Is Najib and Duterte smarter than Mini Lee when it comes to a China?

November 4, 2016

Q: Has Singapore lost out to the Philippines and Malaysia when it comes to dealing with China?

A: Even by the most forgiving standards. I think it’s fair to say at this point, it seems both the Philippines and Malaysia seem to be getting more out of China than allying themselves with the US and their regional proxies in Asia.

You need to understand. I want to be polite. So that is really another way of saying Singapore has really backed the wrong horse and to put it mildly, they have lost a precious opportunity to reap whatever benefits from a forging a strong alliance with China.

Q: Duterte comes across like a mad man to the world. Do you really believe the Chinese can gain anything meaningfully by cultivating his friendship to further their agenda regionally. Aren’t they, the Chinese taking a big risk by backing a wild card?

A: Please don’t label Duterte as mad. You can certainly say his methods are unconventional…controversial…questionable. But mad is a very strong word that I don’t think applies to Duterte – only because he is deploying intimidation tactics which has so far proven very effective in tackling crime and drugs and possibly a very one sided relationship with the US. To understand Duterte. You need to psychologically profile how he became the man that he is. This of course is digression, but I feel it’s important because there is so much out there that paints him incorrectly – Duterte’s outlook and conceivably worldview is predominantly shaped from his experience as a politician and administrator in Davao city in the Mindanao. Now to you – that just a place in the map. But I have worked in Mindanao and it’s really a place that even most Pinoy’s in metro Manila would rather give a miss. As it’s riven with crime and corruption at every conceivable level where it’s really not unlike the wild Wild West.

You go carry a samsonite briefcase in one hand and semi auto with a full clip with the safety off all the time to work and trust me within six months – even you would understand why Duterte thinks and speaks the way he does.

A lot of people who seem to criticize Duterte if you notice are the same people who have not been able to bring many of these crime warlords to heel and their ambivalence is one reason why Duterte continues to garner support from many perfectly same and ordinary and peace loving natives in the Philippines.

I for one happen to believe his methods are very effective – it’s psychological warfare. As what many of his critics continue to elide is – he has to work under tremendous constraints where there is chronic corruption and complicity between the law enforcement agencies and many of these crime warlords.

So at some point when everything breaks down – the law of the jungle has to come into effect.

I don’t mean to come across a rude. But I have reminded you many times before to structure your questions succinctly by asking me one question at only one time. I would appreciate it if you can do me the courtesy of remembering this.

Q: What can China get out from an alliance with the Philippines? What does the Philippines get out from an alliance with China?

A: If you look at the countries at the periphery of the South a China Seas (SCS) – one thing stands out very clearly. The biggest claimant to the fisheries and mineral largesse of the SCS is the Philippines. Singapore is very far away, she is not even a number card. She is probably the box that holds the cards. Malaysia is maybe a number card but definitely not a face card. As for Japan possibly a Jack or Queen. But the Philippines is the ace in the pack. Now if you are familiar with poker – then you will realize there is only so far you can go without a hand of aces.

The fact that the Chinese have been able to win over Duterte has multi dimensional geo strategic ramifications. Americans know this. They just wondering whether he’s playing both sides or serious. If it’s the latter. Then it’s very very serious – as we are not only talking about the four US bases in scattered along the archipelago of the Philippines but countless staging points that will make life very miserable for not only the US seventh fleet, but for all her allies as well to conduct war.

Without the Philippines in the US breast pocket there can be no talk of a coherent military response to the SCS.

It’s game over.

What will the Philippines get? I believe they will get a lot of concessions. One of the most contentious issues facing the Philippines is food security. You can certainly moot the idea Duterte is maybe stupid. But the same cannot be said about his planners and advisors. They know that if they sign the TPP, one scenario that may play out is they will face rising food cost. That’s because the Philippines is an archipelago, it’s not like Vietnam, Thailand or Malaysia where there is one monolithic land mass with rivers and tributaries that will dramatically lower the cost of growing food – so to me this along with other goodies is certainly in the mind of Duterte. As the primary economy in the Mindanao stretching from Davao City right up to Zamboanga is very dependent on fishing.

There are of course other goodies as well.

Q: What about Malaysia? There is a lot of rumors circulating around stating he has had a change of heart recently because the US dept of Justice seem to be drilling deeper into the 1MDB scandal.

What is your take?

A: You really want to know the truth. No one wants to be part of the TPP. They are all just taking their seats on the bus. But in truth – no one really wants to be part of it. Except for a few reliable US allies.

As the whole idea of a pivot is just an elaborate fantasy to depict China as an aggressor. Why is this point important?

