[ANALYSIS] Is Duterte ready to handle a looming Middle East crisis?

While the Philippines has been transfixed in the last few days on the boat-ramming incident involving 22 Filipino fishermen in the West Philippine Sea, further west near the Persian Gulf, another maritime episode blew up, escalating an already tense situation in the Middle East, home to over two million Filipino workers.

Like the brouhaha at the Recto Bank, the attack on two cargo ships  in the Gulf of Oman on June 13 poses a grave problem for President Rodrigo Duterte, as the country risks getting entangled in a larger power play that could result in a major regional conflict. As it happened, 32 Filipino mariners worked in the two vessels that reportedly got hit with limpet mine and caught fire.

In another encounter on June 20, Iranian surface-to-air missile shot down an unmanned American drone over its territory. The US confirmed the report, but insisted that it took place in international waters, making the strike potentially more combustible. On June 21, the New York Times and the Associated Press reported that Trump approved a retaliatory strike against Iran on Thursday night, before backing down.

With threats of military action and looming deadlines swirling around, the next few days and weeks are critical in determining whether a diplomatic solution could still be salvaged, or if the heated rhetoric could lead to war – the consequences of which, analysts say, are unimaginable.

So what does it have to do with Duterte and the Philippines? Two things: Unprecedented OFW repatriation and sky-high oil price.

But first, some background.

Nuclear deal

At the center of this brewing tension is Iran and the nuclear deal that it signed with the US and other world powers in 2015.

In exchange for giving up its nuclear enrichment program, international sanctions against Iran were lifted, allowing it to sell oil in the world market, and resume trade using the global banking system. The deal also put on hold decades-old antagonism between Iran and the US.

However, when US President Donald Trump came to power in January 2017, he started dismantling the deal, withdrawing altogether in May 2018. He said it failed to curb Iran’s ballistic missile expansion and its “malign” activities in the region — grievances that are not covered in the agreement.

Observers say that while Trump has low appetite for war with Iran, his “incoherent” Iran policy and “reckless” pronouncements are leading him into that direction. His national security advisor, John Bolton, a top cheerleader of the disastrous 2003 Iraq invasion, is also known as an anti-Iran hardliner and had boasted that 2019 would be the end of the Islamic Republic.

Pursuing a “maximum pressure” policy, Trump then reimposed oil sanctions against Iran, and threatened to punish other countries that continue to trade with it.

As a result, Iran’s economy has tanked and its currency lost more than 60 percent of its value since last year.

Against the odds, Iran has held on to the deal. According to UN nuclear inspectors, Iran continues to comply with its commitments to the agreement. Previously, Iran had also hinted willingness to talk about regional security issues, as long as the US and other signatories keep their end of the bargain.

Trump has upended all that, pushing Iran into a corner and leaving it with no choice but to fight back. Iranians are not known to be pushovers, afterall.

Amid insults and threats from Trump, Iranian leaders have also discounted any talks until US sanctions are lifted. They said negotiations should be based on mutual respect.

Earlier this week, EU foreign policy chief Federica Mogherini, one of the architects of the 2015 nuclear deal, has already conceded that keeping the deal alive is not going to be easy.

The fear is that absent real diplomacy, miscalculations and other incidents, much like the Gulf of Oman sabotage attack and the downing of the drone, would push the protagonists into open hostilities.

Iran has announced that by June 27, it will reach the 300kg limit of enriched uranium set by the nuclear deal, putting it on the brink of breaking the nuclear agreement, further complicating the issue.

Still, Iran has left a small window for last-minute negotiations until July 7, before it will reduce its compliance of the deal —  a move the US and its allies warned would lead Tehran into a path to nuclear weapons production.

After that, all bets are off.

Warning

Ironically, the US government has urged Iran to continue complying with the deal – the same piece of paper Trump thrashed a year ago.

Trita Parsi, founder of the National Iranian American Council, remarked on social media, “Remember, we are only on the verge of war with Iran, because Trump senselessly chose to withdraw from the Iran deal.” In his post, Parsi, a proponent of diplomacy, seemed resigned about the inevitability of war.

Security and diplomacy analysts are now warning that an Iran-US war would leave the entire region in flames with unimaginable number of casualties. That would make the US invasion of Iraq in 2003 seem like a cakewalk, they added.

In the fight, the US and its allies have far superior weapons, but not without vulnerabilities, which Iran can exploit.

From Saudi Arabia to the United Arab Emirates and Bahrain, these Arab states host American military installations that are within striking distance of Iran’s arsenal of ballistic missiles. Qatar, which maintains diplomatic and strong blood ties to Iran, may not be spared either, as it hosts the largest US air base in the Middle East. Iraq, Yemen, Israel, Lebanon and Syria could also be dragged into the mess.

In all these, the Philippines may only be a bit player. But the Middle East hosts more than two million Filipinos, including over a million in Saudi Arabia, Iran’s regional rival. In contrast, there are about a thousand Filipinos in Iran.

In the event of war, the logistics of a mass evacuation would be a nightmare for the Duterte administration. For instance, it would take more than 5,500 trips of an Airbus 330 to repatriate all Filipinos from the region. The evacuation of OFWs during the first Persian Gulf war in the 1990s would pale in comparison.   

Consequently, millions of jobless overseas Filipino workers will be back in the country, translating to billions of dollars in lost remittance. In 2018, overall remittance accounted for 9.7 percent of the Philippines’ Gross Domestic Product.

That is only the beginning of Duterte’s headache though.   

Oil prices

Following the drone downing last week, Brent crude futures went up 3.1%, at $63.75 a barrel. One analyst told CNBC that an all-out military encounter could drive up that price to $150 a barrel. Other estimates are much higher, with some pegging the oil price at $300 per barrel.

Even in US standards, that price would be unbearable. How much more for a country like the Philippines?

In the past, Iran had warned that it could block oil production and trade in the Persian Gulf, in case of US aggression. That is not an empty threat. The Middle East accounts for about 30 percent of the world’s crude supply. Any disruption would be devastating to the Philippine economy and the rest of the world.  

Recently, Saeid Golkar, an Iran expert at the Chicago Council on Global Affairs, told me that it would be “foolish” for the US to attack Iran. 

Iranian Foreign Minister Javad Zarif was also quoted as saying, “There will be no war because neither we want a war, nor has anyone the idea or illusion that it can confront Iran in the region”.

Realities on the ground are saying otherwise.

In such an unwelcome event, the Philippines will be left on the wayside. To borrow President Duterte’s term, we will become “collateral damage.” – Rappler.com 

 

Ted Regencia covered Iran for Al Jazeera English online from 2014 to 2019. He finished his journalism degree at Columbia University in New York.