THE trick about horror films is that it is less about what the viewer can see onscreen, than what the director chooses to leave off-camera. The killer lurking around the corner, the monster that might appear in the mirror, the body stashed in the closet. What we can see often borders on the banal: a man walking the alleyway, a woman fresh out of the shower; what we cannot contains the phantasmagoria of the psychological drama that keeps us in suspense in our seats, and suspended in the tale. We call this latter negative space — everything that surrounds the main action in the proscenium. It is in the negative space where power is wielded in a horror film. And in the international arena, it is in the negative space where true dealings take place. After all, thrillers and international politics share one thing: dealing with the unknown.
Last week, the Department of Tourism (DoT) inked a memorandum of agreement (MoA) with Dubai-owned Emirates Airlines, after making overtures in late August about increasing flights to Manila from the littoral. The purpose, according to Tourism Undersecretary Benito Bengzon Jr. is to “promote the Philippines not only in the Middle East but also in Europe, connecting the travelers directly to the Philippines’ major destinations such as Manila, Cebu and Clark via Dubai.”
This is promising considering our national carrier, Philippine Airlines (PAL), has one sole route to Europe — London — and was recently compelled to scale down its European presence given overextended financials. In the first half of this year, PAL posted a net loss of P3.33 billion compared to only P1.4 billion in the same period last year. With Emirates by our side, the hope is to boost tourism revenue, without taxing our economy and our airline industry. Noble, indeed.
Economic statecraft through aviation is not new hack. Airlines are good public relations vehicles. And no one knows this better than the Gulf states. Just look at sports jerseys and football fields during any World Cup.
Gulf carriers have been noted for their robust presence in the airline market, even recently getting into hot water with the United States over their abidance with open skies agreements. In a bid to boost non-oil revenues and driven by what we in political science call, “the second-image-reversed” — essentially, foreign policy shaping domestic affairs — state-owned Gulf airlines have actively pursued destinations, code shares, agreements and footholds in foreign markets.
Abu Dhabi-owned Etihad Airways has been the most expansive in this, acquiring major stakes in foreign airlines. The roster includes a 40-percent stake in Air Seychelles, 29-percent in now-defunct Air Berlin, 24-percent in India’s Jet Airways, 49-percent in Alitalia, and a whopping 75 percent stake in Alitalia’s frequent flyer program at one point, to name a few. Most notable of its investments, however, was the 49-percent buy-out of Serbia’s struggling Jat Airways in 2013 on the condition that Etihad manages the airline for the subsequent five years. Etihad rebranded Jat to Air Serbia, extensively restructured and added destinations. Sales soared.
Most significantly, what the Serbian partnership ushered in was a new age of Emirati investment. Soon thereafter, the Abu Dhabi Investment Authority signed a $1-billion loan agreement with Serbia, Emirati Al Dahra holding purchased and ran eight state-owned farms, Emaar properties invested in the Belgrade waterfront, and another Emirati holding invested in the Serbian arms industry. The rest of the Balkans benefited, too, as more Emirati investments made their way to neighboring Croatia, Montenegro, Albania, Bulgaria and Bosnia in big-ticket infrastructure financing projects such as the $228-million purchase of Porto Montenegro and the $115-million Tirana road and river projects.
In a perfect world, our DoT partnership with Emirates would induce just this: an increased foreign equity stake in PAL; restructuring and rebranding of the airline under new management, akin to JAT; and most significantly, a boom in foreign direct investment, especially for large infrastructure projects that could cater to the trade needs of our investment partner-nation, such that we have a ready market for our goods. The arms industry, agriculture and oil drilling in the West Philippine Sea certainly come to mind. And in early June, there was already noise of a potential IPO raising the ceiling of a foreign-owned stake in PAL from P13.5 billion to P20 billion. The scenario is not far off.
But, in the Balkan case, that was Etihad. This is Emirates. The same Emirates which refused to invest in Air India, when it was offered in 2018; the same Emirates which chided Etihad for overextending itself, investing in foreign airlines; and the same Emirates whose president, Tim Clark, indicated in 2018 that “Emirates has no plans to buy or acquire any airline” and that “equity stakes [are not] on the table.” This is also the Emirates owned by Dubai — the emirate most hit in the Gulf by the Lehman Brothers financial crisis because of its connectedness to world markets; the emirate whose national minimum wage pales in comparison to its Gulf neighbors; an emirate reliant on oil, whose prices have been falling; and an emirate quite active on bond issuances whose debt is at an estimated $65 billion, 56 percent of its GDP. Perhaps we are barking up the wrong tree.
The most salient aspect, however, that can work against us is Dubai’s position in the Gulf crisis of 2017 that reshaped the geopolitics not just of the Gulf states, but of its allies and partners. On June 5, 2017, Saudi Arabia, the UAE, Bahrain and Egypt cut all diplomatic and trade ties with Qatar, essentially bifurcating the region into two camps. This, right here, is the negative space in our dealings with the Gulf. The Gulf has not been the same since and all borders have been shut between the two.
I shall spare the details but what this means for us is that aligning too closely with Dubai, whose officials have been the most vociferous in their disdain and contempt for neighboring Qatar, would alienate the other side, who may very well prove to be lucrative trade partners. It is no wonder we have yet to harvest Qatari state investment, in spite of talks in late 2017 to invest in the Philippines through Islamic bonds, or sukuks, for the energy sector, and in spite of an exploratory mission by their sovereign wealth fund early this year, according to a Philippine source.
It is not just Qatar we would alienate should we curry too much favor with Dubai. We would distance ourselves from Turkey, Iran, Lebanon and a whole host of countries that pledge close allegiance to, and which rely heavily on, the blockaded nation. Notably, Qatar and Iran, quite unlike the blockading quartet, rely on natural gas reserves whose prices have not been quite as vulnerable as oil. These are the economies we may unintentionally lose. Especially with Arabs, politics tends towards the Manichean.
One cannot help but see the links between the 12 Filipino fishermen arrested by Iran in the Strait of Hormuz last week, and the visit of our special envoy to the Gulf cooperation Council, Amable Aguiluz, to Bahrain about a week before the fishermen incident. Quid pro quo. A closer alignment with Qatar, rather than Bahrain (which, too, has been quite vocal about its disapproval of Qatar and especially Al Jazeera), would have likely saved us from diplomatic incident. We must tread more carefully in the negative space, especially in crises of which we are not a part and whose roots we cannot fathom. In politics, karma is real.
For anyone abreast with the goings-on in Gulf politics, our MoA with Emirates can only be read as taking sides. A way to ameliorate this quandary is to ensure parity when dealing with the Gulf and its state-owned entities — at least until one side demonstrates a commitment to draw us into their sphere of influence, much like the UAE in the Balkans.
We cannot extend our reach into the Gulf with simply a constricted view towards the bilateral; we must consider the politics that engulfs the Gulf. It would not bode well, otherwise. For a country in need of investments, we cannot afford to alienate — lest we become the alienated.
It is a good diplomat who knows that bilateral dealings are never just about the two countries; they are about the negative space that envelops each. One must know the psyche of the other more than one’s own. This is what separates the novice from the seasoned in foreign affairs. It is a good diplomat who can turn the negative space into something positive for one’s nation and one’s economy.
The Gulf is a good partner with whom to do business, but its currency is loyalty. We must deal with dexterity. Otherwise, we may just end up seeing our own monster in the mirror.
The author is an economist who holds master’s degrees in government and international history from the London School of Economics, and a bachelor’s degree in international politics from Georgetown University. She has trained at Harvard University on international education and admissions.
Follow her on Twitter (@kq_avisrara).