SPERI Conference 2014: The Global Contours of Growth and Development: Beyond the Crisis
I July 2014
Towards Sustainable Resilience in post-Haiyan Philippines: Observations from December 2013 to
February 2014
Adrian Hewitt, Senior Research Associate, Overseas Development Institute, London.
In early November 2013, islands in the east-central Philippines were hit by a monster typhoon.
Cyclones – severe tropical depressions – are known as typhoons in east Asia and this one was named
Typhoon Haiyan internationally. From the point of view of the Philippines, where they name their
typhoons alphabetically through the season, this was relatively late in the season, receiving the
name Yolande, at the end of the alphabet. There is no doubt it was a bad storm – even without a
tsunami as such, many were drowned and it killed over 6,000 people in all, with many more
rendered homeless and hundreds of thousands badly affected.
Whether it was ‘the strongest recorded tropical cyclone to hit landfall in human history’ as sometime
alleged can be disputed even from Philippine history let alone international records. But for a while
it was the Philippines’ crisis, preoccupying (and potentially destabilising) Government and looming
larger for sections of the population than either the Global Financial Crisis of 2008 or the 1997 Asian
Financial Crisis had done in popular memory, and because it was a distinctly visual event it attracted
strong media attention – and somewhat bogus headlines here such as ‘Imelda Marcos’s gems hidden
among rivers of mud’ (The Independent, 17 November 2013; what, no shoes?); The
Guardian/Observer website on 1 December even reported ‘$240 billion donated since the typhoon’
(yes, it really did say billions). None the less, reporting of the disaster helped form an unaccustomed
bond between the Philippines and the UK – which has no regular aid programme there, with
Britain’s closest historical link having been the navy’s occupation of Manila for a bare two years from
1762-64 in the Spanish era – and thanks to the Disasters Emergency Committee’s fundraising efforts
(which were matched £ for £ under a commitment by the UK Government), the British public
became one of the leading international sponsors of the relief effort. DFID even posted a single
officer there (in Manila) for a three-month period to administer the £75m of official UK relief funds
and take part in collective decisions on the DEC donations. This was unprecedented, albeit brief and
not repeated - given that UK aid policy now tends to shun non-African countries deemed to be
middle-income, however large their populations living on one or two dollars a day are. DFID has
never had a office in the Philippines, although it maintains an executive director in the Asian
Development Bank headquarters in Mandaluyong, Metro Manila.
I was in the privileged position of being able to stay nearly three months in the Philippines in the
immediate aftermath of Typhoon Haiyan (as I shall call it in this paper), and all my observations are
based on data and views gathered and visits done then – December 2013, January 2014 and in the
first half of February 2014. What interests me is less whether a country can bounce back from a
national disaster, however serious, for we all know the answer, but whether national resilience –
perhaps aided by this natural-disaster-response trigger - is at last beginning to manifest itself in
broader forms of governance, economic management, institutions and policy so that after badly
underperforming its region in the second half of the twentieth century, the Philippines could now
become a contender among countries in post-modern groups from which it is currently excluded –
the BRICS (where South Africa has just been put on a downgrade-watch, while Russia, India and
Brazil have hardly performed brilliantly over the past year or so) and the G20 (where eg Argentina is
liable to default afresh). I won’t get started on the CIVETS, etc., but just let me say that that unlikely
economic forecaster, Tony Blair, in a speech about the 21st century world order given to the
Confederation of British Industry on 3 June 2014 named the Philippines squarely in this bunch:
‘As for the future, in a world becoming dominated not only by the power of America, but of China,
soon no doubt India, not to mention Russia, Brazil, Turkey, Indonesia, Philippines, Vietnam, and in
time the big nations of Africa; and where GDP and population are increasingly correlated [there is no
question that the rationale for Europe is stronger than ever].’
I shan’t dwell here on the novel correlation between population and GDP or the politician’s
negatives: ‘no doubt’, ‘not to mention’… but only stress the national citation. Hyperbole aside, let’s
explore why the Philippine economy seems to be performing more strongly than for many decades
and why its prospects now seem brighter, despite last year’s seeming catastrophe.
