Has the economic fallout from the Iran war boosted China’s global leverage?

[00:00:00]Will tensions from the South China Sea to the Bay of Bengal and the Straight of Hormuz push nations to counter or cooperate with China? With Azon foreign ministers [music] meeting in Manila, the Philippines airs its grievances with Beijing while a great game [music] gets underway in the Bay of Bengal. All while US action in the Gulf chokes [music] energy supplies across Asia. So, as geopolitics collide, will nations be forced into new [music] alliances?

[00:00:29]I'm Andrea Si and this is the newsmakers.

[00:00:48]Well, it may not feel like the biggest story right now, but the Azon meeting underway in Manila illustrates something huge. the global power competition at play where the world's biggest powers are strategizing to maintain their security and superiority. From managing tensions in the South China Sea to fallout over the Strait of Hormuz, deals reached now in the Philippines could easily shape our collective security future. It all coincides with the tugof war over strategic ports in the Bay of Bengal as well as in the South Pacific where nations big and small look to counter or cooperate with China's expansion. Here's a look now at that complicated picture.

[00:01:30]>> Oil shortages from the Iran war, security partnerships, and China's growing assertiveness in the region loom over the 2026 AAN summit. Foreign ministers and top diplomats from 11 countries that make up the Association of Southeast Asian Nations converged on Manila in the Philippines.

[00:01:51]Additional non-members and regional partners were also in attendance.

[00:01:56]The Philippines and China wasted little time in trading accusations of aggression in the South China Sea.

[00:02:03]Manila condemned Beijing over an incident, saying one of its sailors was injured on the back of the head, allegedly struck by a member of the Chinese Coast Guard holding a baton in shallow waters near Second Thomas Shaw.

[00:02:16]China rejected the account, saying Philippines boats ignored warnings and struck first by ramming one of their patrol vessels.

[00:02:24]>> China had no choice but to respond resolutely in accordance with the law.

[00:02:29]But security issues further a field also come into play. While not an AAN member, Australia has entered into a series of sweeping new security pacts and agreements with Pacific Island nations.

[00:02:43]Following a change of government, the new Solomon Islands Prime Minister, Matthew Wall, promised in June to review a secretive Beijing security arrangement signed in 2022 and to negotiate a more comprehensive treaty with Australia. In late June, Vanuatu signed a new agreement with Australia under which it agreed to prohibit any foreign military bases on its territory while also agreeing to consult Australia first when a third party is involved in infrastructure. But it was a new agreement in early July between Fiji and Australia that prompted the most serious reaction from China. The Ocean of Peace Alliance introduces a mutual defense obligation and there's no higher obligation than to come to each other's aid at a time of need.

[00:03:37]>> It marks Fiji's first official defense alliance with another country. I do not expect uh China to have any severe push back on either uh governments but I and I believe that they will welcome the the understanding that it is between Australia and Fiji. It is not uh it does not threaten Fiji's relationship with China nor Australia's relationship with China. But within hours, China fired an intercontinental ballistic missile from a submarine into waters of the Pacific Ocean. The missile carried a dummy warhead, and China said that the test was routine military training, not aimed at any country or target. Neighboring nations condemned the move, seen as a symbol of China's growing military might. Further westward, the Bay of Bengal and Indian Ocean emerge as arenas of increasing strategic competition.

[00:04:40]China is moving to accelerate the China, Myanmar, Bangladesh economic corridor, a way for Beijing to secure overland access to the Indian Ocean. India sees the China, Myanmar, Bangladesh economic corridor as a cause for deep concern.

[00:04:58]New Delhi perceives it as a systematic effort by Beijing to encircle its eastern flank, bypass the Malaca Strait, and put the Indian Ocean firmly within China's sphere of influence. This summit largely meets in the shadow of the Iran war, the Homus crisis, and South China Sea tensions. But agreements, decisions, and outcomes from these summits will play an outsized role in shaping global events.

[00:05:29]Joining me now to look at how those outcomes might shape what's to come are from Beijing, senior fellow at Tah Institute, Inar Tangan, from Dhaka, founder of Dhaka Forum, Ashvak Zaman, and from Manila, former legal adviser to the Philippines government on maritime issues, Jay Baton Bakal. Thank you all so much for being with me. I I think I have to preface this by saying there is an overwhelming uh number of really shifting components here at play. But let's start with the South China Sea and the pictures of that, you know, confrontation near the second Thomas Shaw. They look like the offshore equivalent of a of a street fight, but with huge implications and very strategic timing. Jay, your foreign secretary raised it immediately with with Wang Yi. So do you expect things to escalate or deescalate from here and to what end?