Because from the word go. My point is there has never been a strong alliance between most claimants in the SCS and the US.

Since this whole idea of an alliance with the US lacks a significant economic dimension when compared to China. How can there be any talk of a strong alliance. In the case of Malaysia – when China is it’s biggest trading partner. This is nonsense.

So what Najib is doing in the general scheme is very logical and natural.

I will however say this – the only thing that holds this crumbly alliance together is a lot of propaganda about the benefits of the TPP. Pundits like to point to the fact – that it’s encapsulates 40% of the global trade. But what they convenient omit is most of it is specifically structured to benefit only America that makes up nearly 22% of the the much publicized 40%.

The paradox is many Americans don’t even realize they are the primary beneficiaries of the TPP – yes, there will certainly be some winners such a Vietnam and definitely Singapore. As the latter can set in concrete it’s primacy as a shipping, trading and service industry hub, but for the rest of the signatories. They all secretly know that it’s not going to change anything dramatically. Above all China knows they all know and she is simply calling them out to confirm this reality.

That is why she is leveraging on soft loans and long term cross trade deals – to put it crudely China is using monetary incentives and the most importantly holding out long term promises of being able to prop up many of the economies of the countries in ASEAN to effect a political paradigm shift to undermine the US sphere of influence in the Pacific.

Please observe carefully. China is not saying to either the Philippines and Malaysia – the SCS is all mine and only mine. She is parlaying with them and it’s really a public relations exercise to divide and rule and to perhaps even blunt the influence of the US and their reliable allies.

So if this plays out to it’s logical end we are likely to see both Philippines and Malaysia sharing whatever booty that is in the SCS.

China is not stupid. She is showcasing to demonstrate to the other reticent countries in ASEAN – if you come to the table and talk. We will strike a deal. But there is also an iron fist in the velvet glove as well – she is also saying at the same time – if you stand alongside Uncle Sam and fight me. You get nothing!

Q: What can Singapore hope to get out by aligning themselves with China?

A: That is not a credible question. Firstly, Singapore cannot be allied to China. Singapore is really intertwined with the US and the old hat idea of preserving the status quo ante of US primacy in the pacific to perpetuate her own interest. She is ultra pro TPP and since she is perceived as an instigator to cement an alliance against China – like I said, if you stand by Uncle Sam and fight me…you get nothing!

In truth Singapore has nothing to offer China. That is a fact. It is an awful fact. The US on the other hand can with the TPP.

Q: Both Clinton and Trump are dead against the TPP. Is the TPP dead?

A: There is a dissonance between reality and perception that must be corrected. The way I see it – the TPP remains the only means for the US to retain it’s appellation as a prime mover and shaker in the Pacific – there is nothing else.

Hello! The biscuit tin is empty lah! The alternative is they spend billions building ten more carriers. But even they have to come to terms with the awful reality that strategy may have reached the point of diminishing returns.

The way I see it – if Clinton wins and she will. Within one hundred days the TPP will be given a make over and marketed to the US public as something other than what it really is and it will be passed.

I can almost guarantee you this by the uncommon certainty of fact.

In the unlikely event Trump wins – the same thing will happen. Because his advisors will tell him the same thing..the biscuit tin is empty!

All this talk about the corporatist elites and political hegemony being against the TPP is just white noise – throwing bread to appease the masses – truth is all the US thinkers know only too well this remains possibly their only counter response to an emerging China.

That’s the only game in town.

Q: How can Singapore position herself better to benefit from a rising China?

A: Like I said previously, they’re really so terminally invested in the whole US architecture of how this part of the world should and must be to perpetuate the status quo – it’s really like asking a man with two feet cast in concrete – do you want to dance. The die is cast for Singapore. For better or for worse she has to stick to the choices once made and just bite the bullet.

Q: Do you see the recent strengthening of the leadership in the Chinese political hegemony having a significant impact on their foreign and domestic policy? And what sort of China do you expect to see from all these changes?

A: This idea of core is very different from the literal English understanding. Yes, we might speculate on what it really means by scanning the past precedence. But in my view that is a hopeless exercise. My understanding of what the core really means is – we will see the current party political leadership that is less inclined to allow the fifth generation leaders to emerge and assume the reins of power by dogmatically following the two term protocol.

It is conceivable the current oligarchs don’t trust the fifth generation Chinese elites – for good reasons too I might add. As all thought from the outside the communist hegemony looks like a monolithic party political outfit – many of the fifth generation leaders don’t believe in the communist system as a coherent platform to take China to the next level.