First, a (mapless) note on geography. The Republic of the Philippines is an archipelago about the size
of Italy, totalling about 300,000 square kilometres; somewhat larger than the UK (242,000 km2),
whatever happens after September 18. It has over seven thousand islands, but at the risk of oversimplification it is easiest to describe the layout as two large islands, Luzon in the north and
Mindanao in the south, each comprising a landmass of about 100,000 km2 and each with only a few
island offshoots, plus a central area, the Visayas, comprising many thousands of islands grouped
together. Typhoon Haiyan made landfall at the eastern (Pacific Ocean) edge of the Visayas on 8
November 2013 and cut a swathe through many of the Visayas, although its greatest damage was
caused on hitting the first and most easterly coastal towns in the islands of Samar and Leyte, notably
Guiuan (East Samar province) and Tacloban (Leyte).
Haiyan did not affect Luzon, which houses the capital Manila, at all. (Other smaller typhoons did,
that year and previous years. The inhabitants are relatively well prepared – although the urban
poorest tend to have the worst housing and the poor in general are the most vulnerable.) Nor did it
affect Mindanao – indeed Mindanao used to be described as typhoon-free, though that is no longer
an accurate characterisation. It is Mindanao which contains some Moslem autonomous areas,
whereas the country as a whole is strongly Catholic; with Timor-Leste, the only country in Asia so to
be.
At the centre of the Visayas is Cebu City, the Philippines’ second-largest city and an airline hub for
the region – through which many of the first relief operations for Tacloban, etc., transited. Also in
mid-Visayas is the island of Bohol, which suffered a 7.2 scale earthquake in October 2013, just
before Typhoon Haiyan. Without Haiyan, the Bohol earthquake alone would have made persistent
headlines across the region and perhaps the world. Truly the Philippines needs to show resilience
and to be prepared to cope with natural disasters. Its islands all sit in the Asian ‘ring of fire’. A
generation ago, the eruption of Mount Pinatubo was (with that of Mount St Helens, USA) one of the
biggest volcanic eruptions of the twentieth century, altering the world’s weather for a subsequent
period – and Pinatubo even had political consequences, hastening the closure of the US bases on
Luzon.
From this it follows that the Philippines has an immensely long coastline, much longer than most
continent-bound countries. Given the difficulty in measuring – or giving credit for - every inlet of
every island, direct comparisons are not always helpful. Using the standard fractional measures, the
Philippines at some 34-36,000 km is put around 5th (the CIA World Factbook) or 8th (World Resources
Institute) in the world for its length of coastline, coming after Canada (which has by far the longest),
Indonesia, Greenland and Russia. The UK is usually ranked around 12th to 16th, at around 20,000 km,
so obviously if all the internal - inhabited - islands of the Visayas archipelago itself were to be
measured the difference between the Philippines’ and Britain’s coastlines would be far greater than
2:1. (Moreover if Scotland were to leave the UK it would take great lengths of indented coastline and
islands with it.) And the Philippines’ coasts are mostly economically serviceable, unlike much of, say,
Canada’s or Russia’s at present, in the sense that people live and work there. How these people and
these assets (especially those on the perimeter giving rise to EEZ claims which may overlap with
other countries’) can be protected to show resilience is however a question of political and
economic resources, and government policy, to which we can return later.
The reference to human geography prompts a note too, then, about national population. Four
decades ago there were approximately as many Filipinos as there were Britons in the UK. This year,
the population of the Philippines reaches 100 million. Even today the average size of families is 3.8
children. The country experienced rapid populations growth in the intervening period and has
become a major exporter of skilled labour; its government and the (positive) balance of payments –
as well as vast numbers of families - have become dependent on remittance income from migrant
labour. So the Philippines delayed its demographic transition not only behind that of developed
countries, but also behind other countries in Asia, most notoriously that of China which until now
has been broadly sustaining a one-child-family policy for the past thirty years. With the politics of
reproductive health in the Philippines now on the cusp of change, we shall consider whether this can
be turned to the Philippines’ future economic advantage.
The reality of coping with a natural disaster on the scale of Typhoon Haiyan required government
action; cooperation between central and local government institutions; international assistance; and
sustained government support after the immediate responses to consolidate the progress achieved.
A World Bank study published four years before this typhoon suggested that the Philippines needed
to set aside 0.6 to 1 per cent of its GDP this decade to provision against the risks of natural disasters.
