which aims to provide Australia with nuclear-powered (but conventionally armed) attack submarines. The Chinese government believes that AUKUS would “form an underwater military encirclement against China”. It has also argued that AUKUS violates the nuclear non-proliferation regime and has invoked SEANWFZ to criticise the deal. In March 2023, the Chinese foreign ministry spokesperson said that AUKUS “undercuts ASEAN countries’ effort to establish SEANWFZ and seriously undermines the ASEAN-centred regional cooperation architecture in East Asia”. Chinese commentaries state that China’s willingness to sign the Protocol is a manifestation of its “due responsibility as a major power that seeks peaceful development” and contrasts its position with the “irresponsible behaviours of the AUKUS countries”. CONCLUSION The SEANWFZ States Parties maintain a longstanding position that all outstanding issues with the NWSs should be resolved in a ‘package deal’ so as to enable their accession to the Protocol concurrently. Therefore, China has not been able to sign the Protocol despite its express intent to do so for decades. However, the rapidly deteriorating global strategic environment may warrant a rethink by the SEANWFZ States Parties on the ‘package deal’. The US and Russia – the two largest nuclear powers – have taken steps to walk back from their arms control obligations, including US withdrawal from the Intermediate-Range Nuclear Forces (INF) Treaty and Russia’s suspension of its participation in the New START. Closer to home in East Asia, the race to develop nuclear capabilities is gathering pace. China is expanding and upgrading its nuclear arsenal and may become an atomic peer of the US and Russia by the 2030s, according to the US’ 2022 Nuclear Posture Review. America’s withdrawal from the INF raises the concern that Washington may introduce short-range ballistic and cruise missiles in Asia. The US’ Asian allies, while stopping short of developing nuclear weapons, are re-arming themselves to deal with nuclear threats (Australia with nuclear-powered attack submarines, Japan with counter-strike capabilities, and South Korea with submarine-launched ballistic missiles and its public debate on the need to acquire nuclear weapons). They are also seeking to consolidate the US’ nuclear deterrence umbrella in the region. Most ominously, Russia’s nuclear blackmail in its war against Ukraine draws home the vulnerabilities of non-nuclear-weapon states in the face of great-power bullying. Against this backdrop – and with China’s diplomatic activism – the SEANWFZ States Parties may drop the ‘package deal’ approach to pave the way for China’s accession to the Protocol. After all, it is a common practice that NWSs accede to other NWFZs’ protocols at different points of time. Apart from China’s NSA – which is already covered under its NFU policy – China’s accession would add a legal guarantee that it would not dump radioactive wastes in the zone, exert political pressure on other NWSs to follow suit, and raise the profile of SEANWFZ at a time when “the risk of nuclear weapons use is higher than at any time since the Cold War”. Yet, China’s accession would raise several legal and policy questions for the SEANWFZ States Parties. First, should China sign the original Protocol or the revised Protocol? Since the original is a non-starter for the remaining NWSs, using the revised Protocol would minimise legal complications when the SEANWFZ States Parties re-negotiate with them in the future. It is also important to ponder the implications of the above-mentioned MoU which would give China a free hand in defining the geographical scope of SEANWFZ in ways that serve its interests, possibly at the expense of those of SEANWFZ States Parties and other NWSs. Last but not least, China’s accession to the Protocol would be a strategic and diplomatic win for Beijing in its enduring quest to displace external military power from the region. In the final analysis, China values SEANWFZ not only because it is a regional non-proliferation regime per se but because its terms serve China’s strategic security in discrediting the nuclear forward deployment by foreign powers in China’s near neighbourhood. Now, as before, SEANWFZ States Parties remain confronted with the chasm between their nuclear weapon-free aspirations and their security interests from a balance of power in the region. This is as much a problem of strategic incoherence among the States Parties themselves as it is about their substantive differences with the NWSs.

