The Filipino Fox There's a Method to Duterte's Madness ForeignAffairs.Com

ERIK DE CASTRO / REUTERS  Rodrigo Duterte, president of the Philippines, speaks in Pampanga, December 2016. 

SNAPSHOT January 18, 2017

The Filipino Fox

There's a Method to Duterte's Madness

ForeignAffairs.Com

By Jessica C. Liao

Rodrigo Duterte’s trip to Beijing in October marked the first visit of a Filipino president to China since 2011. During his tour, Duterte shocked the world by announcing that his country would “separate” from its long-time ally, the United States, and “realign” with China. Even before this pronouncement, the Filipino president’s brutal drug war, badmouthing of U.S. President Barack Obama, and general hostility toward the United States had made many in Washington—and elsewhere—view him as a headache.

Although Duterte’s erratic, populist persona has unnerved leaders on both sides of the Pacific, he is not the crackpot he is sometimes made to seem. Rather, when it comes to foreign policy, he is a rational statesman with a keen sense of his country’s interests. Duterte’s move toward China is a calculated risk, and he is more interested in securing economic gains for the Philippines than in undermining the United States’ Asian security network, despite his harsh rhetoric against the U.S. military. The incoming administration of President-elect Donald Trump, therefore, stands to gain more from fostering a good relationship with Duterte than from sabotaging his attempts to seek closer ties with China. 

BALANCING ACT

Duterte’s decisions make the most sense within the broader context of Southeast Asia, where foreign policy is a small countries’ survival game. The region’s states formed the Association of Southeast Asian Nations (ASEAN) in 1967 as an anticommunist coalition, and since the end of the Cold War ASEAN has expanded into a regional bloc. But regardless of their immediate goals, ASEAN members have routinely searched for ways to strengthen their leverage against more powerful states. Today, with Southeast Asia once again a chessboard for the world’s great powers, ASEAN relies on U.S. military supremacy to balance against China and maintain regional stability. In recent decades, this balancing strategy has been the pillar of the Philippines’ foreign policy.  

Other ASEAN members, however, are not merely engaged in a balancing act. China may be a threat, but it is also the most influential country—and the largest economic power—in the region. Most states in Southeast Asia have thus sought to set aside conflicts with China while reaping as much economic benefit from the relationship as possible. And especially since China embraced “Good Neighbor Diplomacy” in the early 2000s, Sino–ASEAN economic relations have progressed rapidly. China has been ASEAN’s largest trading partner since 2009 and the top destination for its exports since 2011. Beijing has been particularly fond of using aid and soft loans to charm its Southeast Asian neighbors, doubling down on this strategy in recent years with a surge of bilateral and multilateral loans, including from the newly launched Asian Infrastructure Investment Bank (AIIB).

This is not to say that Chinese loans encounter no opposition. But the region’s small and poor countries, such as Burma, Cambodia, and Laos benefit from Chinese support in developing their infrastructure. Despite their longstanding territorial disputes, Vietnam is turning to China as its key financier for much-needed construction in the power supply sector. And recently, China has also loaned billions of dollars to state-owned banks in Indonesia and bought Malaysian government debt.

Yet closer economic ties with China have not damaged ASEAN countries’ military ties with the United States. Indonesia recently expanded its military cooperation agreement with Washington. U.S.–Vietnamese military relations have improved as well, with Washington lifting its longstanding embargo on arms sales to Hanoi, and high-level officials from both countries in talks for greater operational cooperation. Singapore, the destination for the majority of Chinese investment in Southeast Asia, has been outspoken in its support of U.S. military presence in the South China Sea. Clearly, Southeast Asian leaders view security and the economy as separate issues, and have opted to diversify their foreign policy in pursuit of their national interest.

In contrast with its regional neighbors, the Philippines has in recent years rejected this pragmatic approach. It has, to be sure, attempted to improve relations with China—the latter’s Good Neighbor Diplomacy did help the countries’ bilateral relations, which culminated in the signing of 14 business agreements worth $1.62 billion during former Chinese President Hu Jintao’s visit to Manila in 2005. Although not all of these agreements have been realized, the Chinese did build coal-fired power plants, dams, irrigation systems, and agricultural projects in the Philippines. And Beijing has been in talks with Filipino authorities about additional investments in power supply and transportation projects.

But Chinese investments vanished as tensions over the South China Sea began to rise in 2011. The bilateral relationship worsened as Duterte’s predecessor, President Benigno Aquino III, took a hardline stance against China, filing the South China Sea complaint with the UN Permanent Court of Arbitration. More importantly, Aquino revitalized the U.S.–Filipino military alliance by opening five naval stations to the United States, a move that Chinese leadership viewed as a direct challenge to the status quo of the South China Sea. High-level official exchanges between the two countries were completely suspended under Aquino’s term. The Philippines has thus, over the past five years, lagged far behind other ASEAN countries in terms inbound Chinese investment. 

