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Philippine Pivot Back Toward America Will Offset Growing China Dependence

Philippine President Rodrigo Duterte at the Malacanang Presidential Palace in Manila, Philippines, Aug, 16, 2017.
Philippine President Rodrigo Duterte at the Malacanang Presidential Palace in Manila, Philippines, Aug, 16, 2017.

A new Philippine quest for stronger economic relations with the United States, a staunch post-colonial supporter that Manila has sidelined over the past year, appears aimed at offsetting an increasing dependence on help from its new friend China.

The Philippines is now “seeking to intensify economic cooperation with the United States” in an effort to improve overall relations, the Southeast Asian country’s Department of Foreign Affairs said on its website Sunday. Stronger economic ties, the department said, would “go beyond security issues.”

Improvement in Philippine-U.S. economic relations would repair damage since Rodrigo Duterte became president in Manila last year. Duterte has thundered against the United States over its criticism of his deadly anti-drug campaign and scaled back joint naval patrols. The two had been steadfast defense allies since U.S. colonialism ended in 1946.

“I think (the new economic push) is just really formally outlining the next steps forward just given the hazy time between when Duterte first came into office and the trials and tribulations as it were with the bilateral relationship,” said Christian de Guzman, vice president and senior credit officer with Moody’s in Singapore.

Foreign Affairs Secretary Peter Cayetano proposed stronger economic cooperation when he met U.S. Senator Cory Gardner, chair of the U.S. Senate Foreign Relations Subcommittee on East Asia, at a meeting last week in Washington.

Duterte’s foreign policy

Since Duterte took office in June 2016, he has tilted foreign policy, including the search for economic aid from China despite a bitter maritime dispute. He is also seeking help from Russia and Japan. Japan and China are helping the developing nation’s $167 billion, five-year plan to improve public infrastructure.

“We would like to be vital partners of every major nation in the world. Of course the U.S. is No. 1 and then China, and Russia and Japan,” said Dexter Feliciano, a Filipino voter and founder of a startup firm in Manila. “We won’t want to distance ourselves with the U.S. because we are really trade partners and culturally we are connected.”

Washington traditionally supports the Philippines economically by allowing Filipinos to work in the United States as teachers and nurses. Those workers in turn send money back to family in the Philippines. About 3.4 million of the more than 10 million Filipinos estimated working abroad live in the United States – more than in any other country.

The two sides might also consider a trade liberalization deal, giving Philippine firms more access to the world’s biggest economy, de Guzman said. The United States can further influence aid to the Philippines via its clout with low-interest lenders such as the World Bank, he noted.

American aid

The United States already ranks among the top foreign investors in the Philippines, with more than 235 billion pesos ($4.58 billion) in existing foreign direct investment, U.S. Embassy spokesperson Molly Koscina said. It’s also a top trading partner, she said. The two sides exchanged more than $17 billion in goods last year.

The Philippines’ largest private employer, Convergys, is an American company. The information management firm employs more than 60,000 Filipinos, the embassy says.

“Our economic relationship is strong and has a very bright future,” Koscina said. “We remain one of the Philippines’ closest economic partners.”

But U.S. economic aid comes with conditions, Duterte and some Filipinos have complained. Last year, for example, the U.S. government stopped planned sales of 26,000 assault rifles to the Philippines and said it would redirect $9 million in aid away from Philippine anti-drug training.

U.S. ex-president Barack Obama’s government criticized Duterte’s use of extrajudicial killings in his anti-drug campaign, leading to a dip in support.

“Aid given by the U.S has strings attached,” Feliciano said. “We have to do this, we have to do that. But what if the government doesn’t want to do it?”

Duterte may have swung back toward a stronger U.S. partnership because of voices from the military and the public, scholars say. About 70 percent of Filipinos place “much trust” in the United States, according to an early 2017 survey by Manila-based research institution Social Weather Stations.

As 2017 chairman of the 10-member Association of Southeast Asian Nations bloc, Duterte may also feel “pressure” to moderate his U.S. position, said Carl Thayer, Southeast Asia-specialized emeritus professor at The University of New South Wales in Australia. Much of Southeast Asia relies on Washington for trade and defense support.

Chinese aid has limits too, experts say. In October, after Duterte visited Beijing, China pledged $24 billion in aid and investment. In January, Beijing committed $3.7 billion for 30 projects, but experts fear most are far from final -- stuck possibly on labor and financing issues.

Beijing also may expect the Philippines to keep quiet about its expansion in the contested South China Sea as a condition of receiving aid, experts warned last year.

“You get an impression that the leaning to China has had its limits and constraints,” Thayer said. “It’s resulted in a lot of promises and some delivery, but not completely.”

A shift back to the United States shows that “we’re seeing a little more realism percolate through,” Thayer said.