The further strengthening of ties between the US and the Philippines is indicative of the breadth and scope of maritime security arrangements in the region.Only four months into the year and 2023 has already been very busy in terms of United States (US) engagement in the Indo-Pacific, particularly in East Asia and the South China Sea. During Philippine President Ferdinand Marcos Jr’s recent visit to the US, alongside reaffirming the continuation of the broader ambit of bilateral partnership, the two countries established ‘ground rules’ on US-Philippine defence cooperation on 3 May. The US and the Philippines have a long-standing treaty partnership that dates back to the post-World War II era. The treaty partnership began with the signing of the Mutual Defense Treaty (MDT) in 1951, which established a framework for military cooperation and mutual defence between the two countries, making Manila the oldest ally of Washington in the region. Beijing, quite expectedly, has expressed its disapproval of this new development characterising it as Washington’s attempt at drawing Southeast Asian nations into a small clique to contain China. Beijing’s usual reaction whenever the US conducts outreach in the region comprises various versions of the narrative that Washington is forcing countries to sacrifice their sovereign identities by becoming pawns in the latter’s efforts to destabilise the region and turn countries against China. Mao Ning, a spokesperson for the Chinese Foreign Ministry stressed that the South China Sea is not a hunting ground for countries outside of it. Meanwhile, the state-run foreign-language news channel, CGTN, warned against President Marcos’s ‘dangerous courtship.’The reinforced scope of the US-Philippines defence partnershipInterestingly, in addition to reiterating US commitments as Manila’s treaty partner and referencing the strong need for maintaining peace and stability in the South China Sea, the joint statement noted that the two sides “affirm the importance of maintaining peace and stability across the Taiwan Strait” as an indispensable element of global peace and security. Defence ties between the US and the Philippines have indeed expanded to include, first the South China Sea and now, the Taiwan Strait. What this indicates is a steady consolidation of security frameworks in the region that would form bulwarks against Beijing’s repeated and expanding overtures into the South China Sea and pressures on Taiwan. Given that the Taiwan Strait lies at a distance of only 800 miles from Manila, it is not surprising that the security of the Strait has been included under the expanded purview of Washington and Manila’s treaty partnership. Under the basic framework of the MDT, the US and the Philippines agreed to come to each other’s aid in the event of an attack by an external aggressor. The MDT has been an important part of the US-Philippines relationship, providing a basis for close military cooperation and joint training exercises. The US has provided military aid and assistance to the Philippines, helping to modernise its armed forces and improve its capabilities in areas such as maritime security and counterterrorism. Despite episodic friction over issues such as human rights and the rule of law, the US-Philippines treaty partnership remains an important part of both countries’ foreign policy agendas. As the geopolitical landscape in Asia continues to evolve, the US-Philippines treaty partnership will likely remain an important pillar of stability and cooperation in the region. Now, the partnership includes a broadening of “information sharing on the principal threats and challenges” to the peace and security of the US and the Philippines. The upgraded ‘ironclad’ alliance commitments also make room for the inclusion of new sites which could contribute to the enhancement of Manila’s maritime security and modernisation efforts under the U.S.-Philippines Enhanced Defense Cooperation Agreement. It also creates a greater space for US involvement in the improvement of local and shared capacities in the delivery of humanitarian assistance and disaster relief.What this means for the Indo-PacificPresident Marcos’s visit comes close on the heels of South Korean President Yoon’s visit to Washington which resulted in the latter agreeing to send an Ohio-class nuclear ballistic missile submarine to Seoul to strengthen deterrence against Pyongyang’s recent nuclear flexing. Earlier in April, Manila allowed Washington access to four additional military bases for joint training, pre-positioning of equipment and building of facilities such as runways, fuel storage, and military housing. Access to these new locations is significant as two of them—Isabela and Cagayan—are positioned facing Taiwan while the Palawan base is in proximity to the Spratly Islands—a source of a long-standing dispute between China and the Philippines. The two countries have agreed to resume joint maritime patrols in the South China Sea and Manila is also assessing a trilateral security pact involving Japan. In mid-April, before President Marcos’s visit, the two countries participated in their largest-ever joint military drills, Exercise Balikatan, in the South China Sea. China is decidedly furious at the pace and scope of these new developments. Undoubtedly, steps like these are strategic and oriented towards boosting the defence postures of ‘like-minded’ countries in the region. But despite Beijing’s strong censure, these measures are indicative of the breadth and scope of maritime security arrangements in the region being on the course to be further strengthened.

