Philippines: President Duterte's Strident Rhetoric Unlikely to Impact US Business Interests

Monday Oct. 31, 2016

Philippines: President Duterte's Strident Rhetoric Unlikely to Impact US Business Interests

This is the first report in a three-part series covering changing conditions in the Philippines. The second report, which will address Duterte's controversial program against drug traffickers, will be released the week of Nov. 14. The third report will discuss changing militancy in the Philippines, and will be released the week of Nov. 28.

iJET will also be hosting a webinar on The Future of Philippines-US Relations on Nov. 2 - register today!

Executive Summary

Philippine President Rodrigo Duterte's persistent anti-US rhetoric is generating increasing uncertainty in bilateral relations with its primary security ally and major business partner. The president's controversial policy statements - including pledges to end military exercises, demands for US special forces to withdraw from Mindanao, and an economic separation from the US - would, if enacted, mark a significant deterioration in relations between Manila and Washington, DC. However, the president's comments have yet to cause any actual policy changes in the US relationship, and while some adjustments are likely in the near term, overall relations between the two countries will probably remain strong. Regardless, Duterte's remarks could stir anti-US sentiment, and leftist supporters may increase protest activity in the near term. Widespread participation in anti-US protests appears improbable, however, and demonstrators are unlikely to target US business interests.

Key Judgments:

  • A major deterioration in Philippine-US relations is not anticipated, though anti-US rhetoric is likely to continue in the near term as Duterte weighs the potential economic benefits of his proposed changes, and calibrates the nature and depth of the partnership he desires with Washington.
  • Long-term opponents of the US-Philippines alliance may increase the frequency and scale of anti-US demonstrations during this period of uncertainty in the bilateral relationship, though participation in such events will likely remain low.
  • Public support for, and cultural affinity with, the US will remain strong in the Philippines, forestalling any major backlash against US companies; anti-US protests that do occur are unlikely to impede operations of US brands or fundamentally impact US business interests.

Duterte's rhetoric has inflamed tensions with the US since the former Davao City mayor took office on June 30, and his statements seemingly indicating a shift away from the country's traditional close security relationship with the US have caused widespread concern. The president's language has intensified in recent weeks in the lead-up to official visits to China and Japan, with Duterte calling for the withdrawal of US special forces supporting counterterrorism efforts in Mindanao and warning that he would stop joint patrols in the South China Sea, and end US-Philippine military exercises. The rhetoric reached a peak in Beijing, where he announced Oct. 20 that the Philippines would "separate" from the US on economic and military affairs. On Oct. 26, while on an official visit to Japan, Duterte said that he would end the Enhanced Defense Cooperation Agreement (EDCA) and would like to see all US troops out of the Philippines within two years.

All of Duterte's controversial statements have been caveated to some degree by various Philippine Cabinet members, especially Secretary for Foreign Affairs Perfecto Yasay. On occasion, the president himself has sought to clarify his statements by noting his desire to carry out an "independent" foreign policy, while maintaining treaty obligations with the US. However, the steady stream of provocative comments has led to concerns about the US-Philippine relationship. Duterte's slur against US President Barack Obama led to the cancellation of a meeting between the two leaders in early September, and Philippine defense officials were forced to postpone an Oct. 24 meeting to plan military exercises with the US, as the Philippine military had not received official orders from Duterte. Thus far, the working-level relationship with the US has remained unchanged, but the lack of clarity in Philippine policy has increased uncertainty within both the diplomatic and business communities. Duterte's anti-US rhetoric will probably continue as his administration publicly defines and acts upon the character and depth of its working relationship with the US, especially if Washington continues to question his controversial anti-drug campaign.

Anti-US Protests

An increase in protest activity is possible as long as the course of the US-Philippine partnership remains ambiguous, though mass unrest appears highly improbable. Anti-US sentiment is high among some segments of society, particularly the leftist Bagong Alyansang Makabayan (Bayan) alliance and members of the Sandugo indigenous group coalition. Such groups have been emboldened by the president's anti-US comments and the possibility of a diminished relationship between the two countries. The president's stated intention to annul the EDCA, in particular, could encourage activists to stage more rallies in support of Duterte, as the deal was widely unpopular during its negotiation. Indigenous groups and leftists have been active in recent weeks, staging protests at the Philippine National Police and Armed Forces of the Philippines headquarters in Quezon City on Oct. 18, as well as anti-US demonstrations outside the US Embassy in Manila on Oct. 19 and 27. Future protests are most likely to target US diplomatic facilities; leftist groups allied with Bayan have also rallied outside of military installations hosting US troops in the past.

Despite the likelihood for more anti-US demonstrations in the near term, protests are unlikely to impact US business interests. Historically, anti-US protests have been fueled by specific policies, such as the EDCA deal, and the resulting demonstrations have taken place near US and Philippine government facilities. Anti-US protests targeting US business interests and citizens have been much less common. Additionally, the majority of Filipinos hold positive views of the US; an annual Pew Research Center survey has found favorability toward the US among Philippine citizens at higher than 90 percent in recent years. The data suggests that - short of a major diplomatic blunder - anti-US protests are unlikely to spread to the greater population, though actions by even a small number of radicals could turn violent, as occurred at the Oct. 19 US Embassy protest. Absent large-scale support, any rallies against the US are likely to be carried out by fringe groups with a narrow focus.

Conclusion

While President Duterte's anti-US rhetoric indicates that some recalibration in the US-Philippine alliance is likely in the near-term, overall relations between Manila and the US will probably remain strong. The countries enjoy a close military partnership, and the US government supports a variety of initiatives - including police and good governance training, agricultural exchanges, and infrastructure support - that will further the president's domestic-focused agenda. The bilateral relationship consists of more than government-to-government support; US enterprises are among the largest investors in the Philippines, bringing jobs and training to the country's workforce. Additionally, the US is the country's second largest export market, after Japan. Despite Duterte's recent overtures to China, a wholesale pro-Beijing shift is unlikely to be welcomed, either by the populace or top military leaders, due to competing claims in the South China Sea that have long resulted in anti-China sentiment.

Lastly, it is noteworthy that the direction of Philippine policy is not solely determined by the president. While Duterte is a charismatic leader, the importance of his popularity has been overstated by many news outlets, as Philippine leaders often enjoy higher-than-normal approval ratings vis-a-vis their Western counterparts. Moreover, the military, members of Congress, and the Roman Catholic Church all play an important role in Philippine policy. It is likely that such institutions will temper Duterte's approach to the US over the course of his term, particularly as his administration will seek a return to a stable and predictable security environment in its effort to continue attracting foreign direct investment to fuel the country's economic rise.

Prior to joining iJET, Lee worked as a Program Manager and Research Assistant in the Asia Division of the International Security Program at the Center for Strategic and International Studies (CSIS). He coordinated and managed a range of projects on U.S. relations in East Asia including alliance management with Japan and South Korea, U.S.-China coordination on DPRK (North Korea) contingency planning, and China-Taiwan cross-Strait dialogue. Prior to joining CSIS, he served as a Brent Scowcroft Award Fellow within the Aspen Strategy Group of the Aspen Institute in Washington, DC. 

Lee received his masters in international relations from the Elliott School of International Affairs at the George Washington University, and his undergraduate degree in international relations with honors from Claremont McKenna College. Lee is based out of iJET's Singapore Office. 

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