Revitalizing the U.S.-Philippines Alliance to Address Strategic Competition in the Indo-Pacific

Executive Summary

As competition with China intensifies across the Indo-Pacific, the United States is looking increasingly to its wide network of alliances and partnerships to confront the challenge. The U.S.-Philippines alliance remains of critical importance due to the two countries’ deep historical and cultural ties, including the significant Filipino-American community in the United States, as well as the Philippines’ strategic location in the South China Sea. Its position in the “first island chain”¹ is important to American security and the integrity of the U.S. alliance system in the Indo-Pacific—namely, if an adversary can coerce or easily penetrate the Philippine archipelago, Japan and Taiwan are easily flanked. Furthermore, the Philippines is an ally and friend within the Association of Southeast Asian Nations (ASEAN) at a time when Southeast Asia is emerging as the epicenter of geopolitical competition. Lastly, the Philippines is important in shaping regional norms on democracy, notwithstanding the setbacks under former Philippine President Rodrigo Duterte. With an alliance in place for over 70 years, the two countries have fought side by side in several wars and cooperated on common diplomatic and security objectives, including during the Cold War when the United States had a massive military presence in the Philippines.

With the election to power of Ferdinand “Bongbong” Marcos Jr. on May 9, 2022, the United States should seek to reinvigorate this critical alliance and set it on firmer footing. The alliance had faltered under Duterte’s administration due to his counternarcotics campaign that resulted in human rights abuses—including thousands of extrajudicial killings—attempts to reorient the Philippines’ foreign policy toward China, and abrogation of the U.S.-Philippines Visiting Forces Agreement (VFA) in early 2020. Signed in 1998, the VFA is a bilateral agreement that helps streamline the entry of U.S. service members into the Philippines and lays out procedures for resolving issues that may arise from their presence.² Duterte’s decision to suspend the VFA followed a number of disagreements with the United States, including the revocation of the U.S. visa of one of Duterte’s close confidantes and the architect of the counternarcotics campaign, former Philippines National Police Chief and now-Senator Ronald dela Rosa.

Despite the challenges under most of Duterte’s rule, bilateral relations began to turn around in July 2021 when Duterte reversed his decision to abrogate the VFA. The decision followed reports throughout the spring of 2021 of several maritime incursions by Chinese vessels in the Philippines’ exclusive economic zone (EEZ) and U.S. donations of COVID-19 vaccines to the Philippines. The preservation of the VFA was welcome news to U.S. policymakers, as a credible U.S. security presence in Asia hinges on the ability of the United States to position forces within the country.

To build a firmer foundation for the U.S.-Philippines alliance and avoid disruptions like those experienced during Duterte’s regime, Washington must nurture all aspects of the partnership, taking a long-term strategic view of ties, while also recognizing that the new Philippine government will continue to try to balance relations between the United States and China.

The purpose of this report is to assess the current state of the relationship and provide recommendations for revitalizing and expanding bilateral ties following a six-year period marked by turbulence and volatility. While Duterte has tested the flexibility of the alliance with his controversial counternarcotics campaign and attempted realignment toward China, his actions have also highlighted a broader need for the United States to reprioritize its oldest ally in Asia.

To reinvigorate U.S.-Philippines relations, the report makes a series of policy recommendations regarding security and defense ties, foreign assistance, energy cooperation, and diplomatic ties. It further proposes ways to improve the narrative regarding U.S.-Philippines legacy issues and the two countries’ complicated colonial history.

Security and Defense Issues

Establish a Strategic and Contingency Planning Process as Part of a 2+2 Dialogue

To reflect Washington’s desire to upgrade, deepen, and expand the scope of political-military dialogue and consultation, the Departments of State and Defense should inaugurate a ministerial-level 2+2 dialogue with the Philippines at the upcoming 10th bilateral strategic dialogue. This will enhance the bilateral alliance and enable Washington and Manila to increase and raise the level of their consultations on strategic and operational planning so that they are prepared to deal on an immediate basis with any contingency that may arise in the Indo-Pacific. This will be easier once legislation—which has now passed the Philippine House and Senate—on ending the revolving-door policy for military leaders, and establishing fixed terms of office for the Armed Forces of the Philippines (AFP) chief of staff and service branch chiefs, becomes law.³ The frequent changes in the AFP leadership—only one AFP chief of staff has served in that position for more than 12 months in the past 20 years—has made strategic planning with U.S. counterparts challenging.

