Philippines in the Geopolitics of Asia: Four Scenarios and Strategic Options

“Guns and Roses” envisions a scenario where the South China Sea (SCS) dispute erupts into an armed conflict, posing challenges and presenting opportunities for the Philippines. Amidst various challenges in the Indo-Pacific, the SCS dispute undoubtedly remains the key driving force shaping states’ behaviours in the region. Internationally, greater informal partnerships and new alliances competing over the future global order will be expected. Hence, armed conflict in the region is likely. If the SCS dispute erupts into an armed conflict, the Philippines will face a dilemma. On one hand, the presence of US troops and facilities in strategic areas are effective deterrents against China. However, despite being treaty allies, Filipinos are sceptical about the extent of the United States’ commitment to helping and defending the Philippines.

Despite these challenges, there are short-term opportunities the Philippines should take advantage of. Firstly, the Philippines should initiate proactive consultations with the US leading to a possible formulation of a supplementary document to the Mutual Defense Treaty, which includes provisions on how the assets of Japan, Australia, the US and the Philippines could be coordinated during an armed conflict. Secondly, the government can align its public works planning and implementation with the war plans of the Armed Forces of the Philippines (AFP). Unimpeded mobility is essential in times of war; Philippine infrastructure must be able to sustain the transportation of heavy assets and supplies nationwide. Thirdly, the AFP must seriously consider the prospect of an expanded and organized paramilitary organization for the West Philippine Sea (WPS). 

To emerge stronger, the Philippines must adopt the following strategic options.  

1. Invest in human capital

To achieve a demographic dividend, the Philippines must invest in education, health, food and energy security. Upon attracting investments, they must be screened at the local and national level to avoid elite capture. Furthermore, once investment opportunities are secured, the Philippines can focus on improving its mandatory national service programme, the Reserve Officers’ Training Corps (ROTC) to better equip and prepare itself for future aggressive conflict. Moreover, the focus can be expanded beyond traditional security to embrace more humanistic approaches such as safeguarding food and energy security during times of crisis.

2. Attract foreign direct investments

The Philippines can continue to attract foreign direct investments (FDI) from like-minded states. Investment from China should be subject to national security threat reviews both at the national and local levels. To attract FDI, the Philippine government should start, and accelerate the establishment of its domestic defence industries specializing in naval warfare, as well as expand other key strategic industries. These include defence, shipping, aerospace, semiconductors, biotechnology, new energy, transportation, and info-tech. The Philippine government must also consider the expansion of its critical infrastructures, supply chains, and strategic industries. Relatedly, the Philippine Congress should pass stringent laws on the protection and conservation of the country’s strategic resources such as natural minerals, radioactive materials, wind energy, hydroelectric power, energy, and coal.

3. Develop new mini-lateral alliances

Once the Philippines achieves middle-income status, it can form new alliances to strengthen its military presence in the WPS. Beyond the US, the multinational force presence could include the French and South Koreans in disputed sea areas.

This can be facilitated by rallying support for and formalizing the idea of a multinational defence force in the WPS. While states enter partnerships and alliances based on their national interests, there is no cost for the Philippines to leverage the arbitration ruling and its existing ties with like-minded states in realizing the idea of a multinational defence force that could assist the Philippines in terms of (i) multinational presence of both personnel and assets as deterrence to China; and (ii) creating layers of archipelagic defence in times of invasion and war, i.e. keeping and exhausting China’s naval forces at international seas. Another method of facilitation is strengthening strategic communication. The Philippines can promote its national narrative surrounding the SCS disputes, to garner support internationally in arbitration cases, through translated articles.

Summary of scenario by Robert Joseph Medillo, Associate Professor, National Defense College of the Philippines.

This highly optimistic scenario is premised on managed competition between the United States and China. The situation is similar to the period of détente during the Cold War after the superpowers stepped back from the brink of nuclear war. Tensions were relaxed, and the environment became fertile ground for cooperation in the areas of arms control and disarmament. Similarly, in Scenario B US-China competition has tempered, allowing the Philippines to continue its economic development. It is assumed that the US and China have reached the brink of war in Taiwan, but without erupting into a full-blown military confrontation. In response to the near-collapse of the post-1945 rules-based order, the two superpowers are assumed to have stepped back from their intense competition and have reached a level where their relations are managed. Alongside the assumption that great-power competition is reduced, another assumption includes the non-contentiousness of the area known locally as the West Philippine Sea. This implies that China has abided by the 2016 arbitration decision and has scaled down its insistence on reinterpreting international law to suit its purposes. Because of the managed geopolitical conflict, the Philippines is presented with opportunities for economic growth.