Chinese leader Xi Jinping was unanimously “reelected” for another five-year term at the Two Sessions, and the Chinese government approved significant changes in the party-state structure to counter the US-led West’s dominance and promote economic and technological self-sufficiency. At the same time, China is engaging in diplomatic activism in the Middle East and elsewhere, forcing Israel to reconsider regional dynamics and prepare for a protracted state of “struggle” between the two superpowers.  In March 2023, Chinese leader Xi Jinping marked several highly successful events. Internally, he was “reelected” for a third term as President, and externally, he brokered a normalization agreement between Saudi Arabia and Iran – without any American involvement. These two developments coincided with the Two Sessions, China’s annual parliament meeting, where Xi passed far-reaching reforms aimed at increasing China’s economic and technological self-reliance in the face of Western adversaries. Judging by his remarks, it appears that under Xi China will continue its proactive foreign policy directed against the US-led global order. This in turn will test Israel’s ability to continue to maintain a balanced foreign policy vis-à-vis the two superpowers. Israel must now account for China’s growing influence in diplomatic and security theaters in the Middle East, as well as Beijing’s closer relations with Iran and Russia. To ensure its own security and economic interests, it must reconsider the regional dynamic while engaging in dialogue with the relevant actors. Finally, the escalation of tensions between the superpowers forces Jerusalem to prepare for extreme scenarios, most notably war in the Taiwan Strait. After a decade as president, Xi Jinping was unanimously reelected by the Chinese parliament for another five-year term. The vote – in which Xi was the sole candidate – was held as part of the annual Two Sessions, the Chinese legislature’s most important political gathering. The main event usually takes place over a seven-day period in March, when approximately 3,000 delegates from the National People’s Congress (NPC) – the legislative body – and some 2,000 delegates from the top political advisory body, the Chinese People’s Political Consultative Conference (CPPCC), convene in Beijing. In the course of the gathering, the Premier delivers a work report, while the delegates pass legislation, make amendments to the country’s constitution, and approve appointments in various state bodies. This year’s events were especially significant because they occurred immediately following the 20th Congress of the Chinese Communist Party (CCP), held in October 2022. At that gathering, which takes place every five years, Xi was also appointed to a third term as general secretary of the CCP and Chairman of the Central Military Commission. Since the 1980s, every five years, the CCP has introduced widespread reforms in the structure of the party-state. Previous reforms included changes to the balance of power between the Party and the state in ways that conformed to the incoming leadership's priorities and vision, as well as domestic and foreign developments. This year, the NPC approved significant changes in the party-state structure, continuing the trend in which the CCP under Xi has been "swallowing up" the government, with the lines between the two becoming increasingly blurred. These changes reflect Xi's belief that only a strong and centralized party can deal with domestic and foreign challenges, particularly the United States, China's main strategic rival. Indeed, during a heavily-publicized meeting at the start of the Two Sessions between Xi and representatives of the Chinese business sector, the Chinese leader stunned the audience by launching a direct attack against Washington, which he blamed for "the unprecedented severe challenges" that China is facing, and for trying to "contain, blockade, and suppress" China. What made his remarks particularly noteworthy was that despite rising tensions between the superpowers in recent years, Xi avoided explicitly naming and shaming the United States, instead allowing Chinese diplomats to spar with Western hawks. As a matter of fact, an examination of Xi’s writings reveals that even early in his political life, he saw the West, and the United States in particular, through a Cold War prism. However, it was the trade war waged by the Trump administration, which later escalated into a comprehensive technological and geopolitical war, that reinforced for him the need for economic and technological independence. The Biden administration went even further in its efforts to prevent China from gaining access to critical technology, and unlike its predecessor, has been successful in securing allies’ support. The Chinese countermeasures can be found in its most recent reforms, which included increasing the powers of the Ministry of Science and Technology (MoST) through the establishment of a new decision making body, the Central Science and Technology Commission, which is likely to be headed by Xi himself. Some of the ministry's specialized functions were transferred to relevant government ministries as part of the restructuring. The changes will allow the ministry to focus on macro-management of competition in innovation and to foster local development of basic research, core technologies, and a solution to the problem of the "bottleneck" imposed by the West, such as restrictions on China's import of microchips and airplane engines. In addition, a new institution, the National Data Bureau, will be tasked with managing digital resources, under the auspices