Despite the obstacles that remain in the way of enhanced trade activity between Russia and the Philippines, there are prospects for deeper economic relations, especially as Russia expands to the Asia-Pacific region.
Russia's President Vladimir Putin (R) and Philippine Secretary Mario Montejo of Science and Technology during a welcoming ceremony for heads of the delegations taking part in the 2016 ASEAN-Russia summit in Sochi, Russia, May 20, 2016. Photo: TASS
The recent Eastern Economic Forum in Vladivostok, which took place at the beginning of September, highlighted the expanded efforts that Russia is taking to boost its economic profile in Asia– not just with China and Japan, but also with nations such as the Philippines.
Naturally, there are both obstacles and incentives to develop bilateral relations between Russia and the Philippines given regional historical, and economic contexts. For example, the Philippines has longstanding ties with the United States, which could be an obstacle for developing closer relations with Russia.
However, according to the Ambassador of the Philippines to Russia, Carlos D. Sorreta, the Philippines is capable of nurturing relations with both countries.
“Our close relationship with the U.S. should not be an obstacle. However, sometimes differences between Russia and the U.S. on particular issues do somehow get in the way of Russia-Philippines relations,” explains Ambassador Sorreta.
The U.S. and the Philippines have worked together for a long time and on many issues together, which has created a solid basis for bilateral relations and led to the interaction between diplomats on a daily basis. Besides, the military of the Philippines works closely with the U.S. “Because of history, there may be a hesitation to build stronger relations with Russia. It’s changing, though,” argues Sorreta.
While lacking a history of relations with the Philippines, Russia might use the easiest way to start building relations: people-to-people communication and culture. “After that it’s language, music, art, which are the universal languages we can build on. Then next will be economics and trade, science, education,” notes Sorreta.
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Russia-Philippines military cooperation
However, the most challenging to develop are military and defense relations, according to the Philippines diplomat. Despite that, he remains hopeful that relations in those areas will also develop positively. In fact, a big Philippines delegation participated in the Army 2016 technical forum in Moscow, which was held in September. They met with people from the defense ministry and the Federal Service on Military and Technical Cooperation (FSMTC).
“We are negotiating a defense cooperation agreement right now. We already had one round of negotiations and it’s going very well. It is focused on exchanging information and training, which could help develop a better understanding between our defense officials,” Sorreta says.
According to him, Russia and the Philippines are also in talks about another agreement for purchasing military equipment. As the Philippines is currently implementing a modernization program for its military, it is buying equipment and that makes it a potential buyer of Russian weapons. In fact, thereis a lot of interest on the part of Russian companies.
“We’ve had preliminary discussions with FSMTC and these have been quite enlightening. Aside from discussing military equipment and technology that were available from Russia, they also touched on the issues of training, after sales service and maintenance, transfer of technology, investment in domestic military production and servicing, and different modes of financing,” explains Sorreta.
Russian and the Philippines are also drafting another agreement on sharing intelligence information. It will be a more specific agreement, focused on counter-terrorism, international crime and drugs.
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Russia’s positive role in regional security
In general, the Philippines views Russia as an important actor in the Asia-Pacific, as a nation contributing to the region’s stability. Ambassador Sorreta underlines that that it’s important to know the Russian view on the situation in the South China Sea and how Russia sees Philippines’ capabilities and those of the Chinese. “We don’t see Russia taking sides in the situation. Even though Russia did not support the arbitration resolution, it keeps supporting a peaceful resolution in accordance with international law, particularly the Law of the Sea, which is very important,” argues Sorreta.
The Philippines viewed the recent joint Russia-China drills in the South China Sea as being conducted in full compliance with the Law of the Sea. Ambassador Sorreta explains that Manila understands that Russian and Chinese military have very good reasons to work together and to cooperate; besides, it contributes to building confidence between the two countries.
“I think Russia has no intention of adding to the conflict in the South China Sea. And we have been informed that the exercises would not be in contested areas,” underscores Sorreta.
Potential for economic ties
In 2014 Russia-Philippines trade turnover stood at just $1 billion. Moreover, oil is the largest commodity that tips the trade balance in Russia’s favor.
However, there are opportunities for other products from Russia to take their share of the Philippines market. Meat and chicken products have potential. For example, chicken in Russia is far cheaper and far fresher than the one the Philippines import now, Ambassador Sorreta points out. “It’s guaranteed to have no GMOs and it’s not injected with all sorts of hormones, which makes it a very unique product. That kind of product from the U.S. is called organic, and is very expensive. Here in Russia it’s an ordinary chicken.”
As for Russia’s imports from the Philippines, they are not that extensive and are limited to processed fruits and some other agricultural products, tobacco leaves, some auto parts, cocoa fiber (used in car seats) and some chipsets.
“We want to break into Russia’s banana market. Russians eat a lot of bananas and we are the major producer in Asia. We supply 90 percent of bananas in Asia,” notes Sorreta. However, the demand is very high and the Philippines need to produce more bananas. “I spoke to a supermarket chain in the Russian Far East and they are very interested in bananas from the Philippines,” concludes the Ambassador.
Focus on bilateral trade
With Russia’s increased focus on Asia and its plans to expand Eurasian Economic Union (EAEU) ties with the Asia-Pacific, the Philippines could be interested in a free trade agreement (FTA) with the EAEU. During the recent Russia-ASEAN Summit in Sochi, Russian President Vladimir Putin enthusiastically pushed the concept of a FTA between the EAEU and ASEAN.
Indeed, the Eurasian market is very large and many countries are interested in entering it. Although many ASEAN leaders welcome this idea, it won’t happen in the near future, argues Ambassador Sorreta.“For the Philippines, we still need to see the potential. Our trade is still very low to talk about a FTA,” explains Sorreta. Moreover, there are another large economic projects in the region, the Trans-Pacific Partnership and China’s Silk Road initiative, which make regional states weigh their decisions carefully.
“However, it does not mean Russia and the Philippines can’t work closer on a bilateral basis,” concludes Sorreta.