ZTE Scandal: The Spratlys Connection

From early 2003 to 2004, Philippine and China officials had a series of meetings on the Spratlys project. During that period, negotiations were simultaneously conducted for big Chinese investments in the Philippines, including the now controversial North Rail project. At the time, newspapers reported the frequent visits of Speaker Jose de Venecia Jr. to China supposedly for parliamentary networking. His delegation, however, always included economic managers of the Arroyo government.

On Aug. 30, 2004, Mañalac was appointed president and chief executive officer of PNOC. Two days later, the PNOC and CNOOC signed in Beijing the JMSU agreement that covers the Spratlys, a copy of which was obtained by NEWSBREAK.

Mañalac said the PNOC consulted with the justice and foreign affairs departments. The agencies welcomed the idea, but “they had doubts about its do-ability.” Sources at the DFA say there was a time when the PNOC was always in touch with the office of then Undersecretary for Policy Sonia Brady, but they are not certain if this was during the negotiations for an agreement with China, or after Hanoi protested upon learning about the agreement that excluded Vietnam. Brady is now the Philippine ambassador to China.

The day after the signing of the agreement in Beijing, Hanoi wrote the Philippines to protest its exclusion from the project when it has a claim over the Spratlys, too. Thus, the tripartite agreement for a JMSU by the three countries was signed in Manila months later.

According to the three-year agreement, China would gather the data, Vietnam would process them, and the Philippines would interpret them.

In every stage, one or two representatives from the two other countries (which is not the lead country) would be present. Each party will shell out US$5 million for the project. The data are now in Manila for interpretation, which is expected to be completed by October. If data from 11,000 kilometers across the underwater area proves encouraging, another round of geophysical survey will be conducted, as long as the agreement has not expired.

A Treaty Is Required

The agreement, however, raises legal questions. Why was a project involving a contentious area signed only by government-owned and controlled corporations (GOCCS) and not by governments?

Lawyer Harry Roque, director of the Institute of International Legal Studies of the University of the Philippines, explains that under the United Nations Convention on the Laws of the Sea or UNCLOS, coastal states have the “exclusive right to explore and exploit the natural resources” found in the continental shelf and the exclusive economic zone (EEZ) 200 nautical miles from their above-water borders. Since the Philippine Constitution and a law (Presidential Decree 1596) say that the Spratlys is part of the country, it follows that the EEZ around the Spratlys should be for the Philippines’ exclusive exploitation.

“Clearly, an agreement to jointly survey for the existence of petroleum resources in the Spratlys would be a derogation of the country’s sovereign rights [because] the exploration here would cease to be exclusive,” Roque said.

The Philippines may choose to “limit its sovereignty through entering into such an agreement,” Roque explained, but it should be done through a treaty, as required by international laws. In the case of a treaty, the JMSU agreement should have been sent to the Senate for approval, as required by 1987 Constitution.

“A Filipino GOCC could not redefine what is provided for by law,” Roque said.

Roque even thinks that President Arroyo can be impeached for allowing a government entity enter this agreement. “My position is that anyone who will give away Philippine territory is guilty of treason. Since the national territory is governed by the Constitution and by law, a President who will surrender the exercise of sovereign rights is guilty of treason, an impeachable offense.