Ferdinand “Bongbong” Marcos, elected president of the Philippines in 2022 and the son of its infamous 10th president, was expected to continue his family’s close relationship with the Chinese embassy in office. But as he became aware of the extent of China’s coercive activities in the South China Sea and after his last-ditch effort to convince the country to back off failed, he surprised the world. In February 2023, Marcos accepted the overtures of the United States by committing to the Enhanced Defense Cooperation Agreement, bringing the Philippines into America’s orbit until at least 2028.
As Marcos said during a joint statement with President Joe Biden at the time the agreement was struck, “it is only natural … for the Philippines to look to its sole treaty partner in the world to strengthen and to redefine the relationship that we have and the roles that we play in the face of those rising tensions that we see now around the South China Sea.” And as Defense Secretary Lloyd Austin told reporters when he hosted Marcos at the Pentagon in April 2024, “the United States and the Philippines are more than allies—we’re family.”
Marcos’ predecessor, Rodrigo Duterte, largely played down China’s construction of military outposts on reclaimed islands, overlooked the regular encroachment of the Chinese maritime militia ships, and called the 2016 Hague Permanent Court of Arbitration ruling in favor of the Philippines on the South China Sea case a “piece of paper.” Now, with the help of the United States, the country’s battle to reassert its sovereign rights has resumed. But in order to be effective, the Philippines’ position requires continuity. Should Sara Duterte, the China-leaning Philippine vice president—and daughter of Rodrigo—emerge victorious in the 2028 Presidential elections, then she will reverse Marcos’s gains in the contested maritime domains. The result will be that China dominates the region and asserts its power across Taiwan, Southeast Asia, and the Pacific.
While those elections are still four years away, Marcos must work to consolidate domestic support in the interim. If he fails to deliver economically, China will win. Duterte’s faction argues that Marcos spends too much time on maritime disputes instead of alleviating day-to-day economic issues, and the South China Sea issue will not be at the forefront of Filipino concerns in the 2028 Philippine elections. Rather, Filipino votes will be about the low prices of food, affordable utilities, the efficiency of government programs, the quality of basic services, and the inclusiveness of long-term government plans. This means the U.S. needs to think beyond increasing military aid, and instead look to scale up existing overseas development assistance programs as well as expediting large-scale development commitments, in order to shore up long-term security in the region.
When Marcos ran in 2022, he promised to improve Filipino lives, but the reality is that his administration has so far has failed to deliver. Dismal economic conditions are felt by the average Filipino on a day-to-day basis.
First, inflation has been the biggest concern for most Filipinos since the peak of the coronavirus pandemic. The Central Bank has attempted several measures to curb it, including the decision to increase interest rates. However, that measure has limited impact. In February 2024, inflation finally decreased to 3.4 percent, which was far lower than that of the previous years, but 75 percent of Filipinos still feel dissatisfied with Marcos’s handling of the situation.
Second, while the Philippine economy grew at a 5.6 percent rate in 2023, faster than any Southeast Asian country, the average Filipino does not feel these gains. Economic growth has benefited the rich, worsening income inequality. In addition, inflation has rapidly outpaced wages.
Third, Marcos has frequently traveled overseas to ask for foreign investment and development finance. He has received in return pledges, but it will take time before these deals impact the lives of Filipinos.
Finally, progress towards infrastructure projects has been too slow. As of July 2023, Marcos’s government has initiated 197 projects, 71 of which are ongoing. Judging from the record of previous administrations, most of these will remain unfinished and only a few will finish.
Economically, Marcos has focused on fiscal discipline, public private partnerships, foreign direct investments, market-driven prices, and private sector investments. But his economic policies are either too slow, indirect, or insensitive to the daily needs of Filipinos. His failure will reflect on the U.S., in particular, for three reasons.
First, while the Philippines is located in the center of a geopolitical tug of war, Filipinos—like most people—prioritize their well-being and want to feel that government is exhausting all efforts to improve their lives. Decades-long surveys indicate that Filipinos prioritize affordable basic goods, low levels of crime (which Duterte, Marcos’s predecessor, focused on) and quality services. Marcos’s focus on the South China Sea may result in a popular feeling that government attention and resources are misplaced, fostering resentment against the U.S. government that backs him.