of the Chinese government’s top macroeconomic management agency, the National Development and Reform Commission (NDRC). This year's reforms likewise highlighted China's financial sector, with the establishment of the new National Financial Regulatory Administration (NFRA) and expanded powers for the China Securities Regulatory Commission (CSRC). It was also decided to cut 5 percent of the central government and party workforce. Beyond the economic rivalry with the United States, the ramifications of the war in Ukraine, and COVID-19 restrictions, Beijing faces a host of internal challenges: a skyrocketing debt-to-GDP ratio (at the end of 2022, it stood at 273 percent), a declining population, a real estate bubble, natural resource pollution, a slowdown in imports and exports, high savings levels among households, and income inequality. If the rivalry with the United States intensifies – for example, if China were to invade Taiwan – Beijing would have to anticipate the imposition of additional sanctions, similar to those that Russia has been struggling with for the past year. Yet until such time as the situation vis-à-vis the United States reaches a critical stage, if at all, and against the backdrop of increasing concern in the international business community about the direction China is heading under Xi, Beijing is attempting to project to the world “business as usual.” At the conclusion of the Two Sessions, the incoming prime minister, Li Qiang, appeared to be smiling as he told foreign reporters that the United States and China must cooperate, because “there are no winners in a conflict.” He also promised that he would ensure a competitive, market-oriented, and fair environment that would protect the rights of Chinese and foreign businesses. However, here too the Party’s “invisible hand” was evident when he added that “the role of the new government is to execute and implement the important decisions and plans laid out by the CPC Central Committee.” The new appointments of other senior positions reflected the same ambivalence that Li expressed in his remarks. On the one hand, the Congress decided to extend the terms of 24 of the 26 ministers and national commissions, among them the head of the China’s central bank, Yi Gang, and Finance Minister Liu Kun, even though they had reached retirement age. One of the two new appointees, on the other hand, is Minister of National Defense Li Shangfu, who has been sanctioned by the US since 2018 for purchasing Russian weapons. Unlike his predecessors, who had battle experience, Li is an aerospace engineer in training. He was the former director of the People's Liberation Army's (PLA) space and cyber programs, as well as the deputy commander of the PLA's Strategic Support Force, which was in charge of China's space, cyber, and electronic warfare capabilities. Aside from the obvious defiance toward the US, his appointment demonstrates the importance that China places on modernizing China's military technology, given the ever-increasing restrictions imposed on technological imports to China. Self-sufficiency should not be confused with isolationism. The agreement brokered by Beijing between Saudi Arabia and Iran on March 10 – while  the Two Sessions were in session – was the clearest indication that China intends to maintain its active foreign policy. Granted, China pushed through an open door, given the conflicting parties’ inherent need for an agreement to focus on their economies, and only time will tell whether the agreement will hold; nonetheless, this was the first time that Beijing has led any kind of mediation effort, let alone successfully, and the United States was not even in the room. In doing so, China has demonstrated that it can use its dominant economic and commercial position to advance diplomatic and security objectives, ostensibly as an "alternative" to the United States. China’s global ambitions are not limited to the Middle East. The Belt and Road Initiative (BRI), as stated in the government's work report, will celebrate its tenth anniversary in October. What began as a central-southeast Asian initiative has evolved into a global network of "silk roads" emanating from China and extending into space, with hundreds of massive infrastructure projects worth over $1 trillion in 146 countries. The BRI has had to deal with a number of implementation and funding challenges over the years, so it has been scaled back. At the same time, Chinese officials emphasize that it will remain a focal point of Beijing's foreign policy, with the emphasis shifting to smaller but more strategic projects such as bolstering global supply chains and cooperating in the digital domain, as well as healthcare, public policy, renewable energy, and people-to-people and diplomatic ties. Xi has unveiled other ambitious projects in recent years, most notably the Global Development Initiative (GDI), which is tasked with promoting the United Nations' goals for sustainable development, and the Global Security Initiative (GSI). At the conclusion of the Two Sessions, Xi announced the Global Civilization Initiative (GCI), the details of which remain unknown. As with the BRI, any success story that can be classified as development or security will be attributed to them, even if it occurred years before these initiatives. This is what happened with the Saudi-Iranian agreement or the Chinese peace initiative to end the Ukrainian war, both of which Beijing hailed as shining examples of the GSI in action. In practice, these initiatives reflect Beijing's desire to reshape the global order to reflect its interests and values, while undermining the