Although the Government has put small amounts of resources into dedicated national institutions
such as the National Disaster Risk Reduction and Management Council and the Rehabilitation and
Reconstruction Programme, and its disaster preparedness is generally ranked quite highly
internationally, it is unrealistic to propose that a developing country like the Philippines should ring-
fence large revenues on the precautionary principle alone, any more than it is sensible to tell African
countries with new oil and gas reserves which have yet to achieve full primary education and health
coverage to build up a sterile sovereign wealth fund as if they had Norwegian levels of social welfare
already. That is why international assistance has a valid role, despite all the risks of confusion,
duplication, corruption and showing-off. And the Philippines, generally speaking, seemed to cope,
even if the population was often cynical about the actions of its government – and particularly the
standoff between central, provincial and local government in the initial stages (complicated by the
fact that Tacloban was and is a fiefdom of the wife, Imelda, of a former President, the late Ferdinand
Marcos, with her family still in control there).
The immediate local reaction to the typhoon was to lament the suffering and loss of life – an
understandably emotional response, which included a willingness to give alms, domestically not just
internationally (commercial firms such as supermarkets and budget airlines, as well as Filipino ngos
and relief organisations, raked in large contributions from the middle classes and the relatively
poor). Very soon thereafter, however, domestic reporting of the disaster seemed to focus on the
loss of physical output, even at the expense of the human losses (which remained vague for months;
the government stuck to a low body-count of a one to two thousand for the first couple of months
and even now it is not clear if the total death tally should rise from 6,000 to 8,000 to account for the
extra two thousand missing persons, or if the difference is a recording error). Leyte and Eastern
Samar are agricultural and fishing communities and as the rice harvest season was about to begin,
accounting for crop losses may indicate how importantly rice figures in the Filipino’s consciousness,
even though that output can reasonably be replaced with seed support and other measures at the
following harvest (two per year in rice in those regions). More likely, rice harvest in a given area is
somewhat easy to measure from previous season records even as forgone output. Wisely, the
government was not panicked into massive international purchases of rice (as had a previous
regime, forcing up world prices unnecessarily) to reconstitute national buffer stocks, buying only an
additional 100,000 tonnes according to USDA, since the 2013 harvest turned out to be a record
18.44m tonnes (up 2.3% on 2012) despite the disruptions in Samar and Leyte. Yet panic-buying of
emergency food stocks used to be a barely-resistible political reaction at times of elections and of
national disaster, especially when the two coincide. In contrast, coconut trees take six years to bear
fruit, plus another three for their damaged crowns to rejuvenate. A shortage was declared in
numerous coconut-pie bakeries on faraway Luzon throughout December and January!
Meanwhile, the government quickly instituted food-for-work programmes to restore infrastructure
which were paid at the minimum wage rate of about $6 dollars per day and limited to 15 days per
month x two months maximum, mostly funded from foreign relief assistance (my assumption
though I cannot check the full budgetary implications) which supplemented farmers’ incomes and
those of others prepared to work. Many Filipinos without formal jobs subsist on incomes of two or
three dollars a day, so this represented an economic enhancement for those who could access the
schemes and do the work. For others affected there were emergency rations and even small
(budgetised) cash payments, but these had to navigate the barrier of local bureaucracy. Rather
quickly the burst of activity focused on the eastern Visayas led one to reflect that gross economic
output in the current year may be no less than in a normal year (if not slightly more), despite last
November’s disaster and the immediate losses it caused - for those who survived and were
uninjured, however otherwise bereft.
President Aquino himself set out the formal approach of his government: to prioritise the needs of
the most vulnerable; to perform search and rescue; to minimize loss of life and property; to provide
food, clean water and basic health support to surviving communities; to preserve law and order; and
to clear and restore critical infrastructure – roads, telecoms, sea and airports, water, sanitation and
electricity supplies. (The Leyte main power plant is likely to be back producing at full output only by
August 2014, though.) These are textbook orders: the reality is rather different in a robust
democracy like the Philippines where central government with an executive president in the middle
of his sole (six-year) term has to deal with political opponents running a local municipality – in the
end Aquino had to overrule them and intervene centrally after much time was lost initially. In the
longer term the aim is to build resilience by reinforcing communities – quite a delicate political task;
and physically to ‘build back better’, away from the most vulnerable areas such as the immediate
coastline. Even this is more difficult said than done when people have livelihoods and own land or
properties which have themselves proved their vulnerabilities.