[00:06:26]>> Well, I think uh the message now comes from the very top with the president himself having summoned the Chinese ambassador and having met with him last night. No, the idea really is to try to deescalate the situation. You're right.

[00:06:39]The timing is quite uh bad for this uh thing to happen uh especially on the eve of a major uh meeting uh involving the Asan as well as the other uh regional leaders and powers.

[00:06:52]But Manila may this is the bigger issue I guess at play here because if these tensions continue if they persist like this between Philippines and China over the South China Sea you know Manila may have been looking to the United States for kind of protection from China in this space. But might that have to change now given what Washington has done in the straight of Hormuz which which leaves Manila potentially needing China for its energy security.

[00:07:24]>> Well, I think that calculations are still the same with respect to the relationships. The recent changes in US policy of course present huge challenges and that's a given. However, I think that in terms of the interests, no, they're still aligned. So that will provide a little bit of consistency with respect to the relationship between the Philippines and the United States and certainly what has happened in the straight of four moves has uh given them new factors now to consider. No. Uh with respect to China again the message from the president has been clear that they will try to uh find ways to cooperate despite all these tensions. So I think it's going to be quite challenging uh to say the least. No, but it will uh still proceed along the same track trying to uh ensure that the Philippines interests are protected either way.

[00:08:18]>> Okay. But do you think the Philippines can actually continue to hold that hard line on these, you know, so-called sovereignty disputes in the South China Sea?

[00:08:31]Oh definitely the positions will uh will still remain the same in the same way that we don't expect China to change its positions. No after all these are already in a way set in stone for the for a large extent that's why the challenge really is to find ways to still be able to find the modus bendi find some common ground to work on. Now events like what what you're showing now on the screen uh always present new challenges because it certainly does not uh contribute to the building of even just the basic trust and confidence. No, and that's what's really sorely lacking uh in the relationship between the two countries now. Uh there's really no way to go but but up.

[00:09:09]>> Okay. Then let me ask for his opinion.

[00:09:12]Where do you see this going? And and how much do you think the US war on Iran has perhaps perhaps changed the amount of leverage China has in the South China Sea and and globally for that matter.

[00:09:28]>> I I don't think anything's changed for China. I mean, if I score an own goal, doesn't mean that somebody else is winning. It's just it means that I'm losing. And uh quite frankly this idea that somehow the Philippines is not acting as an agent to the US is I think uh fairly transparently wrong. I don't think anybody sees that the Philippines is acting in its own interest. Remember the Philippines is part of ASEAN. The extent that it is part of ASEAN China will continue to deal with it. But I mean this kind of rogue behavior attacking Chinese coast guard ships while there is a meeting going on between the highest levels is purely theatrics. Now, it it might uh somehow serve the current president to say that, you know, look, you know, I'm I'm I'm being strong, but quite frankly, he's on his way out, and he has to worry more about who's going to protect him from being indicted or prosecuted after he leaves.

[00:10:33]It's interesting, Inar, because the Philippines has insisted that it was China's sailors in this scenario that traveled thousands of miles into what the Philippines calls its exclusive economic zone in order to kind of start this fight with this timing uh to show that it's, you know, or so so that this could come into a part of part of the Azion discussion. But why do you see China having effectively the right to be there and that it was the Philippines that was doing the kind of bullying here?

[00:11:06]>> Yeah, that's the difficult thing, Andrea. I mean, rights, international law. Tell me about it. Uh, you know, let's look at the recent history about what's going on. What right is the US to have to go into Venezuela or to Iran?

[00:11:21]The fact is the international structure.

[00:11:24]>> But we're talking only about the China and the Philippines here. That's why I'm asking specifically about this.

[00:11:28]>> But that's my point.

[00:11:30]>> No, no, that's my point is that the China and the Philippines have fallen into this issue where for whatever reason Marcos despite being deposed by the US or at least intended to at least his father has somehow thought that he is aligned uh with the US is not going to supply energy to the Philippines except in market prices.

[00:11:54]>> Okay. this idea that somehow the US has come to Philippine rescue is not is not correct >> in terms of the South China Seas I mean this is transparently uh an issue which is they're acting on behalf of the US as it's leverage with China >> Jay I' I'd like to get your response to that because I know you are especially in this particular situation the most recent escalation that we're seeing the visuals of you truly believe that China went out of its way to kind of start this visual conflict here. Uh so where is INR wrong in your opinion? Go ahead.

[00:12:33]>> Well, to say that the Philippines instigated an attack on the China Coast Guard in the situation clearly is belied by the facts. Number one, this is already more than 800 nautical miles away from the Chinese coast. No. And the location where this happened is something like 50 nautical miles away from the nearest artificial island of China. And that location is also surrounded with an overwhelming presence of Chinese ships. No. So to think that a lone outpost with just a few men would try even to start a fight in that situation is just I think uh inconceivable. These people are professional. They're marines. They're far more battle than >> you can't see the video.