United States-led West's dominance in its spheres of influence. For example, Xi described the GCI as "a new form of human civilization" that "shatters the myth that modernization is equal to Westernization. The bottom line is that the Two Sessions and the extension of Xi’s term of office indicate that China will continue to push itself to the forefront of the international stage. The next five years will be defined by a stronger push for self-sufficiency, financial stability, and technological advancement. At the same time, China will not close itself off to the rest of the world. On the contrary, China will not back down from "a struggle" against what Xi refers to as the West's and the United States' "attempts to blackmail, contain, and blockade" it. This spirit was evident during the first press conference given by China's new foreign minister, Qin Gang, who warned that "if the United States does not hit the brakes, but continues to speed down the wrong path...there will surely be conflict and confrontation." While Western doors are closing in on China, Beijing will continue to see Israel as a backdoor for securing core technologies that will help it achieve self-reliance, rendering Israel obsolete in the long run. This is evident in the recent influx of Chinese commercial delegations to Israel, following Beijing's lifting of travel restrictions. Simultaneously, the US-Israel Strategic High-Level Dialogue on Technology, launched during President Joe Biden's July visit to Jerusalem, will examine Israeli-Chinese cooperation, particularly in the less regulated hi-tech sector and academia. The agreement reached between Saudi Arabia and Iran, as well as Xi's recent visit to Russia, during which the parties agreed to "increase contacts over security issues in the Persian Gulf," indicates that China's diplomatic activism in the Middle East will only grow. The evolving situation in which China and the US both play key roles in regional geopolitics – against the backdrop of increased competition between the two countries and the war in Ukraine – forces Israel to reconsider regional dynamics. In order to prevent Iran from acquiring military nuclear power in peaceful means, Jerusalem must deepen its dialogue with Washington, Beijing, Moscow, and its Arab partners in the Negev Forum on regional security and economic interests. Finally, if a conflict between China and the United States is truly "inevitable," Israel must prepare for the worst-case scenario, in which two superpowers go to war in the Taiwan Strait, and consider the implications for its relations with Beijing.

With relations at an all-time low, punitive actions targeting China have become politically popular, even if they have no analytical basis. Five years ago, then president Donald Trump launched a tariff-fueled trade war with China designed to reduce the bilateral trade deficit. His successor, President Joe Biden, then added a decoupling focus by restricting high-tech exports and curtailing professional and financial links. Both wanted to reduce imports of manufactured goods and bring home more jobs. How should one judge the effectiveness of their policies? Back then, and even more so today, the logic of Trump’s fixation on trade deficits made little sense. But security concerns have now become the rationale for reducing America’s trade relations with China and undercutting China’s growth potential. Against these yardsticks, the results are mixed but on balance unconvincing, given the costs in the form of inflationary pressures, repressed export growth, and a projected decline in global output. But U.S. politicians from both parties strongly support these restrictive measures because the costs are not obvious to their constituents, while the benefits from appearing to be tough on China resonate well with voters. Rising trade deficits The recent U.S. Census Bureau data indicate that the politically sensitive U.S. merchandise trade deficit with China was larger in 2022 than when Trump became president, while America’s overall trade deficit hit an all-time high of $1.18 trillion. This reinforces the views of nearly all the economists surveyed at the launching of Trump’s trade war: that the tariffs would not reduce U.S. trade deficits and the costs would be paid largely by Americans. For the Trump administration, the wild card was the “phase one” purchase agreement, which called for an increase of $200 billion in China’s imports from the United States. But state-to-state purchase agreements have no logical basis when global trade is largely shaped by the market-driven decisions of firms and consumers and subject to unpredictable events such as the coronavirus pandemic. Economic principles tell us that how much a country saves and spends determines its trade balance. The combination of Trump’s large tax cuts and Biden’s huge expenditure initiatives has led to soaring budget deficits, which are mirrored in record trade deficits. All this has little to do with China. Yet the Biden administration still insists that China honor the purchase agreement and links the removal of tariffs to its fulfillment. Asking China to honor an agreement that made no sense to begin with as a condition for dropping another equally ineffective policy defies logic. Trade diversification but increasing import dependence on other countries But this focus on bilateral trade numbers overlooks the sharp decline in China’s share of trade with the United States. Whereas China accounted for 47 percent of the U.S. trade deficit in 2017, it accounted for only 32 percent last year, with most of this decline offset by the increasing shares of other