Of course such talk is treason…but when one is alone with friends sharing the facts of life over whisky this is certainly one of their concerns that is shared by many.

You just don’t know about it – because Western intelligence analyst are just terrible at reading between the lines.

Having said that I consider this quite a natural response given that China is currently confronted with an unprecedented range of challenges that they have never ever experienced before. Mind you this is not new. Putin did it. So let us not speak of dictatorship as if it is a dirty word. To me it is purely a function of necessity like how my car needs big tires to transverse across rough plantation terrain – as we are not only talking about the obvious such as the inexorable economic slow down in China and it’s ramifications, but there are also cultural as well especially in the autonomous regions which has always been a perennial problem – along with some intractable problems.

All these challenges no matter how you splice it cannot do without strong and decisive and sustained leadership. So I see this extension of the political hegemony as a clear sign to lay a strong foundation to do what needs to be done which cannot possibly be accomplished if power needs to be devolved in just two terms.

Q: You mentioned some problems China faces are intractable. Please elaborate.

A: China is a bit like an old Hutong with plumbing, electricity and modern amenities – but this all this came about thru a mixture of forced accommodation and having to work around many of the immovable constraints. If you’ve ever seen a Hutong, then you would probably understand how difficult it is to marry modernity with tradition to produce a happy balance…it’s never 100% – sometimes the accommodation works for length of time. At other times since it’s best to leave some of the old things alone simply because they are really like linchpins that support other good things – it’s debatable whether that is good. That is how I see China.

In the past, the leadership could probably turn a blind eye to many of these intractable problems. A notable one worth mentioning is the power of some of these oligarchies such as the PLA – that really have their hands into everything from coal mining to power generation. Many of these oligarchs haven’t really changed at all since the time of Deng. They may well embody all the elements of change but the form is still intact and that will be a problem for the new China – simply because the margin for error is getting less and less along with the diminishing opportunities for trying to figure out how to keep growing the economy.

Facts are brutal for the new China. All if not most of the low hanging fruits have been harvested – low labor cost, backward environmental laws and enforcement, low cost of starting businesses and factories etc etc – that cycle of how to grow the wealth of a nation has in my opinion come to an end.

They have to step up their game by migrating upwards in the value chain – it’s no longer possible for them to grow the economy by just rubber stamping new foreign investments projects.

Only understand this! At that level it is not an easy game to play – not even Singapore succeeded in being able to move up the value chain. Sure we experienced limited success with A Star, electronics and of course there was creative technologies that once monopolized the global sound card market – but when one looks at it, it’s been a patchy record that’s why Singapore ended up focusing on banking, port and the service based industry.

In the case of China. They don’t nearly have the luxury to fail like Singapore. If that happens there will certainly be revolution – so on one hand you can say, well they seem to be able to make pretty solid trains that can bullet over one hundred kilometers without disintegrating. Or that they can even produce jet fighters that don’t flame out. They even make pretty good smart phones and can send astronauts into orbit – but all this China has been able to do only with reverse engineering.

Nothing really new has emerged out of China.

To put it crudely, they are replicating the second wave of technological revolution by copying just as probably how the Japanese once learnt how to make good cameras by copying the greats like Leica or Hasselblad to build their stable of household brands like Nikon, Sony, Panasonic et al.

But at that level of the game what you’re really talking about obliquely to my understanding at least is decoupling from the communist system completely – and that is where the metaphor of the Hutong comes in.

Some set pieces in my view cannot be moved. In some parts of China and even in certain state owned oligarchs, communism is not just a philosophy, it’s so ingrained that it has become a way of life – like religion.

For China to move to the next level. I have no illusions. These sacred cows will be slaughtered and reincarnated again into very efficient business units that we regularly see in the West.

Having said that the problem is how does one go about effecting that sort of change in that scale and within a defined timeline. Mind you time is not on their side.

On one hand they’re happy they can still grow digit wise at least in GDP metric terms. But at the same time, they too realize with each digit of growth – it also means they’re approaching another new level of the life cycle of how to grow the wealth of a nation. Only this time round they have to be leaner, meaner and smarter.

Like I said, it’s not an easy game to play. On one hand you can say they have a big domestic market – but like the metaphor of the old Hutong it’s not just selling cars, washing machines and fridges that makes it all come around. There is also the social side like what we are currently seeing in Hong Kong with the struggle to for more autonomy from Beijing.

At some point the oligarchy that is the communist party itself will have to decentralize and eventually die – this is what we are actually witnessing….the question to me is will it be a graceful or violent death.

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