When China Threatens, Filipinos Go Shopping for U.S. Warships

Uh-oh. It seems that the Japanese (and Taiwanese and Koreans) aren't the only folks getting nervous about the Chinese military buildup in the Pacific Ocean.

On Thursday, DefenseNews.com reported that over in the Philippines, continued incursions into territorial fishing waters have the local navy shopping for used U.S. warships to beef up its fleet. Over the past two years, the archipelagic nation has bought two refurbished American "frigates" for about $10 million apiece. Actually, the vessels, formerly named USCGC Hamilton and USCGC Dallas, and now BRP Gregorio del Pilar  and BRP Ramon Alcaraz, respectively, were classified as Coast Guard cutters when in U.S. possession.

The Philippines' new flagship, the BRP Ramon Alcaraz. Source: Wikimedia Commons.

The threat
In recent months, Chinese naval vessels have been sailing into disputed waters off the Philippine coast, an area that Manila calls the West Philippine Sea but that China insists is really the South China Sea. Already, the increasing numbers of Chinese warships swarming the area have frightened off not just Philippine civilian fishing boats. The overwhelming force being deployed forced the Philippine Navy to back down and cede control of a fishing area known as the Scarborough Shoal to the Chinese.

Scarborough Shoal lies right off the coast of Luzon -- quite literally in the Philippines' backyard (if yards were wet). So you can see why the Filipinos are nervous.

Safety in numbers
At just 3,250 tons displacement and armed with only one cannon apiece (plus a mix of mostly defensive "chain" guns and machine guns), the new Filipino frigates aren't particularly frightening warships. But they are currently the biggest warships in the Philippine fleet. Plus, there's safety in numbers, and the more of them they get, the safer Filipinos will feel.

U.S. National Security Cutter Bertholf (WMSL-750). Source: Wikimedia Commons.

The Philippine Navy now intends to buy two more such frigates... and then two more after that... and then two more after that. Jumping at Secretary of State John Kerry's offer last December to provide the Philippines with $40 million in military assistance, the Philippine Navy says it has bid to buy two more U.S. frigates for its fleet within the next two years, and intends to round out its purchases at about eight vessels (including the two already bought). These will then join the nation's three corvettes, a handful of even smaller warships, in trying to fend off the Chinese threat.

All this spending should be good news for American shipbuilder Huntington Ingalls (NYSE: HII  ) . Huntington built the "frigates" in question, and would be the logical company to tap to refurbish additional vessels prior to their transfer to the Philippines. Huntington is also the company that is building the new Legend-class National Security Cutters that are replacing them at the U.S. Coast Guard.

Result: Selling more frigates to the Philippines won't just make the Filipinos feel more secure. It should make a lot of Huntington Ingalls shareholders pretty happy as well.

Oh, and one more thing
Did we mention that Huntington pays its shareholders a tidy 0.8% dividend yield? Try getting your bank to pay you 0.8% interest these days! While they don't garner the notability of high-flying tech stocks, dividend-paying stocks like Huntington Ingalls are also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

 


Read/Post Comments (23) | Recommend This Article (32)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 18, 2014, at 4:22 AM, patsyleeoswald wrote:

    that was awful nice of the american taxpayer to give them such a huge gift.

  • Report this Comment On January 18, 2014, at 7:09 AM, openmindedness wrote:

    The Chinese threat is for real. It's more than just a gift. Let's look at the whole picture first before counting our dollars. I pay my taxes the same as you do.

  • Report this Comment On January 18, 2014, at 7:24 AM, drummindeadfool wrote:

    We have a much bigger opportunity to sell scrubbers for coal plants to China. Our coal industry is hugely against them. For good reason, they are expensive. Meanwhile the Chinese have trillions in foreign reserves just sitting there for the taking. They also have pollution levels 20 times what is considered dangerous. We are making money selling boats, we could be making a lot more.

  • Report this Comment On January 18, 2014, at 9:52 AM, mahvelus wrote:

    American taxpayer's gifts?

    The boats are a buyback of American made products and services. It goes that the American government gives a $40 million "assistance," some of which will be used by Filipino military men to send their kids to the best schools in the islands, not to mention pay for their new cars and houses, and then what's left over will pay for the refurbished American boats.

    Kerry gives Filipinos money, which they spend on an American company..... nice!