East Asian economies. Europe’s share of America’s overall trade deficit also declined from 21 percent to 18 percent. Only Canada and Mexico, via the United States-Mexico-Canada Agreement (USMCA), were able to increase their share from 11 to 18 percent. More insights can be gleaned from looking at the components of trade. Although the value of U.S. imports from China was essentially the same in 2022 as it was in 2017, total U.S. imports increased by about $900 billion during this period. As a result, China’s share of the total, made up largely of manufactured goods, fell from 22 to 17 percent. This decline, however, did not reduce America’s dependency on imports of manufactured goods. The share of imports relative to overall expenditures on manufactured goods rose steadily to 34 percent in 2022 from 23 percent two decades ago. The decline in China’s share of U.S. imports of manufactured goods was more than offset by imports from other countries, notably Mexico and Vietnam. These two developing countries, more than others, were able to import heavily from the United States based on their locational advantages and free trade agreements. Vietnam and China share a border and are linked by the ASEAN-China trade agreement, while Mexico and the United States also share a border and are linked by the USMCA trade agreement. Less noticed, however, is the behind-the-scenes role that China plays in supplying the components and materials for these other countries’ exports to the United States. Most of Vietnam’s increased exports were in product lines where U.S. imports from China fell, such as computer accessories and telecommunication equipment. China’s exports to Vietnam have more than doubled since 2017, and its trade surplus nearly tripled by 2022. China’s exports to Mexico increased by nearly 30 percent last year, on top of a 50 percent increase in 2021. China may be exporting less to the United States directly, but it is now indirectly exporting more. This explains why China’s share of global manufacturing production has continued to increase from 26 percent in 2017 to 31 percent in 2021. As for U.S. exports, the total averaged about $1.5 trillion from 2017 to 2020 but then jumped to $1.9 trillion in 2022. But this increase was not in manufactured goods but in exports of energy products and chemicals to Europe, spurred by the Ukraine crisis. The trade war did little to expand U.S. exports to China, the share of which fell from 8.4 percent in 2017 to 7.5 percent in 2022. Costs and benefits of decoupling According to one study, U.S. firms were handicapped by tariff-related higher costs of their imported inputs, and coupled with China’s retaliatory tariffs, this resulted in U.S. exports to China being 23 percent lower than they would have been in the absence of the trade war. The consequence is that America’s trade war policies generated very little growth in exports of manufactured products, despite the priority given to those policies by both the Trump and Biden administrations. If the purpose of the U.S. punitive actions toward China was to weaken China economically, there is no clear evidence of that happening. By developing alternative export markets and tapping pandemic-driven demand in the West for manufactured goods, China pushed its share of global exports to record levels in recent years. Meanwhile, China’s imports as a share of its GDP have been declining steadily, from a high of 28 percent in the early 2000s to 17 percent in 2022. One could argue that the world has become more dependent on China in trade while China has become less dependent on the world. The benefits of decoupling—if any—should be weighed against the costs imposed on U.S. consumers and producers and damage done to the export competitiveness of U.S. firms. To counter such tendencies, the Biden administration is promoting domestic manufacturing with subsidies in the Inflation Reduction Act. Such actions can be justified for strategic reasons, but the rationale is weakened by protectionist Buy America conditions. U.S. policymakers often counter by pointing to China’s use of subsidies to promote strategic industries, but Chinese firms were keen to import key technologies and components to ensure that their products were globally competitive on cost and performance grounds. The recent semiconductor and other U.S. restrictions on China’s access to high-tech products are also problematic because these products are “dual use,” with a much larger commercial market relative to military applications. Such restrictions hurt the many U.S. firms that derive significant revenues from selling to China and may contravene World Trade Organization guidelines. The costs of trade-related distortionary policies can be substantial. One oft-cited study estimates that taxpayers end up paying about $250,000 for each job saved in typical Buy America programs. At a broader level, a recent International Monetary Fund study estimates that a combination of U.S. trade and technological decoupling measures could reduce global GDP by some 7 to 12 percent. Ultimately, the problem lies in the lack of clarity on U.S. policy objectives. What does it mean to undercut China, and how will the United States know if it has succeeded? With U.S.-China relations at an all-time low, punitive actions targeting China have become politically popular, even if they have no analytical basis. The reality is that the United States and China have no choice but to continue trading with each other. But with security overriding commercial considerations, the economic interdependence built up over decades is now being reversed, leaving everyone worse off.