Restore Bold Vision of the Enhanced Defense Cooperation Agreement

The Enhanced Defense Cooperation Agreement (EDCA) was signed by the two nations in 2014 to enhance their defense and security partnership by improving the AFP’s capabilities and allowing for increased rotational presence of U.S. military forces, ships, and aircraft in the Philippines, but its overall implementation has stalled in recent years.⁴ The EDCA calls for supporting the two countries’ shared goal of improving interoperability and addressing the AFP’s capabilities gap in the short term and its force modernization plans over the long term. More specifically, the agreement aims to assist the AFP in developing its maritime security, maritime domain awareness, and humanitarian and disaster relief capabilities.⁵ Moving forward with EDCA commitments is critical for the United States to improve its military posture in the region and for the AFP to acquire military capabilities for both its short-term security needs and long-term military modernization goals. The two countries must follow through with commitments to increase the number of EDCA sites at army and naval bases and allow for rotational access for U.S. forces.

Enhance Alliance Commitments

The United States and the Philippines should strengthen their alliance commitments and put forward a common strategic vision based on the Philippines’ strategic autonomy and a rules-based order. As part of this effort, the United States should be explicit that Washington would consider any construction of permanent military or dual-use structures at Scarborough Shoal unacceptable and a potential trigger for employing Article IV of the Mutual Defense Treaty (MDT), the provision that is commonly interpreted to mean that an attack on one party is considered as an attack on both parties.

Prioritize Sale of Asymmetric Defense and Maritime Domain Awareness Equipment

Prioritizing provision to the Philippines of items such as land-based mobile anti-air and anti-ship systems, as opposed to big ticket items, makes sense from both a practical and cost perspective. Items such as drones and other equipment that can be used for intelligence collection, surveillance, target acquisition, and reconnaissance serve both the Philippines’ goals of enhancing its own maritime security and the U.S. objective to bolster joint maritime domain awareness. The next priority should be exploring financial arrangements, such as the U.S. Foreign Military Financing program, to help the Philippines purchase more expensive, sophisticated items such as F-16 fighter aircraft over the medium term.

Enhance Cybersecurity Cooperation

Washington must enhance cybersecurity cooperation with Manila and raise awareness among Philippine officials on the importance of investing only in trusted and secure technologies and digital infrastructure. Since the Philippines has not yet committed to either a closed or open digital development path, there is an opportunity to influence decision makers on the benefits of pursuing open digital ecosystems that foster transparency, economic growth, job creation, innovation, and capacity building. One issue to consider is whether it will be necessary to install standalone power facilities for the EDCA bases and Hanjin facility, given that China has a 40 percent stake in the Philippine national power grid, giving it significant influence over this national asset.

Start Minilateral Security Dialogues

Washington should institute trilateral security dialogues between the United States, Philippines, and Japan, as well as the United States, Philippines, and Australia. Such trilateral exchanges are congruent with President Joe Biden’s administration’s goals of achieving greater integrated deterrence by bringing the Philippines into multilateral discussions among key allies to develop common perceptions of maritime threats and challenges and develop a more integrated network of like-minded allies and partners.

Provide Support to the Peace Process in Mindanao

While the 2014 peace agreement and the creation of the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) in 2019 have reduced violence and provided the greatest hope in a generation for a sustainable peace, the BARMM faces major challenges amid high local expectations for a peace dividend. In the run-up to the end of the transitional phase in 2025, the United States should provide support to the Bangsamoro Transition Authority and civil society in the BARMM. Success in the BARMM will reduce drivers of violent extremism and potentially remove a domestic demand for AFP resources. While Washington has provided significant amounts of funding toward reducing violent extremism in the Philippines, it should increase both funding and diplomatic attention to the peace process in the BARMM.