How did this ‘setback’ affect the Philippines’ overall economic performance? For decades, since the
later years of the Marcos presidency in the 1970s through the four decades up to 2000-9, the
Philippines had been the sick man of East and South-East Asia, being progressively overhauled by
Korea, Singapore, Thailand, Malaysia, and more recently even Indonesia and Vietnam; a century ago
the Philippines’ cities and parts of the modern economy could even have stood comparison with
Japan. Long periods of corruption, outdated economic policies more redolent of Latin America in the
19th century and poor governance, rather than natural disasters per se, had rendered the Philippine
economy internationally uncompetitive except in the export of minerals (mostly under post-WW2
constitutionally ordained deals favouring American companies, under the Laurel-Langley
Agreement), agricultural raw materials such as sugar and copra, and – remarkably – educated labour
as migrants and ships’ crew; it had also been left with a severe infrastructure backlog.
Gradually in the 21st century the economy has shifted first into electronic component manufacture
and microprocessor assembly and now into call centres (soon overhauling India serving the Englishspeaking market), broader manufacturing and assembly and professional services, especially in
health care and education – the latter often enhanced domestic versions of the jobs which migrants
were doing in the Gulf or Hong Kong, etc. – as well as reinforcing the domestic manufacturing base,
introducing competition into energy, telecoms and other essential services. There is still a massive
infrastructure backlog, wages are still desperately low by international standards, and inequality
high, but whereas GDP growth rates had risen into the range 4-5 percent in 2008-12, by the time of
the typhoon they had become the strongest in ASEAN, rivalling those of China itself (as China’s
economy overheated and wage costs were driven up) at around 7 per cent. In the first two quarters
of 2013 growth even reached 7.6 percent, according to Economic Planning Secretary Arsenio
Balisacan, exceeding the government’s plan target of 6-7 per cent, even if it slipped to 7 per cent in
the third quarter, still with a current account surplus (of about 3% of GDP).
So while I was in the Philippines local economic forecasters and the bangko sentral were expecting
growth rates to dip overall as a result of the twin disasters of Bohol and Haiyan, but the ADB now
reports Philippine growth to have been 7.2 percent overall for 2013, and it forecasts that
rehabilitation and reconstruction work is likely to have a significant impact on growth rates in 2014
(projected to be 6.4%) and 2015 (6.7%) – both comfortably within the 2011-16 national
development plan targets. Growth is being driven by increased domestic infrastructure spending,
remittances and exports – not yet by domestic consumption, so unsurprisingly most Filipinos you
meet do not lay claim to feeling better off, even though the economy is clearly buzzing – and doing
better, alongside China, than Vietnam’s 5.1%, Indonesia’s 5,4% and Thailand’s 2.8% (these are
economists’ consensus forecasts for 2014 via HSBC reported in the FT on 9 May this year; the
Philippines is given a 6.5% consensus forecast in the same exercise).
So there must surely be clouds on the horizon? Absolutely, and quite apart from Black Swans (which
by definition cannot be listed here; natural disasters being so frequent in the Philippines that they do
not qualify as Black Swans – see also annex to this paper). What could possibly go wrong?
One certainty is that the Philippines will remain prone to natural disasters, as a tropical country in an
extreme oceanic zone on a ring of fire. Already in January 2014 the typhoon season had restarted –
alphabetically – with tropical depression Agaton (following typhoon Yolande, aka Haiyan; the
Tagalog alphabet has but 20 letters) which killed 37 people in floods and mudslide in Mindanao –
and there will be further earthquakes and erupting volcanoes. A Filipino delegate at the
intergovernmental climate change conference tearfully attributed this to his country’s chronic
sensitivity to the effects of global warming but that is a new argument, as yet untested. More
anticipated, albeit irregular, is the El Nino southern oscillation which periodically warms the waters
of the tropical Pacific, altering the season’s weather in the Philippines and triggering droughts and
floods affecting agriculture and livelihoods well beyond; the last strong El Nino was 1997-98 and
while there have been several La Ninas (with the opposite effect) since, we are probably due for a
big El Nino – and a record warm year - about now.
The national response in future, in learning from Haiyan, will be more scientific, should involve the
pre-positioning of relief goods and the closer coordination of lead agencies and a stronger
recognition of the role played by social media and communications in addressing immediate needs.
