Oil has been at the epicenter of global politics for generations, and the Indo-Pacific region is the focal point of the action today. The geopolitical significance of oil is a fundamental factor contributing to conflict through resource warfare, petro-aggression, civil wars in oil-producing governments, oil as financing for insurgencies, conflicts sparked by the potential of oil-market domination, and confrontations over control of oil transit routes. Calling attention to current events this week, President Marcos is exploring to ignore global sanctions against trading in Russian oil & gas, while operating outside the confines of allies such as NATO, AUKUS Alliance, EU, US, and UN international agreements on buying Russian oil & gas. This trend indicates the recent increase in rumors of looming military conflict in the Indo-Pacific region. History suggests we should take this issue seriously.
President Marcos may have had the foresight to establish the most effective strategic planning necessary to successfully rebirth a nation. In response to the actual needs reflecting every demographic of the Philippines, this could be the most valuable strategy for his administration to transform the nation geoeconomically and regain the citizen's trust in government. Once deployed, the world will likely react with a positive long-term impact on the future relations between the Philippines, leading ASEAN members, European Union and the United States, and in particular, the AUKUS Alliance. The AUKUS Alliance is a military cooperation pact between Australia, United Kingdom, and the United States, for the Indo-Pacific region.
The South China Sea is home to over two hundred uninhabitable islands, rocks, Atolls, and reefs. Mainland China and Taiwan, for now, separate nations, form the northern boundary of Southeast Asia; Vietnam forms the western boundary; Malaysia, Brunei, Indonesia, and Singapore form the southern and southwestern boundaries; and the Philippines to the east. China, Taiwan, and four other members of the Association of Southeast Asian Nations (ASEAN) (Vietnam, Malaysia, the Philippines, and Brunei) have been at odds over these islands for decades. Its sea routes through the Malacca Strait are among the busiest in the world; with nearly 100,000 vessels passing through it each year, accounting for about one-quarter of the world's traded goods. And, since they provide the shortest passage between the Pacific and the Indian oceans, its waterways are used by more than half of the world's oil tanker traffic.
China has recently been observed by multiple navies and surveillance satellites harassing oil and gas production rigs and support vessels operating in the South China Sea, raising concerns that these incidents might spark a broader military clash. These intentionally unlawful activities are especially suspect as the lingering instability in the region from the pandemic shutdowns allows the Chinese government to assert itself more forcefully in several territorial conflicts. The Philippines detected dozens of Chinese fishing vessels occupying a reef in its exclusive economic zone (EEZ) in their northern Spratly Islands. These boats were eventually identified as part of China's covert, paramilitary maritime force. The most alarming tactic is that they have gained a foothold by building 5G network transponder stations on the islands connecting to the Philippines, and Huawei on the mainland, which China promotes as basic information and communications technology (ICT) but is in actuality a Chinese government-controlled surveillance system.
Numerous territorial disputes in the Indo-Pacific area, such as those over the Spratly Islands and Sabah, revolve around the Ambalat, and is home to vast oil and gas reserves. In the ongoing territorial dispute between Malaysia and the Philippines, the region of Sabah is of critical importance. Prior to annexation by Malaysia, Sabah had been a province of Great Britain. The Philippines maintains that British North Borneo Co., the territory's administrator before its annexation, solely leased Sabah in 1878 but did not surrender it. Despite this, Malaysia continues to insist that Sabah is an inseparable part of Malaysian territory, as it has been ever since the formation of the federation in 1963. In recent times, the region has been the site of a number of territorial disputes.
For almost seven decades, the Philippines has been in the vanguard of U.S. efforts to maintain a free and open regional order across Southeast Asia and the wider Indo-Pacific. The Mutual Defense Treaty of 1951 forms the foundation for their strong collaboration in the realm of security (MDT). Their alliance has proven to be one of the longest-lasting in world history, weathering the changing geopolitical climate and being a regional stalwart despite occasional conflicts.
With the AUKUS Alliance in full swing since last year, they must develop new capacities for shared defense based on coordinated alliance actions to counter China's strategic competitiveness and other rising threats, such as cyber warfare. More than just the alliance's combined formidable military power is required for it to blossom into a collaboration that provides safety and stability for all parties involved. Even while this shift in the alliance is possible, neither Washington nor Manila has shown any interest in making it a reality. The Philippine administration will likely want to maintain a careful balance but doing so will have perhaps catastrophic ramifications for the Philippines, the Indo-Pacific region, and global consequences with the breadth and strength of China expanding.