The Philippines has three strategic options to achieve this envisioned scenario:

1. Pursuit of a robust economy towards USD1 trillion by 2030

To achieve this economic goal, sustained foreign direct investments are necessary. In this regard, the Philippines can focus its efforts on three areas: marine resource management, agriculture, and manufacturing. Marine resource management can be strengthened by investing in research and development. Scientists and researchers are also incentivized to collaborate, which can ensure that knowledge production is inclusive and sustainable. The Philippines can also tap markets that can accommodate agricultural products to diversify food production. Focusing on sustainable cash crops, including coffee, cacao, rice, livestock, and fisheries, is critical. These efforts can lead to self-sufficiency, a resilient supply chain management system, and food security. The manufacturing sector can likewise be a source of economic robustness for the Philippines, especially the development of semiconductors and green technology for exporting marine products.

2. Improve and reform the education system

The continuation of economic development hinges on an educated population. Hence, in a scenario where superpower tensions are lowered, the Philippines’ pursuit of a robust economy by 2030 relies heavily on a skilled, highly professionalized, and high-value workforce, which can not only support and lead the scientific initiatives that will propel economic growth, but also produce a greater number of technocrats and more efficient and effective modes of governance. A focus on education can further bolster research and development on marine resources, allowing the country to achieve more gains and leverage in its envisioned goal of leading the blue economy by 2030.

3. Position the Philippines as a more influential and decisive player in the international community

The Philippines has been historically criticized for inconsistent and oscillating foreign policies, depending on the sitting president, which gravely affected the country’s credibility in the international community. With a more educated and participative population, Filipinos can elect better leaders to protect the national interest instead of relying on personalistic and patronage politics. In this scenario, the country will be better positioned to leverage its partnerships by contributing more significantly to the US-Philippine alliance and its management, crafting more relationships, effectively diversifying its international relationships, and substantiating its pursuit of a foreign policy more independent from internal and outside influences.

Summary of scenario by Dr Charmaine Misalucha-Willoughby, Professor and Chair of the Department of International Studies, De La Salle University in Manila, the Philippines.

The “ASEAN Ascent” scenario envisions a future where hot wars shift to economic trade wars. While the relative geopolitical stability of the region enables the Philippines to focus on economic development, it remains constrained. As geoeconomics, partnerships, and economic issues grow in importance, the Philippines must be aligned with the rise and ascent of ASEAN.

In this scenario, geopolitical competition is managed yet geoeconomic trends are bad for economic development in the Philippines. Major driving forces include disruption in the global and regional balances of power; threats to sovereignty and territorial integrity, particularly in the West Philippine Sea; the Philippines’ growing energy requirements; the formation of alignments and partnerships; and overt balancing with the US due to more frequent joint military exercises. Advances in military technology can also complicate arms races and security dilemmas in the region. As the Philippines lacks a substantial highly skilled workforce, digital automation and digitisation could have a considerable impact on the economy.

While geopolitical competition is managed, there is a lower possibility of armed confrontation but the great powers may compete in other areas. For instance, technological bifurcation could become more prominent, with semiconductor competition between Taiwan (and the West) and China, in particular, intensifying. Simultaneously, the proxyism of great powers in the Philippines could intensify as the US and China compete for influence in countries in the region. Further, China could resort to handing out economic inducements, which may result in a greater domestic backlash towards China. However, if West Philippine Sea tensions subside, Philippines–China relations may improve.

The Philippines should be prepared for an intensification of economic war as the prospects of a hot war recede; third-party countries could be forced to choose sides. If American or Western capital leaves China, the Philippines should present itself as an alternative investment hub. Given the enduring China–US rivalry, the Philippines must strive for a balanced foreign policy. But this is contingent on the state of China-Philippines maritime rivalry in the West Philippine Sea. With a more stable strategic environment, the Philippines should take the opportunity to develop self-reliant armed forces with greater investments in the security sector. Currently, there are multiple Visiting Forces Agreements (VFAs) in the works, so more foreign military presence in the Philippines can be expected.

To emerge stronger, the Philippines can adopt several strategic options.

1. Navigate trade wars by improving domestic economic position

Internal balancing can be achieved through domestic development. Energy security and infrastructure projects are necessary to improve economic competitiveness. Economic impediments such as criminality and corruption also need to be curbed as they substantially impact overall investment climate, and the Philippines must avoid debt traps and the securitisation of some of China’s offers.

Relatedly, the Philippines should improve its ease of doing business by relaxing foreign investment laws and reserving critical infrastructure for domestic corporations to strengthen anti-dumping laws and local government codes. The Philippines could also strengthen its contribution to the global economy through the export of skilled workers. Given its large youth population, the Philippines should maximise its human capital. Prioritising quality education and in-demand skills training is vital. In conjunction with this, the Philippines should focus on alleviating poverty and addressing the high level of stunting among children as these could jeopardise the potential of the country’s human capital.

Additionally, in the wake of developments in artificial intelligence (AI) and automation, the Philippines must institute upskilling to sustain its dominance in business process outsourcing (BPO). As the country’s cash cow industry, this industry risks being rendered irrelevant if upskilling is not instituted promptly.