While ngos, especially foreign ones, sometimes display anguish over phenomena like ‘saviour
syndrome’ (see ODI’s own website: ‘Typhoon Haiyan’ is still up there in a not-easily-digestible menu
of ‘Chronic Poverty’, ‘South Sudan’, ‘Future Diets’ and ‘The Crisis in Syria’) or maintaining the purity
of humanitarianism a la MSF (David Miliband himself, newly president of one of the largest
international relief organisations the IRC, has been criticised in ODI for focusing too much on the
technical fixes which foreign humanitarian organisations can offer) , from the national point of view
it is far more sensible to merge relief into reconstruction and development assistance after the first
few days minimising loss of life, and to build resilience that way; this requires strengthened
institutions to make allocations and execute programmes. These range from the military through
national ministries, municipalities down to barangay councils (the lowest level of local government
in the Philippines) and across to local self-help organisations (particularly important in a country
which has no semblance of a welfare state). The National Disaster Risk Reduction and Management
Council for instance has local branches now.
Aside from recurring natural disasters, unnatural ones too occur with disarming frequency. The
Philippines as noted above has a very long coastline and a large population living in, and so travelling
between, islands. This though is no excuse for the world’s most deadly peacetime shipping disaster
to have occurred in the Philippines (the domestic ferry Dona Paz sank in 1987 with the loss of 4000
lives), and as recently as 2008 over 800 were lost on the domestic ferry Princess of the Stars,
travelling between two major destinations (Manila and Cebu). These problems can be addressed by
enforcing stronger regulation, though it is significant that nowadays budget airlines are trusted for
inter-island safety over ferry companies, indicating that newer technologies prove easier to regulate
than those with vested interests and other baggage.
Finally, this leads naturally to a consideration of the potential political clouds on the horizon which
could negate the new-found resilience of the economy and disrupt its strong current growth
performance. I can see at least five such hazards which risk setting the Philippines’ new-found
resilience off course – yet all are avoidable, or at least navigable given good policy and institutions,
and ultimately favourable policitics.
First is the Reproductive Health Act itself. My own scenario briefly adumbrated above is for the
Philippines, a very late adopter of family planning, to benefit by going through its demographic
transition to smaller families much later than the rest of the region, so that when countries like
China, Japan and Singapore suffer labour shortages in their industrial, IT and modern service sectors
– now in fact - the Philippines has its maximum-extended labour force, in which massive educational
investments have been made; just before Philippine population growth begins to tail off (after the
RHA is implemented). This should - or at least could, ceteris paribus – attract investment out of
China and Japan, and divert investment from regional competitors such as Thailand to strengthen
the Philippine economy, maintain its export focus though now in modern industries and services,
create much-needed modern sector jobs, and improve (though without government intervention
only via a slow trickle-down process) family incomes and the distribution of income overall. But this
hinges on the RHA being implemented – and adopted by Filipino parents. Unlike previous presidents,
Benigno Aquino has taken on the Catholic Church, its cardinals and the Filipino establishment, made
reproductive health a priority during his presidency, and has succeeded in getting the bill ratified in
Congress. The main remaining hazard seems to be the Supreme Court, which has been blocking the
law on alleged constitutional grounds, although there may still be hazards in implementation before
the rosy demographic scenario sketched out above bears fruit. But an A for political effort to the
current president for this important initiative.
Second is the presidency itself – now constitutionally a one-term arrangement. Benigno Aquino’s
ends in 2016. The Philippines is a robust democracy without strong party structures, so voters are
easily swayed to elect outlandish candidates, while Congress is driven – almost explicitly if you read
the press reports – by ‘pork’ (an extreme version of pork-barrel arrangements inherited from the
Americans whereby Congressmen are given spending to favour their regions and their pet projects,
especially under special funds such as the Mampalaya Fund). Aquino is from the landed gentry –
from the sixty or so families who still control much of the economy - and his (elected) presidency is
dynastic (his mother Corazon Aquino had been a president beset by coup attempts in the 1980s,
after his father Benigno II had been assassinated), just as his predecessor, President Gloria
Macapagal Arroyo was the daughter of a more famous President Diosdado Macapagal in the 1960s,
but at least Benigno Aquino III has proved to be a reforming president (and more personally, the
family’s sugar lands around Tarlac have been sold to sitting tenants under the land reform
programme), rather than acting like an oligarch. Given the weaknesses of Filipino democracy, he is
just as likely to be succeeded at the end of his six-year term by a celeb such as boxer Manny
Pacquiao (already a Congressman) as by another oligarch, corrupt or not. Gloria Macapagal Arroyo
replaced a B-movie actor President Estrada who was impeached and later charged with ‘plunder’ –
while she herself is on various embezzlement charges currently. (Estrada has bounced back as mayor
of Manila, after serving not-very-long in gaol.) So there are very few guarantees that the electorate
will deliver a strong presidency again – though this is not unfamiliar in other democratic countries
with direct or nearly-directly elected executive presidents (think France or USA) – and we should
therefore count only on the reforms which can be pushed through by mid-2016.
