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Building New Islands, Military Bases & BFFs

A new man-made island project could be a tactic to ease conflicts over a $5T trade route or a relationship builder.

Philippines President Rodrigo Duterte left his recent visit to Beijing with $9 billion in soft loans and a deal covering the construction of four artificial islands that will, in theory, house government offices, businesses, housing, port terminals and factories.

The 0.8 miles of land will be transformed by dropping sand into the South China Sea just beyond the coastline of Davao City.

China’s state-owned CCCC Dredging, the largest such company in the world and subsidiary of the China Communications Construction Company, has been awarded the project contract, which could be completed as early as 2019.

The deal raised eyebrows for a number of reasons.

First, this newfound BFF dynamic between China and the Philippines comes after decades of disputed territorial rights in the South China Sea. The most recent quarrel ended this past July with an international tribunal ruling that China’s claims to the these waters, and the chain of man-made islands it has been creating there, had no legal basis.

Furthermore, the ruling said that the artificial islands violated the Philippines’ sovereignty rights. China, of course, rejected the rulings.

So, while President Duterte cites the loans and island project as a way of mending fences with China, it should also be noted that the islands China is building in this disputed waterway channel about $5 trillion in trade every year.

Then there’s CCCC, the same company that built those islands China classifies as civil-military locations. In particular, the company has come under international scrutiny for its role in an island dubbed Mischief Reef.

Mischief Reef was part of the aforementioned tribunal rulings, but in addition to territorial rights, it was also found that the dumping of sand upon coral reefs caused permanent and irreparable harm to the ecosystem.

Furthermore, in 2011 the World Bank barred the company from road and bridge projects until 2017, citing fraudulent practices during work performed – you guessed it – in the Philippines.

And in case you thought Mischief Reef might just be another party-themed spring break location that lent its name to a late night Cinemax flick, recent satellite images show runways, hangars, and construction projects throughout.

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