Economic implications of Duterte’s ‘independence’

Ben D. Kritz

Ben D. Kritz

MUCH has been made in the social and conventional media over the past few days about President Rodrigo Duterte’s declaration at the recently concluded, and largely thanks to Duterte, somewhat more exciting than expected Asean summit in Laos that the Philippines would “pursue an independent foreign policy.”

That has been widely interpreted to mean that the Philippines would no longer allow itself to be regarded as an American acolyte, an impression Duterte’s predecessor BS Aquino 3rd did nothing to dispel. By and large, the public reaction to Duterte’s stand has been favorable, as it should be – very few people actually want the country to be an American outpost – but understanding of what the Philippines’ new “independence” actually means in practical terms has apparently eluded most people.

The first thing that everyone should recognize by now is that Duterte has a talent for grabbing the low-hanging fruit in almost every situation. Declaring that the Philippines will have an “independent foreign policy” is just repeating what the Constitution already demands, and in that sense just restating the obvious; in the 30 years since that provision became the law of the land the Philippines has balanced itself, and even done so admirably at times, between the world’s two poles in Beijing and Washington.

In the context of Duterte’s rant against the US for that country’s depredations against rebellious Filipinos and Mindanaoans in the early colonial years, it seems pretty clear that Duterte intended “independence” to mean “a definite shift in alignment towards Asia, and China in particular.” Even though he has stressed that China should abide by the UN tribunal’s ruling rejecting China’s sovereign claim to most of the South China Sea, his comments have been, for him, extremely mild, and nearly always followed by a reminder that he is willing to discuss the issue. And in other respects, particularly economically, chasing markets on this side of the Pacific makes much more sense than potentially compromising political security for the sake of an economic relationship with the US that is worth less than the exchange between the rest of the US and the state of Florida.

At worst, cooling the relationship between the Philippines and the US will primarily result in a reduction of various forms of development aid and some loss of financial investment; some forms of assistance and investment are tied to the recipient nation’s performance in human rights, environmental, or other political indicators, and since those things certainly seem to be eroding under Duterte from the Western democracy point of view, there will be a cost. That, however, is not as scary as it sounds; in 2012, probably the best year of the Americanphile Aquino’s presidency, total US aid to the Philippines was about $197 million, or about P9.26 billion – not an insignificant amount, but not one that would cause the country’s economy to collapse if it was withdrawn.

The other big risk of pulling away from US influence, according to most analysts, is that it puts what everyone assumes will the Philippines’ eventual inclusion in the Trans-Pacific Partnership (TPP) trade pact in doubt.
Ironically, it is the membership of the US that is most at risk at this point; neither Hillary Clinton nor Donald Trump favor the TPP, and while the pragmatist Clinton would probably give it her grudging endorsement if she wins, unless the political composition of the US Congress changes significantly in the November election – which it almost certainly will not – the TPP is as good as dead as far as the US is concerned, and if the US drops out, the deal becomes a lot less attractive.

Given the much more important economic relationship with China and the rest of the region, and the certainty – although the degree is yet to be determined – of much less accommodating US policy no matter who wins in November, Duterte is not doing something bold, he’s just acknowledging reality, and masterfully capturing a bit of populist energy while doing so.


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