The third hazard is the slow pace of income redistribution, even as the economy grows at 6-7 per
cent. The Philippines’ Gini coefficient is put at 46 (with 100=full equality), higher than Thailand,
Cambodia and Laos, but below Malaysia despite the racial-preference policies there. While
education in the Philippines is free up to md-teen level and pretty universal, it has some underlying
costs and health service provision as a public good is so scant and low-quality that even the poorest
families have to budget for private health costs, including basic medicines, so there is a pent-up
demand for the poor as well as the middle-classes to benefit from the economic boom. The current
Aquino III five-year plan (2011-16) has three priorities: growth (to which we already give a tick);
equal access to development opportunities (the jury is out): and social safety-nets for the vulnerable
(for which the bureaucracy is still ill-equipped to deliver; perhaps though the positive experience of
dealing with Haiyan, with foreign intervention, and learning about resilience may prove an
encouragement). The real challenge once growth is an acquis is to deliver employment and povertyreduction. At least the Marxist guerrillas of the New People’s Army, prominent especially in the
Marcos era, now seem to have mostly faded away (co-terminously with the funding from Gadafy?),
and President Benigno Aquino III has gone further than his predecessors in agreeing settlements
with the Muslim nationalists of the south, agreeing ceasefires and extending the areas under
autonomous Muslim control in Mindanao (ibid). On neither count do we appear to be in a prerevolutionary situation, as could have been argued for the Marcos era (Marcos served THREE terms
from the mid-sixties to 1986; though he started as a reformer) or during the time of Mrs Cory Aquino
who succeeded him under ‘people-power’. This more tranquil political situation may have been
assisted by the withdrawal of the US bases (notably Subic Bay Navy and Clark AirField, both used
extensively for the Vietnam War) in 1991: the Philippine Senate voted to end the US military
presence ‘permanently’, although after Pinatubo the Americans were leaving anyway, and had little
difficulty relocating to Okinawa and Guam. This removed one political irritant though it was never to
settle the Filipinos’ love-hate relationship with America – being mainly love (the Philippines’ history
until full independence can be summed up crudely as ‘three hundred years in a [Spanish] nunnery
followed by fifty years in Hollywood’. And then they were brutally occupied by the Japanese from
1942-45).
Which leads us to the hazards of geopolitics. Whether or not the Philippines wishes to have the USA
as its protector (and aside from the politics, historically and culturally there is a strong logic in
favour, even more so if the Obama Pivot Towards Asia is going to become a reality), the Philippines
is so weak a state, and its armed forces so bereft, that it could not defend itself against a regional
power equivalent to Japan in the 1940s, even after many years of 7% growth and budgetary
provision for the navy and the airforce (which currently has no jets. The Philippine navy has only one
frigate and fifty-six patrol boats or coastal cutters, not all in service). Not only is China occupying that
role now, but since it has begun to assert its designs over the South China Sea, with the Nine-Dash
Line which comes not just well into the Philippines’ 200-mile exclusive economic zone, but within
sight of land (30 miles) of some of the western coasts of Luzon and Palawan, a decision on alliances
is becoming more pressing. The Philippines can no longer rely on ASEAN, of which it was a foundermember, ASEAN originally being formed as a bulwark against the PRC in its more revolutionary days,
because new ASEAN member such as Cambodia, Laos and Myanmar – though not another member
whose government is still run by the party, Viet Nam – tend to vote in China’s favour. The USA has
offered to return, in a small way, and April 2014 signed a new defence pact with Manila which allows
the USA to base ships and aircraft – those scarce resources – in the Philippines again but does not
require the Philippines to make over any sovereign bases to America. (Similar arrangements were
made between the USA and Australia for a non-sovereign base in Darwin, so in that sense, the
Philippines now plays in a bigger league.)