  • Report this Comment On January 18, 2014, at 10:07 AM, bakadesuka wrote:

    Investing in China with the not completely avoidable technology transfer and willfully and knowingly buying Made in China is what emboldens China to bully with China's increasingly modernizing and strengthening military. China has a history of unprovoked aggression in Tibet that drove out the Dalai Lama, in Tibet against the border forces of India after that, against the Taiwanese held island of Quemoy, against Vietnam after the Americans seized military operations there, unilateral occupation of islands of the Philippines, and now China is trying to bully her way into owning most of the South China Sea and the islands in it, all of which were never before under the jurisdiction of China such that all including Americans will have to pay a toll to China to enter the South China Sea if China gets her way.

    Giving in to greed of making money off this trade with China is a weakness the government of China knows better than most and is counting on.

    Giving in to this greed increases the probability of more Americans and America's allies getting hurt or killed in a war that China is provoking. Americans and others are very capable of making money in other ways than to aid and abet China against us.

  • Report this Comment On January 18, 2014, at 10:58 AM, AllenElliott wrote:

    this is how enmity builds which destroys many people. They reach their perdition and all because of a hot head at the helm of a small country

  • Report this Comment On January 18, 2014, at 11:01 AM, AllenElliott wrote:

    Is this hot head showing any unconditional love. Would you be likly to invite him into your house to stay a week or to?

  • Report this Comment On January 18, 2014, at 11:20 AM, 168 wrote:

    China bully the Philippine??? China didn't punch Filipino blame their corrupt government and poor country .They allocated billions of pesos to pork barrels and was pocketed by their corrupt politician instead of allocating it to military .

  • Report this Comment On January 18, 2014, at 11:21 AM, palaboy wrote:

    oppressor and the oppressed are the only thing that matters in our life and being aware with our own... is the most important to avoid different kind of war goodluck to everybody it is very very tough.

  • Report this Comment On January 18, 2014, at 12:05 PM, waveynavy wrote:

    168, ummm, this is an article about military spending.

    Allenidiot, What are you talking about? In english, your sentence doesnt make any sense. "is this hot head showing any unconditional love"

    Even chinas propaganda is cheap. They employ people to work the internet, which can barely speak english. Pathetic.

  • Report this Comment On January 18, 2014, at 12:22 PM, yuriknolls wrote:

    the chinese only just got some of these ships in their attack fleet , they got to make them pay or look like it to the authoritys in china

  • Report this Comment On January 18, 2014, at 12:55 PM, tommyworld wrote:

    Both the South China Sea and Easter Coast of China including the recently disputed island immediately adjacent to Taiwan province have been historically documented in the Control of China for hundreded if not thousands of years. They have been officially been given to the China by the Allies for jurisdiction control toward the end of World War II from the Imperial Japanese Military Occupation. Both the Phillipine and Viatnam governments have been illegally evicting and capturing Chinese Civilian Fisherman in the past decades. It is reported that the Viatnam government unlawfully seized five hundreds Chinese fisherman boat. The Phillipine coast guard caused the death of an unarmed Taiwan fisherman who was working in the water off the Taiwan coast in past year. At present China has not seized or detained any third nation fisherman vessel for long period of time and/or demand ransom for release of the crew as frequently done by Japanese, Phillipine, and/or Viatnam goverments toward Chinese Fisherman.

    I believe no nation should be invovled in the matter of another country such that we would not welcome China to patrol our coastline and be invovled with territorial dispute with Canada or Mexico. Also, the U.S. should not supply hardware to Phillipine especially as gifts when that government could use them toward more highsea robbery in demanding ransom for release of fisherman.

  • Report this Comment On January 18, 2014, at 1:17 PM, Pinoymafia12345 wrote:

    Tommyworld, If you think that these islands belongs to China LEGALLY...then WHY your chinese government DOES NOT WANT to answer the Philippine CALLS for U.N. ARBITRATION to solve this problem?????? The ANSWER is: YOU KNOW that these islands not belongs to you and as according to UN Charter these islands is within Philippines 200 miles coastal lines...THEREFORE it BELONGS TO PHILIPPINES.......Got it...

  • Report this Comment On January 18, 2014, at 3:08 PM, AllenElliott wrote:

    Do you think China's threats are full of unconditional love known as God?

  • Report this Comment On January 18, 2014, at 5:19 PM, quasimodo007 wrote:

    the Filipinoes would do better if they Ask for CZAR Putin Protection.

    And would Not get RIPPED off by evil cheney Corrupt military contractors THUGS as they do to the Poor American TAX Payers. THE GREAT American RIP OFF

    Even CZAR Putin Controls the UN, EU and USA just look how CZAR Putin controls the Syrian War how ASSAD keeps on killing for 3 years and CZAR Putin has kept him well supplied for 3 Years and the West has been Talking and Talking for 3 Years and the Killing keeps going on by ASSAD.