Second, while most Filipinos value a strong relationship with the United States, they will interpret American priorities as misplaced and selfish. Most Filipinos prefer working with the United States over China in the South China Sea dispute and more generally, a finding that held true even at the height of China’s engagements in the Philippines. The resilience of the U.S. relationship with the Philippines is a stark contrast to the results in other Southeast Asian countries, such as Brunei, Malaysia, and Indonesia, where China has increasingly become the preferred partner out of the two superpowers. However, most Filipinos do not directly benefit from the arms purchases and security assistance and at times even suffer from these developments.
In 2023, 10,000 Filipino fishers needed to suspend fishing for 18 days in certain areas because of U.S.-Philippine military naval exercises. The Armed Forces of the Philippines promised that they would compensate the fishers for all the suspended days, but officials only dispensed aid to those registered at the local fishery office. This compensation was not only delayed for weeks, but it also arrived in the form of food rather than cash.
Third, pro-China pundits have driven the narrative that Marcos has failed to economically deliver because of the focus on the South China Sea. It’s true that since Marcos came to power, China has delayed moving forward with funding the major commitments that were made during Duterte. In response, Marcos’s government canceled China’s role as a financier of these projects and begun looking for alternatives. These claims become more compelling when the pundits point out that other Southeast Asian countries, which do not have territorial disputes with China, have recently built massive infrastructure projects due to Chinese financing, such as the Jakarta-Bandung High-Speed Railway. Within Southeast Asia, China has been a financier of large-scale transportation infrastructure and an investor in electric vehicle manufacturing.
In contrast to China, U.S. economic programs focus on capacity building and financing “soft infrastructures.” The U.S. Agency for International Development has a robust set of programs on education, environmental governance, health, and livelihood, financing a total of $659 million from 2019 to 2024 on all Philippine projects. Recently, the U.S. International Development Finance Corporation has committed to increasing its loans to the Philippines budget by $20 million, bringing the total commitment of the agency to $80 million. These programs help in the long run, but they do not directly alleviate Philippine economic concerns.
While the previous Duterte administration certainly exaggerated the size and success of Chinese economic programs, several Chinese Belt and Road projects did make an immediate impact. For instance, The Export–Import Bank of China financed the previously completed Chico River Pump Irrigation project, the Estrella-Pantaleon and the Binondo-Intramuros bridges. Local friendship associations funded the two drug rehabilitation facilities were completed. Dito Telecommunity, a joint venture between Duterte-backed Dito CME Holdings Corporation and China Telecommunications, became the country’s third telecommunications company. Another Export-Import Bank project, the Kaliwa Dam, a multi-provincial dam project designed to increase Metro Manila’s water supply, has made progress. There were also Chinese loans for railway and CCTV projects, but commitments that were canceled at the start of Marcos’s administration.
Although these projects were awarded to Duterte’s coalition of elites and had negative ramifications on some Filipino groups, they had an immediate impact because they targeted a long-standing development issue, at the heart of Philippines’ failure to develop: the dismal state of Philippine infrastructure.
Due to institutional rules and economic structure, the United States has been unable to finance large-scale infrastructure. This is because U.S. development institutions focus on encouraging private sector investments, which lack the speed and scale of China’s state-financed investment—or prioritizing overseas development assistance, which funds non-government organizations addressing social needs.
Current U.S. engagement focuses on increasing arms exports to and security arrangements in the Philippines. In October 2022, the United States granted $100 million towards military assistance, and in April two U.S. senators introduced a bipartisan bill that would provide $2.5 billion to boost Philippine defenses against China. Since 2015, the Philippines has received over $1.14 billion worth of planes, armored vehicles, and military equipment.
The most promising economic commitment is the Luzon Economic Corridor, a result of the recent U.S.-Japan-Philippine trilateral summit that was held last month in response to China’s aggressive activities in the South China Sea. However, the construction of the corridor, firm visits, and incentive negotiations will take years. The corridor is also located in Luzon, the most economically developed part of the country and a region where the Marcoses hold considerable support. If a future president is going to have public support against China in the South China Sea, the Luzon Economic Corridor must not only be expedited, but it should also be replicated in other parts of the country.
There is precedent for a pendulum swing between pro- and anti-China leaders. The pro-China Duterte succeeded Benigno Aquino III, who took China’s coercive maritime activities to court at the Hague Permanent Court of Arbitration. Spiraling economic inequality during Benigno’s term fueled Rodrigo’s victory. Heeding this history, the United States must shift the focus from military toward alleviating bread-and-butter issues. In so doing it will prevent the return of another pro-China Duterte administration in 2028.
The post The Philippines Needs Butter, Not Just Guns appeared first on Foreign Policy.