As a result of temperaments, politics, and the vested interests at play in Manila's connections with China and the United States, the Philippines' most significant foreign partnerships have been handled in a murky manner since Duterte's victory in 2016. In this regard, the Philippines were not unique among other countries. Policy battles in Southeast Asian states are frequently shaped by domestic, economic, and even personal interests as well as short political timeframes, in contrast to the carefully calculated strategies of hedging and balancing that appear on the surface amid great-power competition. The Philippines is unique because of the transparency of this drama and the weight given to the whims of a personalist leader in establishing the tone. Following his overwhelming victory in this year's election, Ferdinand 'Bongbong' Marcos Jr. is resetting Philippine foreign policy as a more measured and dominant leader. Still lurking as holdovers from the Duterte era, today, within the Marcos administration, elements are loyal to the deals garnered with China. Duterte unabashedly ignored western alliance concerns and openly signed away the Philippines' national grid, national communications networks, strategic oil storage facilities, rare earth minerals, gold, copper and nickel, oil & gas concessions, and more directly to Chinese companies controlled by the CCP.
For a mutual security agreement to be realistic, the Malacañang foreign policy agenda must better reflect larger geopolitical realities and the country's national interests. The Philippines' decision to adopt a strategy of alignment with the United States does not show a lack of sovereignty but rather a reflection of national interests in promoting the rule of law and free commerce throughout the Indo-Pacific region. Moreover, it acknowledges that the Mutual Defense Treaty's advantages for Manila are inextricably intertwined with obligations that cannot be ignored, but for which Manila is not solely responsible.
Despite the Biden administration's focus on the importance of the United States' alliances in the Indo-Pacific region, now enhanced via the AUKUS Alliance, the Philippines has been ignored or relegated to a secondary role in recent strategic declarations. This type of thinking ignores the crucial role that the Philippines may play in protecting Taiwan and raises the question of who has the last say on the matter. Is Washington dismissive of the alliance because it considers it to be irrelevant, or is it simply due to the fact that the coalition has not been utilized effectively? I see the latter as correct. Previous Philippine presidents have failed to take advantage of the debts owed to Manila since President Clinton departed the US forward bases of Subic Bay and Clark Airbase in 1992. The latter interpretation appears to be more accurate. I think there are essential steps Washington can take to revitalize collaboration beyond the typical debate of military weaponry and capacity building.
Up to this point, Marcos has campaigned for a productive engagement with China while simultaneously promising never to "abandon even one square inch of [Philippine] land." The attempt by President Bongbong Marcos to walk a diplomatic razor's edge, while reasonable, has implications; nonetheless, it still offers a lower threat to the alliance than Duterte's previous open animosity to the west did. Marcos' hesitation may have been a result of the same intractable issues with Beijing that slowed down Duterte, postponing badly needed reforms and giving Washington more reason to consider the Malacañang Palace as an unreliable partner. Both governments should recognize that the relationship is not always pleasant but is mutually beneficial and requires major revisions to be effective, rather than rehashing the same concerns handled by the Duterte administration. The issue that has to be answered by leaders is not whether the U.S.-Philippine alliance will survive but whether it will be relevant in the decades to come. However, look no further than history to appreciate its importance in the context of modern geopolitics. Spanish philosopher George Santayana said “ Those who cannot remember the past are condemned to repeat it.”
There is a striking correlation between current affairs and the Japanese invasion of Manchuria, which set off a major international crisis. The Manchurian (Mukden) Incident marked the beginning of Japanese military intervention in East Asia on September 18, 1931. According to the Kwantung Army, Chinese forces attempted to bomb a South Manchurian Railway train. The railroad sustained minor damage, and the train arrived at its destination without incident. Despite this, the event culminated in the rapid and illegal conquest of Mukden (now Shenyang) and the subsequent occupation of the entirety of Manchuria. The invasion led to the Second Sino-Japanese War and contributed to the escalation of tensions prior to World War II.
As in other battles of the war-torn 20th century, oil was a crucial component in fueling World War II, influencing everything from geopolitical strategy to military operations to tactical maneuvers. A recently unearthed journal belonging to one of Emperor Hirohito's advisors reveals how the Japanese understood the significance of oil in the Pacific War, with the emperor declaring Japan went to war with the United States over oil, and ultimately lost the battle due to oil.