IT'S THE ECONOMY

Duterte—whether he likes China or not—certainly realizes that his country’s ties with the United States have limited its ability to pursue an independent foreign policy. This is of particular concern for someone voted into office on promises to improve the life of the poor by addressing the country’s serious infrastructure deficit. Despite strong recent economic growth and a GNI-per-capita of $3,540, in 2015 the World Bank Logistics Performance Index gave the Philippines an infrastructure score of only 2.6 out of 5. Cambodia, with a GNI of $1,070, received a 2.58. Many provinces in the Philippines have severe transportation problems. Power shortages are widespread, particularly in poor areas such as Duterte’s home province of Mindanao. As a result, Duterte’s infrastructure budget for 2017 grew 13.8 percent over the previous year, and he has vowed to raise infrastructure spending from five to seven percent of the Philippines’ GDP. For Duterte, this is an “it’s-the-economy-stupid” kind of moment in which the United States cannot offer much help.

REUTERS Duterte and Japanese Prime Minister Shinzo Abe toast at a state dinner in Manila, January 2017.  

China, on the other hand, can. So far, Duterte has locked in an AIIB loan and struck 13 bilateral loan investment agreements with China of total value of $24 billion. Yet these agreements should be taken with a grain of salt. A democracy like the Philippines, with its free press and vibrant civil society, is a much more difficult environment for Chinese investors to navigate than are non-democratic countries such as Cambodia, Laos, and Vietnam. The Northrail project, signed during Chinese President Hu’s 2005 visit, faced difficulties related to corruption allegations, relocating residents, and ultimately a court ruling against the contract, leading to the project’s eventual abandonment. Another high-profile project, the construction of a national broadband network led by the Chinese telecom firm ZTE, was cancelled in 2007 amid bribery scandals. Similar issues will surely plague future Chinese investments.  

There are other reasons to be skeptical of Duterte’s strategy. The biggest impediment is the widespread anti-Chinese and pro-American sentiment in Filipino society, both among the elites and the wider public. A Social Weather Stations poll in September 2016 suggested that 76 percent of Filipinos felt “much trust” in the United States, while only 22 percent felt the same about China. It is only now, with high popularity at home, that Duterte has a chance to repair relations with China and hopefully attract some of the country’s capital.

But Duterte will need to finalize the deals quickly, as there is a fair amount of domestic anti-Chinese sentiment to be overcome. Immediately following Duterte’s Beijing trip, the Filipino Senate vowed to review Duterte’s $24 billion deal with China. It also demanded that the administration explain its pronouncements about separating from the United States. Duterte, in response, backtracked his statement and reaffirmed the U.S.–Filipino alliance (although he later threatened to breach the alliance after a U.S. aid agency deferred a vote on renewing aid for the Philippines). Duterte, understanding the challenge he faces, is also hedging against his China strategy by enhancing ties with Japan. Soon after his trip to Beijing, Duterte visited Tokyo, where Japanese Prime Minister Shinzo Abe made a commitment to invest $1.85 billion in the Philippines.   

WHEN DONALD GOES TO MANILA

Washington’s foreign policy establishment is concerned about Duterte’s anti-Americanism and the damage he could do to the U.S. alliance system in the Asia–Pacific. Yet despite his brash style, Duterte’s diplomatic strategy is not uncommon. His China policy is similar to what other ASEAN members have practiced for more than a decade without facing any backlash from the United States. Throughout this time, U.S. military presence in Asia and cooperation with the region has hardly changed, and has, if anything, gotten stronger. Washington should thus give Duterte more flexibility in pursuing an economic policy that allows him to realize his promise to his voters, even if that involves Chinese financial support. As the United States has neither the resources nor the political will to finance Duterte’s infrastructure plans, it should allow him to pursue funding from the Chinese without interpreting this as a threat to Washington.

As the United States has neither the resources nor the political will to finance Duterte’s infrastructure plans, it should allow him to pursue funding from the Chinese without interpreting this as a threat to Washington.

To be sure, as president, Trump will create a new dynamic for U.S.–Filipino relations. His and Duterte’s populist personas and their disregard for human rights could provide the men with a basis for a bond, especially given Duterte’s history of chafing at Obama’s criticism. On the other hand, Trump’s anti-China stance and inconsistency could hinder the United States from productively accommodating Duterte’s China policy.

No matter how Sino–Philippine relations develop, the Trump administration should focus on improving relations with Manila. Duterte’s wariness of the United States stems from his belief that Washington supports his domestic enemies, the entrenched Filipino elite. Bringing Duterte into policy conversations through official visits and other channels is essential in convincing him that the United States supports all of the Philippines, and not just the Filipino establishment. Until he thinks the Philippine’s voice has been heard, Duterte will continue making his provocative comments and policy choices.

What was most striking about Duterte’s deal with China was his claim that he will reopen bilateral negotiations on their territorial disputes, as opposed to pressing the Philippines’ victory in the international tribunal on the South China Sea ruling. Yet similar bilateral efforts in the past have failed, given the difficulties in reconciling the two countries’ overlapping sovereignty claims. Whereas Trump talks about his preference for U.S. withdrawal from other Asian countries such as Japan and South Korea, his position on the South China Sea remains unclear. Nonetheless, many security experts have anticipated that Trump will clash with China over the South China given his recent challenge of the One China policy and his tweet criticizing China’s island building. Rex Tillerson, in his confirmation hearing for secretary of state, confirmed this hardline position, comparing China’s actions in the South China Sea to Russia’s taking of Crimea, and vowed to send China “a clear signal” that the island-building must stop. Here, Trump could steal a page from Duterte’s playbook: avoid turning China into an enemy by treating it like one.