This did not however prevent China occupying Scarborough Shoal, some rocks 150 nautical miles off
the coast of Zambales, in west Luzon, any more than the Philippines under a former general as
president were able to react when China did the same with Mischief Reef in 1997. The Philippines’
current strategy is to take the dispute with China over islands in (possibly oil-and gas-bearing waters
of) the South China Sea to the international Court of Arbitration in The Hague, and base its
complaint on the alleged violation of its EEZ and the UN Convention on the Law of the Sea. This is an
obvious legalistic approach of a small state. The flaw in the process is that even though China
recognises the Court and has signed UNCLOS, it does not intend to respond; its ‘protector’ the USA is
in a slightly worse position as Congress has never ratified UNCLOS. So the Philippines may secure a
hollow victory multilaterally. The remaining strategy is for the Philippines to hope that regional
economic ties with China (and it has less dependence on outward-processing and inward investment
than several other ASEAN members) will trump geopolitical ambitions and China will be equally
happy to continue doing business, while both countries are growing at a hectic rate. It is in the
downturn that you have to fear, however, and when governments look for foreign scapegoats as a
diversion.
Lastly we revert to the Global Financial Crisis – or possibly the next one. As indicated briefly above,
the Philippines was not greatly affected by the 2008 GFC, not having a particularly strong financial
sector (its stock exchange boomed afterwards) and being less locked-into OECD markets other than
Australia and Canada which tanked. It was also less affected by the 1997 Asian Financial crisis than
players such as Thailand, Korea and Singapore (for an authentic flavour, see the Singaporean film IloIlo, which won the camera d’or at Cannes in 2013. It is set in a newly-bourgeois family in Singapore
during the 1997 financial crisis amid the threat of job losses; the job most audaciously lost is that of
the abused middle-aged Filipina nanny who dreams of her homeland beaches in Ilo Ilo but cannot
afford to return to them, or to stop work.) Fashion is a powerful driver in emerging markets (EM)
finance as few analysts are specialists in ‘new’ economies – it is easier to follow the herd. During the
recent years of loose money and negligible interest rates, investments have been pouring into
developing countries (and city property, portable works of art…) and while frontier markets (most of
Africa) are deemed specialist-only, EM in south-east Asia, including the Philippines, have been
attracting good amounts of direct and portfolio investment. This could change in an instant, limiting
growth prospects, for instance, if China failed to grow, if monetary policy changed (as it appears to
be doing already in UK) or even if the pivot to Asia turned out to be a re-tilt back to the Middle East.
(Or if something worse happens; developing countries are never going to be safe havens). Analysts
however tend to mark the risks of this happening as greater if the EMs are already running current
account deficits; the Philippines and most of ASEAN however have strong structural finances with
balance of payments surpluses (as does China, though with debt concerns) so they are unlikely to be
the first group suffering a withdrawal of funding; they have a further cushion to their resilience.
That’s enough future hazards. Let’s just hope that after suffering what could have been the biggest
storm to have made landfall in human history last November, the Philippines can enjoy an easier
ride for the next few years, and can benefit from the albeit tragic experience of Typhoon Haiyan and
the support which it received in its aftermath.
/ends
Annex: Historical recordings of Philippine typhoons
The University of Santo Tomas, the oldest university in the Philippines (dating from 1611) holds
Jesuit records of previous storms, hurricanes, floods and typhoons, though mostly over the past 150
years. Samar and Leyte were hit by six typhoons, bringing with them storm surges, between 1871
and 1934: an average of one recorded typhoon every ten years over 63 years. Tacloban itself was hit
by a storm surge twice, in 1897 and 1902. Friars write of a ‘very severe’ typhoon crossing the
Visayas and southern Luzon in 1871; again, coconut plantations were wiped out.
There are still people alive who remember the 1934 typhoon which struck both Samar and Leyte on
24 November – 5 December; it struck Guiuan town on 29 November (not so different from
November 2013, then, although the relative intensity is not measured or measurable). Contrary to
conventional wisdom, Mindanao island itself had massive recorded floods in 1916 and typhoons in
1912, 1917 and 1922, as well as Typhoon Pablo in 2012. Dr Antonio Montalvan II (from whom I draw
this information, in an article in the Manila Bulletin of 30 January 2013) puts this amnesia down to
the nation’s “cultural habit of forgetting typhoons too soon, given the Filipino penchant for laughing
away our sorrows”.