​Although the dollar continues to be the dominant global currency, Russia and China could dent this dominance. In the aftermath of global financial exclusion, Russia has had to make some strategic adaptations. The West’s sanctions had crippling consequences, and the Kremlin scrambled to find alternatives. In light of these developments, China became an important ally, and the Yuan—its currency—has taken on a more prominent role. It is telling that in Russia, the yuan has surpassed the United States Dollar (USD) in trading volume, a feat achieved a year after the Ukraine conflict, which triggered a series of sanctions against Moscow. As Russia and China band together, one wonders what other shifts will take place and how they will shape the future. Change is afoot, and the Russian market bears witness. The month of February saw a watershed moment as the yuan surged past the dollar in monthly trading volume for the first time. The momentum continued into March as the gap between the two currencies widened, showcasing the growing sway of the yuan. It’s an impressive feat, considering that the yuan’s trading volume on the Russian market was once quite insignificant. The winds of change blew through Russia’s financial system as the year progressed. Additional sanctions had taken their toll on the few remaining banks that still held power to make cross-border transactions in the currencies of countries that had been deemed “unfriendly” by the Kremlin. One such bank was Raiffeisen Bank International AG, whose Russian branch played a significant role in facilitating international payments within the country. However, the lender found itself under the watchful eye of both European and US authorities, which only added to the pressure. These events spurred the Kremlin and Russian companies to shift their foreign-trade transactions to currencies of countries that had not imposed sanctions.Converging coalitionsThe bond between Russia and China is growing stronger, with both nations seeking to bolster their positions on the global stage. Their alliance has spread across various spheres: military, economic, and political. With relations between Russia and the West crumbling, China has emerged as a key partner for Russia, providing it with the necessary support to counter economic and political pressure. On the other hand, China is keen on expanding its global reach, especially in the Eurasian region, and sees Russia as an important ally in this regard. President Xi Jinping’s recent visit to Moscow and his pledge to expand cooperation are likely to take this partnership to greater heights. Trade and investment ties are set to grow stronger, with both nations seeking to reduce their dependence on Western economies. Russia’s focus on infrastructure development and mega projects is also likely to benefit from China’s expertise in these areas. Energy is another significant area of collaboration, with Russia being a leading exporter of oil and gas and China being the world’s largest importer of these resources. Technology is also an essential domain, with both countries investing heavily in research and development to remain competitive in the global economy. While the alliance between Russia and China will likely have far-reaching geopolitical consequences, it is a complicated relationship with both nations pursuing their interests, even as they work towards common goals. As a result of Western sanctions, Russia has shifted its foreign trade transactions away from the dollar and euro to currencies of non-restricted countries. By doing so, the Kremlin and Russian companies hope to decrease their dependence on the Western financial system and explore new avenues for conducting their trade and economic activities. This shift in strategy reflects Russia’s determination to maintain its economic stability despite restrictions on its access to the global financial system. It also underlines the growing importance of alternative currencies in global trade as countries strive to minimise the impact of sanctions and safeguard their economic interests.Structural overhaulsThe Russian Finance Ministry was not immune to the winds of change either. Earlier this year, it made the switch from the dollar to the yuan for its market operations. It even went a step further by devising a new structure for the national wealth fund, earmarking 60 percent of its assets for the yuan. The Bank of Russia joined the chorus, urging its people and businesses to consider moving their assets to the rouble or other currencies considered “friendly.” This would help mitigate the risk of having their funds blocked or frozen. As the world undergoes a seismic geopolitical shift, it seems Russia is moving in tandem, searching for ways to secure its economic future. However, the dollar still reigns supreme in the Russian market. Even with all the changes taking place, it remains the most widely used currency, ceding its throne only occasionally to the yuan. This underscores the enduring dominance of the dollar, which has played a significant role in Russia’s financial landscape for years. However, as the world continues to evolve, one wonders how long it can hold on to its crown.