Beginning with Japan's annexation of Manchuria in 1931 and picking up steam with Japan's war against China in 1937, the conflict was the outcome of the Japanese militarists' determination to construct an empire. The United States presented the most significant challenge to Japan's objectives. Oil was the crucial factor that set-in motion the chain of events that eventually did lead to war between the two countries. Japan’s strategists had learned their lessons from World War I, when oil and the internal combustion engine proved game-changers. Oil imports powered the Japanese military machine almost exclusively; in those days, the United States provided over 80% of Japan's oil. The Dutch East Indies supplied a large portion of the remainder.
The Japanese invaded southern Vietnam (which was then part of French Indochina) in July 1941 to bolster its China campaign and to pave the way for the acquisition of the oil-rich East Indies. Military commanders in Japan were aware that this would likely cause the United States to impose a full-scale oil embargo, which was the only reasonable response short of full-scale military action.
Amid concerns about military collaboration between Germany and Japan, Washington was at a crossroads. The terrifying possibility of an isolated America facing an axis-dominated Europe and Asia was brought home to the United States by the Japanese invasion of Southeast Asia and the Nazi conquest of Russia. In response, Washington froze all of Japan's U.S. financial assets. This amounted to a de facto petroleum embargo, which prevented Tokyo from resupplying its oil reserves. Supply lines from the East Indies were also cut off by the British and Dutch.
Time was running out for Tokyo once the oil connection was severed. Its domestic supply was just enough to last for around two years without access to further sources. The disastrous decision to invade Asia and seize control of its oil reserves in the East Indies was taken in the fall of 1941. The Japanese planned to launch a massive invasion of Asia on December 8th, targeting cities as far-flung as Hong Kong, Singapore, Thailand, and the Philippines. The attack on Pearl Harbor was meant to destroy the U.S. fleet and defend the country's flank. Both goals were met, and Japanese oil ships quickly resumed their trips from the East Indies to the Home Islands. Japan's invasion and occupation of Indochina led to the United States placing an embargo on Japanese oil imports and a freeze on the country's assets. Japan's leadership had a difficult choice when the US cut off its supply of petroleum: appease the Americans by withdrawing from at least Indochina and maybe China or take control of the sources of oil production in the Dutch East Indies. Japan would pull its military out of Indochina if the United States agreed to resume oil shipments. The thriving colonies in Southeast Asia might furnish the necessary raw materials, and the prosperity of these colonies would likely stimulate greater cooperation among them.
When it came to controlling trade between Japan and the Greater East Asia Co-Prosperity Sphere, the Philippines' conquest was a must. Ten hours after the bombing of Pearl Harbor in Hawaii, Japanese forces invaded the Philippines in a surprise attack on military posts in Luzon, thus starting World War II in the Pacific. My uncle was among the 30,000 abandoned allied forces left behind by General MacArthur until his return. Manila surrendered swiftly, and a military administration took power on January 3, 1942. Filipinos created a resistance movement and launched a ferocious guerrilla onslaught against Japanese military force; however, the Japanese soldiers conducted a brutal campaign to crush the guerilla resistance.
Families of oilmen at Balikpapan, Borneo, British East Indies, were evacuated immediately after Pearl Harbor in anticipation of Japanese advances in Southeast Asia. With its oil wells and refineries, Balikpapan was one of the greatest treasures for which Japan would wage war. As the Japanese approached, workers began destroying the wells. The refinery infrastructure was entirely destroyed, and as a result, four decades of oil sector development were wiped out in less than a day. A portion of the crew was removed, but 75 crew members remained trapped in the Bay of Balikpapan awaiting rescue after the Japanese arrived on the bay's south side. Only 35 of the original 75 individuals survived the jungle, Japanese firing squads, and imprisonment.
However, the attempt to deny Japan access to East Indies oil was merely a temporary setback. Japan restored the Balikpapan oilfields in a short space of time with outstanding results. In 1940, the Southern zone generated 65 million barrels of oil. In 1942, the Japanese reclaimed 25 million barrels; in 1943, they restored nearly 50 million. Japan was able to obtain sufficient oil from the East Indies to compensate for the oil embargo, and the Japanese navy was even able to refuel on demand, leading to the belief that the oil crisis, which had prompted the war, had been overcome. By the middle of March in 1942, Japan had full control of the East Indies and took possession of Southeast Asia's rich resources. Success would not last long. Japan had chosen the most formidable adversary available and was defeated in 1945. Rich in oil and natural resources, with well-trained soldiers, superior technology, a massive territory, and immense industrial potential, the United States was a global superpower, just as it remains today.