[00:13:16]>> I I can't hear.

[00:13:17]>> You can't see the video because we have seen the video and in fact it is spliced. No, you see only a few seconds of the video. The ones of course that are provided by China from their perspective.

[00:13:27]>> Okay. But >> you perhaps have not seen both sides.

[00:13:31]>> Yeah. And I mean and you obviously have differing views between the two of you here. But then Jay, very quickly, I'm just going to ask you to restate then what to what end would China do this now?

[00:13:43]What do they want to prove? Go ahead. If in your opinion, go ahead.

[00:13:49]>> Yeah. The timing as uh noted is quite suspect being on the opening of a major discussion, a major meeting that the Philippines is hosting. Clearly the idea is the Philippines somehow would uh place more importance on the meeting succeeding than making noise or objecting to what they do on the ground.

[00:14:10]And what it the the problem with that they've done on the ground really is that this is like a a boa constrictor essentially. By doing these things, they're increasingly uh uh gaining or or taking control of the area around this lone outpost in the middle of the sea, limiting the movements of the people themselves. So eventually, I think that the idea is to really just close that uh area off through these constrictions.

[00:14:35]No, and kick the Philippines out of its own exclusive economic zone.

[00:14:40]>> Okay. I'll tell you what, Anar, I know you disagree, but we we also have to look at, of course, other factors. As I said in the on the outset here, there's uh there are so many angles at play in all of this and we have to look at the Bay of Bengal where China is actually building an economic corridor and must be said this is much to India's dismay uh building that corridor with Myanmar and Bangladesh. So Ashwak is this purely economic interest or does India have the right to worry about encroachment on its security here?

[00:15:17]Uh thank you. Uh uh at this part of the time this agreement is not done. What we are doing is basically there was a discussion when our prime minister visited China and this the initial discussion took place of obviously Beijing has expressed their interest to continue the project as part of their road and belt initiative and the Bangladesh official response was that we will review this and we'll get back to you. So this is still under you know review. We are seeing what it means for our own economy because the current government's foreign policy is Bangladesh first. So we have to weigh in the scale that what it means economically for us, politically for us and only then that official response will be given. But yes the uh I mean the discussion has taken place and it is not a new discussion. It has already taken place quite a years back and initially India was actually part of this plan uh with their objection. Now they maybe they're reviewing it how they can do it with India without India and at the end of the day we'll only get to know about the outcome maybe not probably uh in in in quite soon.

[00:16:20]>> Ashwak do you think it's right uh to hear it described as a great game being played in the Bay of Bengal.

[00:16:34]>> All this plan at this point of the time these are not military plans. These are all focused based on economy. Even the the the deal that was actually signed was actually the Mongla port the Bangladesh China Mongala port terminal that was actually being signed and what we expect from there is actually a ecosystem of supply chain not an ecosystem of submarines. So we have to understand that this these are not defense packs these are economic packs and at the end of the day these packs may also benefit the whole region. You have to take into consideration the positioning of Bay of Bengal. We sit between connecting the south as well as the Southeast Asia and it's a humongous humongous opportunity. Uh India is already part of BIMTech who will be enormously benefited from all these initiatives we are talking about both sea and land. We have Nepal, we have Myanmar, we have India as part of the bilste which represents almost a quarter of the world's population and almost $4.7 trillion economy. And if you just put you were talking about RCN just a few minutes back and if you compare with the REAN trade the inter regional trade is 25%. Within this beamst representing quarter of the world population it is only 7%. So we want to definitely increase the trade and building infrastructure let it be on the port or in the land is just another means of expanding that.

[00:18:01]>> Okay. So in you know is India I don't paranoid is not the word but is it overly concerned with this you know becoming too much of what it sees as China's Indian Ocean strategy that compromises Indian security in return.

[00:18:21]Well, Andrea, let's get a couple of things straight. I mean, both in in Bangladesh and Nepal, you had a situation where the US through the National Endowment for Democracy and other allied entities that are run by the CIA and financed by Congress and directed by Congress were involved. I mean, these Chinese posters and you know all these movements, somebody had to pay for them. So if India is looking for a culprit and they they have been they're quite well aware that the US was involved in both color revolutions in terms of what goes forward you have a party both areas that are looking for their own interests and in terms of what China is doing it's reacting to what Eldridge KBY who wrote a book in 2021 uh espoused he is now the policy the guru for the department of war and he said look the US has to take heammy in its hemispheric area so Monroe doctrine >> on steroids let's take um Greenland and stuff like that and then his second idea is that he has to the only way to combat China is to interfere with their energy uh coming in and then secondly to interfere with any trade going out and that means the straits of Malaa. So China is trying to avoid a direct confrontation by figuring out ways just like the belt and road edition so that it does not feel cut off. So that is what is really happening from China's perspective. Obviously Manila is pretty much on the US side and see how that changes.