  • Report this Comment On January 18, 2014, at 6:12 PM, foolish23o wrote:

    Even though all the Asian countries are arming from USA against China, I will rather advice them to have expending and longterm financial experts and analists from China. Because the money the using to in those old warship is a waste of funds for their economy. And specially the Philippines who will have to planne a budget to rebuild the live for the typhoon people over years is buying a broken warship that they know for evidence will not step china down. Now for the philippines they just start plumging into life debt with the US. IF i tell people US never help anyone in this world they think I am against my own country. For $20 million they claim for helping the typhon people they have (double) $40 million in contract and they sad news for the Beninyo adminitration is that he become victim not of the natural deasister but victim of the US containment. Free market . and here is the next steps. the US will later bring its own warship because they really know that is worthy nothing against china, so they will bring their own military just as in S Korea and they will have the country pay for they are staying as for contribution. That is where the live in philippines will become poorest. For the next move you Asian countries need to make fair long term vision for own toward parterniship with the US.

  • Report this Comment On January 19, 2014, at 4:52 AM, Glen wrote:

    So... They are getting ready. But I bet they will talk longer than the actual battle. Talk will last years. War will start and end in one week.

  • Report this Comment On January 19, 2014, at 6:29 AM, Buang wrote:

    It's in Philippine blood to fight for their country. Have you heard of Emilio Aguinaldo,Andres Bonifacio, Jose Rizal, Lapu Lapu, Gabriela Silang etc. Those were our war heroes we have. They fight and will fight for the country!

  • Report this Comment On January 19, 2014, at 7:58 AM, superdragon9000 wrote:

    Tommy World is just one of China's 50 Cent party paid to patrol English media sources about China and post pro CCP rhetoric, earning 50 cents in Renmibi in the process.

    "The Taiwan province" yeah, we see what you did there.

  • Report this Comment On January 19, 2014, at 12:43 PM, PINCHEfilipinos wrote:

    What a bunch of ungrateful imbeciles. First they decided to kick out the US Naval base for no intellectual reason other than their "filipino pride" (whatever the hell that is) and now that China is giving them a hard time they decided to ask America for help?

    And now they have the audacity to "buy" used US warships? Buying them with what? That CoUNTry has been broke and in serious debt since they kicked out President Marcos. Even if they manage to purchase a ship or two, who's going to operate them? No one in that 3rd wolrd POS country is smart enough to operate a simple row boat let alone a highly sophisticated US built warship.

    Of course there will be but hurt filipinos who will respond to this comment and to them I say.... FOR CRYING OUT LOUD MAHIYA NAMAN KAYO SA MGA MUKA NYO! (had to ask my maid to translate that)

    Don't even bother coming up with a failed attempt to respond because I couldn't care less of what you will say and you're just going to end up with a very painful head ache trying to think of how to come up with a very good "English" response. Just face it, your CoUNTry SUCKS

  • Report this Comment On January 31, 2014, at 4:25 PM, worldpeace wrote:

    @Pinchefilipino

    you wanna know why PH kicked out US troops from their bases??

    because the US wont pay the right amount of rent that PH is asking!! and the US is only using the bases to contain china not to actually be there for the PH!!

    and about Marcos! filipino would probably want to live in poverty than live under a dictator whos slowly changing this wonderful country into something like china!! a communist country!!

    philippines is struggling right now because of marcos!!! he was the most corrupt out of all the presidents that PH had!! and hes on the list of most corrupt in the world!!! so know your damn facts before you write random things!!

    Philippines fought the japanese alongside the US yet the US turned their attention to rehabilitating Japan rather than reconstructing the ruined in the Philippines!!

    China doesnt have te rights to claim islands that are right next to an archipelagic nation!! they fear that they will lose if Ph were to bring the case in UN!! thatswhy they show their teeth to the PH like this!! because they know that PH doesnt have the power to show teeth back!!!

    now try to respond to that!!

  • Report this Comment On January 31, 2014, at 4:28 PM, worldpeace wrote:

    Russia actually supported the philippines on their dispute with china until putin came to power!! he basically said screw you we support our ally on this issue!!

  • Report this Comment On April 24, 2014, at 4:13 PM, flipside619 wrote:

    Hey punk @ss china man you will never win this war. You can build as many hardware as you like and still won't win this war. Let me tell you why. First you have Japan in your door step, second you have Vietnam right in your backyard, and third S. Korea and Taiwan is right next to your door step. You see why can not win this war, because you are already surrounded. And guess what you have Australia and Philippines to worry about. You may send your Navy and Air Force to the Philippines but you will never succeed invading this country. Because these people fought many wars and rather die for their country than be slave. You could not even suppress Japan before how would you expect to win this war.

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