PRESIDENT Rodrigo R. Duterte said his Chinese counterpart has offered Manila a controlling stake in a joint energy venture in the South China Sea, if it sets aside an international arbitral award that went against Beijing.

Mr. Duterte said Chinese President Xi Jinping told him during their recent meeting that if he ignored the Permanent Court of Arbitration’s 2016 ruling, China would agree to be the junior partner in a joint venture to develop gas deposits at the Reed Bank, located within Manila’s exclusive economic zone (EEZ).

“Set aside the arbitral ruling,” Mr. Duterte was quoted as telling reporters late Tuesday in remarks provided by his office on Wednesday.

“Set aside your claim,” he said, quoting Mr. Xi. “Then allow everybody connected with the Chinese companies. They want to explore. If there is something, they said, we will be gracious enough to give you 60%, only 40% will be theirs. That is the promise of Xi Jinping.”

Chinese Foreign Ministry spokeswoman Hua Chunying did not give specifics at a briefing on Wednesday on the exchange between the presidents, but said Mr. Xi noted that cooperation would yield greater progress in exploiting the sea’s resources.

Ms. Hua said Mr. Duterte had expressed willingness to hasten maritime oil and gas exploration and development cooperation between China and the Philippines. With regard to some “specific situations,” working groups between the two sides would consult closely, she said.

The tribunal in The Hague clarified maritime boundaries and the Philippines’ sovereign entitlements, and in doing so, invalidated China’s claims to almost the entire South China Sea. China does not recognize the ruling.

Mr. Duterte has sought to befriend Mr. Xi, hoping to secure billions of dollars of investment, avoiding challenging China over its activities in the South China Sea, including its militarized artificial islands.

BIG SETBACK
Any agreement to forget the arbitral award and team up with China would be a major setback to other claimants, especially Vietnam and Malaysia, which like the Philippines have experienced repeated challenges from China’s coast guard inside their EEZs.

The United States has called that bullying and coercion aimed at denying rivals’ access to their energy assets.

Mr. Duterte did not say if he had agreed to Mr. Xi’s offer, but said the part of the arbitral award that referred to the EEZ “we will ignore to come up with an economic activity”.

The tribunal said the Philippines had legal rights to exploit gas deposits that China also claims at the Reed Bank, about 85 miles (140 kilometers) off the Philippine coast.

The Philippines’ only accessible gas resources at the Malampaya fields will run out by 2024.

A joint project with China has been talked about for decades, but has gone nowhere due to the competing claims.

Joint activity could be deemed as legitimizing the other side’s claim, or even relinquishing sovereign rights.

Philippine Foreign Secretary Teodoro L. Locsin, Jr. on Wednesday told ABS-CBN News Channel that a preliminary agreement between China and the Philippines would avoid stating which country was entitled to the gas.

“It’s very clear — no legal position is compromised if we enter into this agreement,” Mr. Locsin said, adding that putting aside the arbitration case was immaterial, because an international court had already made its decision.

“It’s final and binding.”

ANALYSTS CAUTION
Sought for comment, analysts urged careful study of Beijing’s overtures.

“The problem with the proposal raised by President Xi, assuming the conversation really took place, is that it places our claim in a weak position, coming from an assumption that we are the ones who are asking the Chinese for something,” Enrico V. Gloria, political science assistant professor of the University of the Philippines-Diliman, said in an e-mail on Wednesday.

“This is a very problematic assumption as it seems to ignore our victory in the arbitration court. The Philippines should be at the driver seat and be the one setting the conditions and parameters on any joint cooperation project in the West Philippine Sea by virtue of us having sovereign rights in those areas, as ruled by the arbitration court,” Mr. Gloria explained.

“While it might not be obvious for the president, the whole conversation he cited appears to have changed the entire narrative of the Permanent Court of Arbitration ruling itself — that is, China has the sovereign rights and, crucially, we are merely asking for their ‘graciousness’ to exploit the resources within it with them. And that is a thought (or a narrative) the President should be wary about.”

For his part, Michael Henry Ll. Yusingco, senior research fellow at the Ateneo de Manila University Policy Center, said in a separate e-mail: “First, it is not helpful to him because it makes him look like a weak leader. I do not believe he wants to be perceived as such. I know Filipinos would never want their President to be seen by others, specially by other countries, as a weak leader. We always want to our President to project strength in the international stage.”

“Second, it is not helpful to Filipinos because the apparent capitulation to China is very disheartening. Filipinos know that the Philippines is not a powerful nation but protecting and preserving the country’s dignity is still very important. An obvious submission by our national leader to the demands of a foreign dictator is very hard to accept,” he added.

“Third, it is not helpful to the country’s long-term future because the apparent capitulation can alienate allies in the region. The full pivot to China may cause other countries to change their policy towards the Philippines — changes that can raise both security and trade concerns for us, which we may not be ready to address,” Mr. Yusingco continued.

“Strengthening our bilateral relations with China is not a bad move. In fact, it is necessary. But the statements and behavior of our government officials leading this effort must be consistent with the constitutional prescription that the Philippines must always pursue an independent foreign policy. Our government officials, the President most especially, in dealing with foreign nations must always project in words and in deeds the constitutional prescription that the Filipinos’ paramount concern is always national sovereignty and territorial integrity.” — Reuters with A. L. Balinbin

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