[00:20:11]>> Okay. I know I'm going to stick with you quickly because we just have one more angle to look at uh before I I summarize everything with our other panelists.

[00:20:19]There are also issues as you know in the South Pacific whereby smaller nations seem to be backing either the Quad's strategic interests or China's. We now know that Fiji will host a quadsupported port to many say offset Chinese influence uh to the point where China they think is losing ground in the South Pacific. So do you read it that way?

[00:20:46]>> I I'm actually on the think tank that deals with the South Pacific Islands and what I see here is that countries do not want to choose sides. Uh, you know, Fiji, do you think they're going to go up against the US or China? I mean, they're stuck in the middle of a grinding match and what they're doing is trying to stay out of conflict. They don't want to be the center of anything.

[00:21:10]I mean, they've seen what's happened to countries that are in fact in that position. So, yes, at this point, they're doing anything to maintain peace. I mean, Fiji is not a large country. It's not even the size of most Chinese I mean American cities. So I I have no issue with the fact that they're trying to find peace at any cost. They don't want to be caught between these two powers as they go at it geopolitically. So I applaud uh their ideas of trying to stay neutral as much as possible. This is not about China, the US. This is about these particular countries.

[00:21:48]>> Okay. Jay, how is Manila registering what's happening in the South Pacific?

[00:21:56]>> Well, they have been paying attention to the South Pacific, of course. uh but oh and and there have been some initiatives especially at the academic level uh as well as uh some of the government uh outreach really uh but the truth is you know it's still very far meaning literally geographically so the resources are still quite limited but of course the government is exploring ways to enhance uh relationships with the South Pacific uh nations uh the real challenge for us really is that because of this uh what's happening in the West Philippines, in South China Sea, it tends to absorb the attention of government agencies right now. It's unavoidable given that uh it does tend to be um um priority a priority area at this point.

[00:22:43]>> Huh. Uh I know I could see you you were thinking something, but let me just get Ashvak back into the conversation. And Ashwalk, I mean, with your think tank hat on, how much do you see global power dynamics shifting, global power dynamics shifting over the South Pacific, the South China Sea, the Bay of Bengal, as well as the straight of Hormuz, you know, in other words, kind of a realignment of the global south.

[00:23:15]>> I probably would say that it has already shifted. So the question of whether it's shifting or not comes to the question itself. Uh I think the status quo is no longer what it used to be even a decade back. We have as we can also see with the war which was supposed to be a 4-day war has now you know entered into endless time. We don't know where when it's going to end actually. So um the global paradigm has shifted. I think regional blocks uh will be the way forward. uh at the end of the day it could not cannot be one superpower overwhelming or maintaining the supremacy overall. I think regional blocks will do the future negotiation let it be on the defense facts or let it be on the trade packs as well. So that's that makes regional forums like ASEAN uh the other regions bec even more important when we are talking about this particular region I think ASEAN has a phenomenal uh role to play over here on the deescalation of what's actually taking place and we hope that countries like Bangladesh who are also willing to be part of the observatory status of Garcia will also try to play a role in trying to diffuse the tensions very similar to what Pakistan has played a role in trying to diffuse the tensions between the Iran and the US war. So it's a very globalized community. You can I mean countries who probably was not considered to be any sort of stakeholder in in a particular situation can now play a significant role. I've just mentioned about Pakistan. So we hope that other countries will also come up and take a take a strong position.

[00:24:47]>> Jay I can see you agree but quickly your thoughts.

[00:24:52]>> I I disagree. I I think my colleague from the Philippines has stopped being a lot of people. The fact is we didn't really say anything said oh well you know considerations the fact that there is are two areas you can either jump on China's side and the US side which I think is mistake the Philippines has jumped on the US side or you can do what most practical countries are considering which is trying to stay out of it to stay neutral. The fact is that that actually helps China because China's not pushing an ideology whereas the US is.

[00:25:25]The US says you're either with me or against me. China just said can we do trade and do you agree with the one China principle but you have very very different attitudes very very different ideas about how the should be governed and that's what we're going to >> okay that will unfortunately have to be the final word for this edition of the newsmakers because we are completely out of time. So, I'd like to thank all three of my panelists sincerely so much for joining us, our viewers for being with us as well. Remember, you can follow us on social media and do be sure to subscribe to our YouTube channel. I'm Andrea [music] Sanki. We'll see you next time.