The island of 120 people staring down China's military might

[MANILA] On a clear night, the Filipinos who live on Pagasa Island - a speck in the vast South China Sea - can see the floodlights from giant Chinese cranes working around the clock, dredging sand to build on a nearby reef.

Life on the atoll with its clutch of buildings was for decades leisurely and quiet, with sporadic Internet access and not much to do but fish and stroll on the beach. Now its 120-odd residents find themselves on the doorstep of a dispute over territory that has fed tensions among some of the world's biggest powers. Change has come to Pagasa in the constant presence of China.

More than 820km from the Philippine capital, and defended by a platoon of soldiers with limited weapons, the island is a gateway to reefs claimed and occupied by China. Separated from the nearest big Philippine island by a 36-hour boat ride in rough seas, it relies on ad hoc military flights and a quarterly visit from a resupply ship that has to dodge Chinese vessels to dock.

"We've become used to the sight of big Chinese ships around Pagasa," said Nelly Dalabajan, a 28-year-old nurse who went to Pagasa in February for a four-month rotation. "Seeing 30 ships and boats at one time is normal. We're worried about the Chinese driving us out."

As China and other South China Sea claimant states bicker, the waters that are a conduit for energy supplies to Asia and carry about half the world's merchant tonnage - US$5.3 trillion in goods each year - are increasingly tense. Amid the posturing, with China warning the US military away from reclaimed reefs and the US patrolling the area, the question is: Where does this end?

For the people who live and work in the waters the risk of a mishap is real, and China - the Philippines' second-biggest trading partner - is seen as unstoppable despite the efforts of other countries' militaries.

With a string of reefs on which to base its military, it'll have the potential to better control shipping lanes, fishing grounds and unproven energy reserves, and cause environmental damage to a sea that's famous for its pristine diving waters.

China has accelerated its reclamation, dumping sand to build airstrips on tiny rocks that may otherwise be submerged at high tide. It has built 1,500 acres of a total of 2,000 acres of land since December. Whatever the legal reality, China is building a case that these are now islands with structures, implying ownership.

China argues the reefs are within its sovereign terrain, and construction is needed to ensure navigational safety. It has said the reefs will be used for military as well as civilian purposes such as marine scientific research.

'JUSTIFIED, REASONABLE'

"China's lawful, justified and reasonable construction on some garrisoned Nansha islands and reefs is well within China's sovereignty," Foreign Ministry spokeswoman Hua Chunying said July 3, using China's name for the disputed Spratlys.

China's ships often nose close to Pagasa, sitting offshore for days within view of the island. Its coastguard boats chase Philippine fishermen. Fishing boats that are caught may have a near-empty hold, raising doubts among locals they are just there for the catch. And at night there is the winking of lights from the reefs.

"The big cranes have added to our worries," said Jorge Misajon, the 53-year-old administrator of the Kalayaan municipality that takes in Pagasa. "Our contingency plan is no longer confined to the evacuation of civilians. We're training people to defend the island."

Pagasa falls within the Spratly chain, contested in part by Vietnam, Malaysia, Taiwan and Brunei, some of whom also build on reefs and islands.

China's claim covers roughly 80 per cent of the South China Sea, including islands further north known as the Paracels. The Philippines is arguing its case against China's claims at a United Nations Arbitral Tribunal in the Hague this week.

OIL, GAS

China has placed at least three buoys near the disputed Reed Bank about 280km north-east of Pagasa, Philippine Congressman Francisco Acedillo, a member of the House of Representatives foreign affairs committee, said by phone. "My hunch is they're surveying for oil and natural gas," said Mr Acedillo, a former air force pilot.

For the residents of Pagasa, part of the anxiety stems from their sheer isolation.

While islanders get free food and housing to stay on the 37.2-ha isle, when Dalabajan first arrived there was no Philippine mobile phone service. Wireless Internet is shared between the civilian and military population, with times allocated for each group.

The tensions have brought changes to the relationship between fishermen and businessmen in the area.

SEEKING SHELTER

Chinese traders and fishermen used to come to Pagasa to hawk their goods or seek shelter in bad weather, according to Misajon.

In recent years a Chinese ship towed a Philippine fishing boat out of the Second Thomas Shoal while it was seeking shelter from a storm, and Chinese fishermen were caught illegally catching clams on the Pagasa shore, he said.

For Kalayaan municipality officer Joey Rabanal, 28, the boat journey between Pagasa and the nearest city, Palawan's capital of Puerto Princesa, brings the risk of Chinese encounters. His last major run-in was about a year ago.

Around 7pm on a stormy night, Rabanal said a 21m fishing boat he'd hired was blocked by a Chinese coastguard ship five times its size as it headed for Pagasa. The vessel sat for about an hour, shining floodlights and sounding a horn.

The Filipino captain steered into shallower waters where the Chinese ship couldn't follow. The coastguard boat stayed nearby, and was later joined by another vessel.

'LIKE SHARKS'

"In the morning, we could see them circling the reef like sharks looking for something to eat for breakfast," said Rabanal. "Nobody would know if they do something, they have bigger guns. Anything is possible, especially when it's the middle of the ocean."

The Philippine navy is no match for China, said Misajon, echoing the locals, fishermen and government officials interviewed by Bloomberg. Chinese forces have tried many times to block boats bringing food and building supplies to Pagasa, he said.

While the US and Japan each conducted military drills with the Philippines off the coast of Palawan in June, the soldiers from Pagasa weren't involved. The navy should send those who have trained with foreign forces to the island, said Misajon.

The Philippines needs about 990 billion pesos (S$30 billion) up to 2028 to build a "minimum credible defence posture," armed forces spokesman Brigadier General Joselito Kakilala said by phone.

NAVAL BASE

Tensions in the sea are shadowed by the unease felt by fishermen in the coastal village of Macarascas near Ulugan Bay, a picturesque cove 160km from the Spratlys that the Philippine military is transforming into a major naval base.

The 1,500 residents of Macarascas aren't renovating their homes in case they're relocated to give way to the expanded base, says resident Jonalyn Martinez. Wooden stilts holding up the 37-year-old's home among the mangrove trees are rotting, and the tin roof doesn't keep water out when it rains.

"It's painful because we've lived here all our lives," said 35-year-old fisherman Ronald Colendres. For Colendres, who earns as little as 500 pesos a day, moving away from the bay would leave him and his family without a source of income.

Chinese activities in the waters are causing environmental damage to Palawan and its dredging may impact fish larvae. The destruction of coral reef systems could lead to economic losses of about US$280 million each year to coastal states, the Philippine foreign affairs department said in June.

HUNTING TURTLES

There's been a rise in Chinese poachers, who make up about 60 per cent of fishermen caught hunting marine life including endangered turtles, according to the Palawan Council for Sustainable Development.

"They say that West Philippine Sea is China Sea, so they can fish anytime there, that's what emboldens them," said Adelina Benavente-Villena, chief of staff at the council, who learned Chinese to help her nab poachers.

"The threat is not only the invasion or possible use of force, but the environmental security."

BLOOMBERG