Why Is Hong Kong Punishing the Philippines Now?

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Last Thursday, as Typhoon Haiyan bore down on the Philippines, almost certain to cause thousands of casualties, Hong Kong's Legislative Council sat in its comfortable, air-conditioned chamber and debated how to punishthe island nation.

The ostensible reason for Hong Kong's wrath was the death of eight Hong Kong citizens during a bungled 2010 hostage rescue in Manila. Hapless Filipino police admittedly bungled the situation, in which a disgruntled former cop boarded a tour bus carrying an assault rifle. Hong Kong Chief Executive C.Y. Leung wants a personal apology from Philippine President Benigno Aquino, as well as higher compensation for families of the victims than the Philippines would normally pay to its own citizens.

Hong Kong wants an answer within one-month. Legislators were debating sanctions that would include ending visa-free visits by Filipinos and slowing the flow of Philippine migrant workers to the city.

The tone-deafness of the debate was stunning. Even on Monday, as many lawmakers suggested delaying the sanctions, Hong Kong Chief Executive C.Y. Leung stressed that Aquino hadn't asked for any such extension. If Leung had turned on his TV, he might have realized the Philippine president has been a little busy.

The sanctions are farcical on several levels: the idea that Leung, a pawn of Beijing, is the equal of the president of large sovereign state; the assumption that a national leader should be held responsible for the incompetence of a local police squad; the racist suggestion that a Hong Kong tourist is worth more than a Filipino.

Leung doesn't seem to understand that he needs Filipinos more that than they need his city. His economy rests on three pillars: overvalued real estate, overpaid bankers and exploited migrant workers -- many of them women from the Philippines. Removing the third pillar to score a cheap political point undermines the second one and thus complicates the first.

The 160,000-strong Filipinos Leung would punish are in some ways the glue holding Hong Kong's business culture together. They are the maids, cooks and nannies who enable everyone from middle-class families to hedge fund managers to balance life and work. Remove them from the equation and the Hong Kong lifestyle as everyone knows it ends.

If Hong Kong yanks away the welcome mat, its Filipino workforce can always head to Singapore, Taiwan or the West. Meanwhile, the sanctions would also damage a fast-growing tourism business with the Philippines, hurting local entrepreneurs.

Local media have criticized Leung for trying to exploit public anger in order to shore up his declining popularity. Squeezed by surging property prices, a widening gap between rich and poor, deteriorating air quality and a government that cares more about tycoons than the city's 7 million people, Hong Kongers are not happy.

More importantly, this exercise has little to do with standing up for Hong Kong, and everything to do with Beijing. China remains furious with the Philippines for challenging its claims to great swathes of the South China Sea. That hostility initially led to a foolishly low offer of humanitarian aid after the storm hit -- a measly $100,000. Global condemnation forced Beijing yesterday to raise the amount to $1.6 million.

Like that first lowball offer, Leung's crusade only makes Hong Kong -- and by extension, China -- look cheap and insensitive. Leung should pay a little more attention to the heartbreaking images on his TV, and less to the petty vindictiveness of his masters in Beijing.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Willie Pesek at wpesek@bloomberg.net