Today modern combat is not always fought with boots on the ground. China has recently evolved strategies that operate in the "gray zone." These include the hostile maritime actions discussed previously in the EEZ of the Philippines. By utilizing marine militias and cyber operations below the threshold of an armed assault, China has been able to influence regional security conditions in ways that actively circumvent the Mutual Defense Treaty and undermine the alliance's ability to respond.
China has erected military infrastructure on roughly 8,000 acres it has claimed in the Spratlys and the Paracels, allowing for naval and aircraft deployment. The inability of claimant nations, such as Philippines, who have reacted passively, to retaliate with conventional troops and their reluctance to engage in an all-out war with China creates unease among them. The claimant nations are understandably worried by China's moves, as they lack the resources to mount a conventional response and are unwilling to engage in an all-out conflict.
Cyberwarfare, propaganda and misinformation campaigns and foreign interference in the recent national election are all methods that can have far-reaching and harmful effects. China uses a variety of covert strategies to counter the United States' military presence in the South China Sea. Threat actors employ various gray-zone techniques to coerce their targets into action without resorting to open hostilities. China may now be safely considered the primary military danger to the AUKUS Alliance and the Philippines. These vague, done-in-the-shadows threats undermine the power and render it more difficult to take decisive action.
The United States, with the most advanced conventional military in the world, is not immune to this reality. The sheer size, technological superiority, and destructive potential of the United States military might serve as a robust conventional deterrence against conventional assaults on American soil, yet gray-zone techniques have slightly evened the playing field. In light of China's innovative threats, the United States can no longer defend the Philippines with diplomacy or military might alone, thus the need for the creation of the AUKUS Alliance.
To successfully confront the emerging reality of China's gray-zone tactics, the Philippine government should consider increasing the country's capability for such strategic defense. The Chinese surveillance system Huawei must be decommissioned, and the Philippines' cyber defense capabilities must be strengthened using offensive cyberweapons capabilities. AUKUS cannot deploy advanced major air defense apparatus to coexist within a Huawei ecosystem, which is precisely the mission the CCP designed into the Chinese network company’s global deployment agenda. Incidentally, Huawei is forbidden to conduct business in the U.S. This became a contentious issue in 2020 when the U.S. congress approved the sale of 50 Lockheed F-35 fighters to the UAE. The deal was summarily delayed until UAE leadership agreed to purge the Huawei systems from all UAE PSTN backbone stations.
These offensive strategies are taking place amid international concern over Chinese technology practices, such as how the Chinese government is attempting to subvert the international open internet, and whether the Chinese government's overseas infrastructure and development projects exemplified by the Belt and Road Initiative (BRI)—are a means of spreading surveillance technology, which they are.
At the same time, there is a shift in the American perspective on China. The United States and the majority of Asia have spent the better part of the last quarter century anticipating that China will become an active participant in global affairs and that its views on various topics, including sovereignty disputes in the South China Sea, will be altered. Not only has this not happened, but it's also doubtful to happen anytime soon. This insight, coupled with the fact that the United States now regards China as a serious competitive threat, has changed the American strategic outlook.
Brightside principals have been working in the Southeast Asian region since 1984, starting in Brunei, at the birth of their independence, where we led the effort to establish valued relations with the United States, the EU, and private sector enterprises.
Also, in 1984 we began our efforts in the Philippines across a broad scope of industry disciplines and have continued working to create economic prosperity initiatives. Our Philippines mission is to liberate the collective productivity and mobilize immense resource value, to modernize and establish a newly industrialized world-class economic and enhanced industrial ecosystem.
In 2008, Brightside was welcomed to the Sultanate of Bulungan to lead the development of a long-term economic prosperity initiative that would provide lasting well-being to the Sultan's people and the environment through sustainable development. We have spent quality time in Bulungan and its surrounding areas of Tarakan, Samarinda, and Ambalat.
Brightside has also enjoyed steady relations in both the public and private sectors in the Kingdom of Thailand since 1984. Our group has been active in developing joint ventures with Thai communications companies and a US global mobile satellite enterprise.
Today, Brightside maintains an active senior working relationship with the Philippine leadership in the administrative executive branch, congress, and major industries.
~ Christopher Harriman, President and CEO - Brightside Industries Group, LLC
~ Anne Charman, Vice President Market Research - Brightside Industries Group, LLC
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