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Abe to offer ¥5 billion in loans in talks with Philippine leader Duterte

Kyodo, Staff Report

Prime Minister Shinzo Abe is looking to offer ¥5 billion ($48.2 million) in loans when he meets with Philippine President Rodrigo Duterte this week, bilateral diplomatic sources said.

The financial support is aimed at facilitating agricultural development in the southern Philippine island of Mindanao — Duterte’s home base — the sources said Saturday.

Duterte, who will make his first visit to Japan on Tuesday, was a longtime mayor of the island’s largest city, Davao.

Under the aid deal, Japan is expected to extend loans to financial institutions in Mindanao to help farmers expand business and improve productivity.

The offer comes after Duterte underlined the Philippines’ diplomatic shift away from Washington toward Beijing’s orbit during a four-day visit to China last week.

During his stay in China, Duterte announced a “separation” from the United States, a stunning but ambiguous statement that could upset the geopolitical balance in a region where Beijing and Washington are aggressively vying for influence.

The Philippines and China agreed Friday to practice self-restraint in the South China Sea and hold regular discussions on a bilateral basis in addressing maritime issues.

The agreement follows a sweeping ruling by an international arbitration tribunal in July that said Beijing’s claims to historical rights in much of the resource-rich South China Sea have no legal basis. The Philippines brought the case to the tribunal before Duterte took office in June, and Japan has been a strong backer of the ruling.

The dispute could be raised in Duterte’s talks with Abe.

“Since I have to talk to Minister Abe, I cannot make any projections of what will happen,” Duterte was quoted by CNN Philippines as saying Saturday. “But to the Chinese government, I said we will find the day to talk about only the issue of the South China Sea. It could be bilateral, it depends on the development, it could be multilateral and that would include Japan. Those are what I suggested, in the future.”

Japan, a close U.S. ally and the Philippines’ largest trading partner last year, is seeking to cement ties to the Southeast Asian nation with the agricultural assistance.

But how effective such a move will be remains uncertain as Japan competes with China, which has offered an economic package that would dwarf Tokyo’s aid.

Manila is expected to receive a total of $24 billion worth of investments and credit facilities from China, Philippine Trade Secretary Ramon Lopez said Friday in Beijing.

At the meeting with Duterte, Abe will also vow to strengthen cooperation in building infrastructure in the Southeast Asian nation while also providing maritime patrol ships in a bid to show Tokyo’s full support for Manila, the sources said.

Abe is also likely to reaffirm the importance of the rule of law for settling international disputes, including in the South China Sea, the sources added.

“Abe is in a tough spot during Duterte’s visit considering the geopolitical bombshell his guest dropped during the trip to China,” said J. Berkshire Miller, a Tokyo-based international affairs fellow with the Council on Foreign Relations. “Abe now needs to play a mediator or ‘cooling heads’ role and stress the importance of not accommodating to Beijing due to lucrative aid deals. He has to walk a tightrope, though, on criticizing Duterte — especially on human rights — as this will draw a public rebuke from the mercurial leader.”

Abe and the outspoken Philippine president appeared to hit it off in their first meeting on the sidelines of an Association of Southeast Asian Nations’ summit in Laos last month. At that meeting, Abe quipped that Duterte was “quite a famous figure also in Japan.”