2. ASEAN amalgamation: leveraging ASEAN chairmanship

The Philippines should strive for a balanced foreign policy and remain on guard for elite capture especially by hostile foreign powers. It should take the opportunity presented by its ASEAN Chairmanship in 2026 to steer the wheel towards exploring non-traditional partners in economic ventures beyond East Asia and the West. Diversification of engagements and partnerships is a means to reduce overdependence on any one state or traditional partner. This is an opportunity for greater engagements. The Philippines should strive for the deeper economic integration of ASEAN as this will further elevate ASEAN’s importance to the major powers and this will consequently  

3. Strengthen maritime security and ensure sustainability

Together with partners in the West Philippine Sea, the Philippines could pursue more joint efforts in ensuring maritime security and sustainability. A multifaceted group akin to the Philippine government’s task force on the West Philippine Sea could be assembled on the part of the civil sector (business community, fishers, academe, youth) in order to enable strong public-private partnership on the West Philippine Sea. A self-reliant defence force should also be expedited to lessen dependence on foreign powers and avoid possible supply chain risks.

In addition, the country’s resources should be sustainably managed. The Philippines should simultaneously optimise the country’s rich natural resources and crack down on the over-exploitation of resources and marine pollution.

Summary of scenario by Dr Aaron Jed Rabena, Professorial Lecturer, University of the Philippines Asian Center.

The scenario “blood and iron” describes a future with violent geopolitical conflict and poor geo-economic conditions. In this scenario, two conflicts play out at the forefront.

A Chinese invasion of Taiwan would lead to a massive influx of refugees to the Philippines, and the Philippines risks being China’s next target. The infrastructure and monitoring systems cannot accommodate the influx of refugees, and pervasive Chinese influence in key provinces further undermine support for the government, exacerbating internal strife. Closer to home, an escalation of the South China Sea conflict would result in an energy and food crisis in the country, disrupting business activities and public service delivery.

In this scenario, the China-Taiwan and South China Sea conflicts together trigger a full-scale hot war involving the United States. To prevent being overwhelmed by fighting on multiple fronts, the Philippines activates the Mutual Defense Treaty with the US, and allows bases under the Enhanced Defense Cooperation Agreement to serve as logistics hubs. These bases resupply US forces, and are entry ports for refugees and repatriated individuals. The Philippines faces significant economic disruptions due to the volatile geopolitical situation, namely the blocking of trade routes by China and reduced trade with that superpower.

However, amidst the conflict, opportunities emerge from the fortification of the domestic defence industrial base. The government can allocate significant financial and military aid to bolstering the country’s defence capabilities, diverting resources away from some other industries. The production and maintenance of military-grade assets and equipment will be prioritized. Beyond domestic opportunities, the Philippines gains strength through international partnerships and aid. Fellow US allies such as Australia, Japan, the Republic of Korea and EU nations, along with ASEAN member states, can provide humanitarian and military aid.

Coping with adversity and emerging stronger in such a political landscape and climate can be achieved through the following strategic options: 

1. Improving economic security

Internal balancing and improvement of domestic capacities are long-term objectives requiring comprehensive strategies. Improving the Philippines’ fiscal posture and credit base will encourage investments and the country’s ease of doing business. The state needs to develop new industrial policies and strengthen state-driven support for local industries through performance-based initiatives, and equal distribution of benefits and dispersal of costs. Diversifying economic partners beyond China and finding more markets will strengthen the security of the Philippines’ supply of vital resources such as energy. These strategies must be supported by improved delivery of public goods and services to support the economically disadvantaged.

2. Strengthening human security

Energy and food security are primary issues underpinning human security. Strategic options to ensure this security include the development of strategic reserves in both areas, and generating indigenous and renewable energy resources. Human security more widely will also require robust security of air and seaports, and tightened implementation of immigration laws, especially to help offset the challenges of the archipelago’s porous borders. Dual-use and heavy industries related to strategic needs must also be developed. Beyond domestic strategies, energy security can be strengthened through energy integration and defence-industry collaboration with other ASEAN member states. Economic partnerships with existing security partners, particularly Australia, India, Japan, and the Republic of Korea can also be strengthened.

3. Developing capabilities for territorial defence

Territorial security is vital for the Philippines’ survival. Naval and Coast Guard presence must be strengthened in the West Philippine Sea to continuously pursue and protect its national interests. Capabilities for deterrence must be bolstered, both unilaterally and under the US-Philippines alliance. The Philippines must fortify critical infrastructure, including identifying easily defendable key provinces to set up strategic reserves. Anti-ballistic missile, anti-surface, and anti-submarine warfare capabilities must be enhanced. The government can also consider dispersing assets within the archipelago for strategic deployment and to increase chances of survival.

Summary of scenario by Dianne Despi, Member of the Corps of Professors, Armed Forces of the Philippines, & Doctoral Student, University of Delaware