In the event of hostilities in the Taiwan Strait, Manila’s defense treaty with the United States will give it little room to manoeuvre. President Ferdinand “Bongbong” Marcos Jr.’s recent visit to China underscores his intent to have a constructive relationship with China, and a balanced and diversified Philippine foreign policy. But as Sino-US relations deteriorate and United States President Joseph Biden veers towards strategic clarity to defend Taiwan amid heightened cross-Strait tensions, the risk of getting entangled in a Sino-US conflict over Taiwan has become a major policy issue for Manila.  All Philippine presidents have strictly adhered to the One-China policy which is enshrined in the Joint Communique on normalisation of Sino-Philippine ties in 1975. Even President Benigno Aquino III, who arguably pursued the most critical China policy in 2010-2016, toed the line on the One-China policy and repatriated wanted Taiwanese nationals to Beijing in 2011. Manila’s adherence to the One-China policy was reaffirmed by Marcos Jr. after U.S. House Speaker Nancy Pelosi’s visit to Taiwan last year.  In the event of a Sino-U.S. conflict over Taiwan, the legal status of Manila’s commitment to the One-China policy would be tested against its obligations under the 1951 Philippine-US Mutual Defense Treaty (MDT). The treaty highlights the “sense of unity,” “common determination” and “collective defense” against an “external armed attack” and “potential aggressor”, but it is ambiguous about the specific geographic scope of its application in the Pacific. While the Philippines sees the utility of the MDT primarily for a South China Sea contingency, the U.S. can invoke Article IV of the MDT in a Taiwan conflict. The article states that each party deems that “an armed attack in the Pacific area on either of the Parties would be dangerous to its own peace and safety and declares that it would act to meet the common dangers in accordance with its constitutional processes.”  With respect to “constitutional processes”, the 1987 Philippine Constitution gives the Congress the power to declare “the existence of a state of war”; only under such conditions or another national emergency, would the President be authorised by law to wield the necessary powers “to carry out a declared national policy.” As such, congressional intervention would be an important variable that needs to be closely watched. Manila can also mitigate entrapment risks by exercising its sovereign authority on where and how the U.S. military could access and use its facilities. The preamble to the Enhanced Defense Cooperation Agreement (EDCA) states that “US access to and use of facilities and areas will be at the invitation of the Philippines and with full respect for the Philippine Constitution and Philippine laws.” Yet, history has shown how the Philippines could be involved in a war over Taiwan even in the absence of a U.S. formal invocation of the MDT. Manila could send boots on the ground and/or provide logistical access for U.S. military operations. This was the case in the Korean War, Vietnam War, and U.S. wars in Afghanistan and Iraq.  Put differently, Manila is caught in a bind. On one hand, it fears Washington’s abandonment in the event of a South China Sea conflict with China. Manila has repeatedly demanded clarity and immediacy in U.S. alliance commitments. To this end, Manila concluded the 1998 Visiting Forces Agreement (VFA) and the 2014 EDCA with Washington to secure U.S. military presence in the region and security guarantees. On the other hand, the Philippine security establishment increasingly fears entrapment, where the country’s military is drawn into a Sino-US conflict over Taiwan. This reality became evident following former U.S. House Speaker Nancy Pelosi’s visit to Taiwan in August 2022. In September 2021, the Philippine ambassador to America said that the U.S. can use Philippine bases in a Taiwan conflict if it is important for the Philippines’ security. The condition, however, remains open-ended and is contingent on many indeterminate factors.  At the moment, the risks of entrapment are increasing, at least from the operational perspective. Since its coming to power, the Marcos Jr. administration has taken steps to bolster security ties with Washington. Both countries have agreed to explore joint patrols in the South China Sea, and accelerate the implementation of the EDCA through infrastructure enhancement at various locations. Both allies are looking at adding more sites for American military access, including in the northern province of Cagayan near Taiwan, to facilitate faster response to crisis situations. They have also agreed to double the number of troops involved in joint exercises and plan to sharply increase the number of bilateral defence activities in 2023. Given the timing of these initiatives, Beijing would likely see these Philippine moves as siding with America to undermine its One-China principle and enable U.S. military prepositioning for war-time contingencies. Should the Philippines provide basing access in a cross-strait conflict, Manila would certainly face Chinese sanctions. China could also play hardball in the South China Sea and its ballistic missiles could target countries facilitating U.S. combat operations. But if tensions in the South China Sea escalate and coincide with tensions in Taiwan, there will be a greater incentive for Manila to strategically align with Washington and accommodate U.S. military hardware.  How the Philippines should respond to a Taiwan contingency is not simply a legal question but a critical national security concern. There are around 200,000 overseas Filipino workers in Taiwan; repatriating them during an armed confrontation over Taiwan would be an enormous undertaking. This will be compounded by a massive human migration of Taiwanese nationals.  Even if Manila manages to sidestep the risks associated with entrapment in a Taiwan Strait conflict, it cannot escape the geopolitical ramifications of such a historic event. Should China successfully reunify Taiwan by force, China could inch closer to the northern Philippines and it will be easier for China to break through the First Island Chain. China’s takeover of Taiwan would also augment its power projection capability in the South China Sea. This would consequently impact Philippine maritime and security interests. Given the Philippines’ geographic proximity to Taiwan, its status as a U.S. defence treaty ally and its stakes in the South China Sea, there will be complications in Manila’s desire to be neutral in a Taiwan contingency.