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Strained US-Philippine Ties Show Signs of Improvement

  • Ralph Jennings

FILE - Philippine President Rodrigo Duterte delivers a speech during the 80th National Bureau of Investigation anniversary, Nov. 14, 2016. On Thursday Duterte said he might withdraw from the International Criminal Court.

Relations between the United States and one of its oldest allies, the Philippines, show signs of returning to normal after a crisis in September when the president in Manila demanded Washington withdraw military support and talked of a deeper break in ties with the superpower.

U.S. President-elect Donald Trump congratulated Philippine President Rodrigo Duterte in a call this month on his deadly campaign to squelch the drug trade, according to the Philippine side. The government of U.S. President Barack Obama had angered Duterte, who took office in June, by criticizing the effort because of suspected extrajudicial killings.

Trump also invited Duterte to visit the White House, part of a chain of overtures to traditional U.S. allies in Asia, including Japan.

“What Trump is doing is trying to (take back) the ground that the U.S. has lost in the last phase of the Obama presidency and strengthen partnerships and alliances that the U.S. already has in the region,” said Fabrizio Bozzato, an associate researcher specialized in international affairs at Tamkang University in Taiwan.

New U.S. Ambassador to the Philippines Sung Kim addresses the media shortly upon arrival, Dec. 1, 2016, at the Ninoy Aquino International Airport in suburban Pasay city south of Manila, Philippines.
New U.S. Ambassador to the Philippines Sung Kim addresses the media shortly upon arrival, Dec. 1, 2016, at the Ninoy Aquino International Airport in suburban Pasay city south of Manila, Philippines.

Ambassador's talk 'fruitful'

The Philippine president’s office cited a “fruitful” one-hour discussion between Duterte and new U.S. Ambassador Sung Kim this week, media in Manila reported.

In a Facebook video posted by the U.S. embassy in Manila, Kim called the encounter terrific and said it covered a range of issues.

“My hope and my plan and my commitment is to make sure to strengthen and deepen all aspects of our relationship, so I think you can expect the relationship will continue to grow,” he said.

Rough patch not that rough

In September, Duterte called Obama a vulgar name, suggested scaling back economic ties and demanded that U.S. military personnel leave the country.

Manila has been one of Washington’s chief Asian allies since the two sides signed a mutual defense treaty in 1951.

Since 2002, 50 to 100 American advisers have worked in the archipelago’s southwest helping keep Muslim rebels in check. Since the two sides signed an agreement in 2014, American naval personnel have visited to help the country watch for Chinese ships in contested waters.

The United States, a former colonizer of the Philippines, also gives many work visas to Filipinos and was the country’s No. 2 source of foreign direct investment after Japan in 2013.

Analysts expect the upswing in ties to continue. Duterte has not scrapped any agreements with the United States, and the two sides weathered an even deeper falling out in the early 1990s with the closure of two U.S. military bases, said Christian de Guzman, vice president and senior credit officer with Moody’s in Singapore.

“They’ve gone through rough patches before, and by no means do we think that the rough patch between Duterte and latter months of the Obama administration was the roughest,” de Guzman said.

In September, the notoriously rough-spoken Duterte was seeking only less dependence on U.S. aid rather than a complete cut, part of a multicountry foreign policy, analysts say. He has visited China and Japan and contacted Russia’s prime minister since taking office.

Call center agents work overnight daily to cater to United States clients in Manila's Makati financial district, Feb. 6, 2012.
Call center agents work overnight daily to cater to United States clients in Manila's Makati financial district, Feb. 6, 2012.

“Duterte’s objective was never to completely shift to China and abandon the kind of relationship the Philippines have had with the U.S. for decades,” Bozzato said. “Rather Duterte is trying to balance between China and the U.S. in order to maximize the kind of aid or political support he can get from both of the big guys in the region.”

Strong Philippine-U.S. ties should bring factory investment from American companies, said Jonathan Ravelas, chief market strategist with Banco de Oro UniBank in Metro Manila.

In 2013 the United States invested $1.3 billion in the Philippines.

“The warming relationship between the U.S. and the Philippines could create that new spark similarly to that of President Ramos during his term,” Ravelas said. “His relationship with the U.S. was strong, and it was during those times you had seen the likes of FedEx being here in the Philippines.”

Brace for Trump

But experts warn that the Philippines should brace for more protectionist trade and investment policies under Trump.

Those policies might make it harder for people in the still largely impoverished country to get U.S. work visas and discourage American firms from using offshore bases such as call centers, a driver for the fast-growing Philippine economy.

About 1.8 million Filipinos work in the United States, sending back a major chunk of the $20 billion-plus in remittances from other countries each year.

The Philippine call center industry began in 2004 with an American investor and has expanded to employ about 1 million people, with expected revenues of $25 billion in 2016.

“I think that the source of concern in financial markets at the moment is Trump economic policy,” de Guzman said. “He says he may have incentives or disincentives for American companies looking to offshore jobs or place overseas investment.”

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