Foreign Assistance, Economic and Energy Cooperation, and Diplomatic Ties

Explore Opportunities for New Millennium Challenge Corporation Compact

The Biden administration should conduct early diplomatic outreach to the new Philippine administration to determine if there is interest in filing for a new Millennium Challenge Corporation (MCC) compact. Washington should be clear about what actions Manila needs to take to become eligible for MCC funding. A new MCC compact could focus on investing in much needed renewable energy capacity, transportation infrastructure, and post-pandemic economic recovery.

Maximize the Philippines’ Role in the Indo-Pacific Economic Framework

The United States should seek to maximize the Philippines’ role in the White House’s Indo-Pacific Economic Framework.⁶ One area of opportunity is working toward a digital standards agreement, as the Philippines concurs with U.S.-favored digital standards, which help underpin its business process outsourcing sector. Such an agreement could further reinforce and expand U.S.-Philippines cooperation in this sector.

Enhance Public Health Cooperation

Washington should focus a large portion of its assistance to the Philippines on public health, including continued provision of COVID-19 vaccines, training medical staff, technical assistance for crisis preparedness and health data management, and upgrading labs and health facilities. To facilitate increased cooperation on public health, the State Department should fill the public health advisor position at the U.S. Embassy, and the Department of Defense should reactivate the U.S. military healthcare advisor position at the Joint U.S. Military Assistant Group in Manila. Washington should also provide technical assistance to reduce logistical hurdles for vaccine distribution. Providing robust assistance to aid the Philippines in coping with the COVID-19 crisis also demonstrates the enduring value the United States places on the alliance beyond the conventional security realm.

Support Liquefied Natural Gas Development as a Bridge to Renewable Energy Alternatives

The United States should support the development of onshore liquefied natural gas (LNG) import facilities that would increase the Philippines’ capacity to diversify energy imports while decreasing the pressure to develop fossil fuel deposits within its borders. U.S. companies are well placed to help the Philippines develop LNG infrastructure and can also assist the Philippines in staking claims in its EEZ to develop gas resources. LNG can serve as a bridge to help fulfill the Philippines’ energy needs until renewable energy options are fully available and can offer a cost-effective alternative to carbon- based options.

The United States could also propose a joint U.S.-Philippines public-private effort to explore the feasibility of carbon capture, utilization, and storage to help reduce the carbon footprint of existing energy projects. U.S. expertise in this area would increase the Philippines’ capacity to meet emissions targets while ensuring its energy security.

Establish U.S. Consulates General in Cebu and Davao

In line with the White House Indo-Pacific Strategy commitment to “meaningfully expand our diplomatic presence in Southeast Asia and the Pacific Islands,” Washington should establish consulates general in Cebu and Davao, the second and third largest cities in the Philippines.⁷ Currently, the United States only maintains an embassy in Manila and a consular agency in Cebu, despite the Philippines’ vast geography and its population of more than 100 million people. In contrast, both Japan and China maintain consulates general in these two cities, with China also present in Northern Luzon. Greater presence would facilitate closer people-to-people ties and more effective strategic communication.

Legacy Issues

Amend Filipino Veterans Equity Compensation Act

The U.S. Congress should increase the remaining $55 million in funds allocated to the Department of Veterans Affairs for Filipino veterans and amend the 2009 Filipino Veterans Equity Compensation Act to raise individual payments to noncitizen Filipino veterans to the same level as Filipino-American veterans. Congress should also institute a more streamlined verification process that balances the desire to prevent fraudulent disbursements with the guarantee that remaining veterans receive their rightful compensation.

Construct Peace Monument at Jolo Island

The United States should consider constructing a peace monument at the site where as many as 1,000 Moros—native Filipino Muslims also referred to as the Bangsamoro people—including women and children, were killed by the U.S. Army in 1906.