Philippines caught in the line of fire

This is an audio transcript of the Rachman Review podcast episode: Philippines caught in the line of fire

[MUSIC PLAYING]

Gideon Rachman
Hello and welcome to the Rachman Review. I’m Gideon Rachman, chief foreign affairs commentator of the Financial Times. This week’s guest is President Ferdinand Marcos Jr of the Philippines, who was elected president of his country last May. I met President Marcos, who’s often known by his nickname, Bongbong, in Davos last week. He was keen to send a message to the world’s business leaders that the Philippines has changed and to encourage trade and investment. But President Marcos’s efforts to rebrand the Philippines will not be straightforward. He’s the son of President Ferdinand Marcos Sr, who was forced from power by the People Power Revolution of 1986. And for many people around the world, the Marcos name is still associated with corruption and dictatorship. So what future for the Philippines in a second Marcos era?

(Bustling street sound)

Gideon Rachman
When Bongbong Marcos was elected president last May, his victory was the biggest landslide in the Filipino presidential election for several decades.

News clip
(Marcos supporters celebrating their victory)

Gideon Rachman
But he takes power at a very difficult time for the country, both at home and abroad. Military tensions are rising between China and America, and as we’ll hear, the president’s very concerned that war may break out in the region. And then there’s the legacy of this man . . . 

Rodrigo Duterte
You know, my advice to everybody, the ones that I cursed publicly, is do not get your documents from the opposition and from the communists. Because I said they are all falsified. Maybe I would say, as a reality, that there were some killing extrajudicially. But as always, I order the arrest and detention.

Gideon Rachman
President Rodrigo Duterte, who led the Philippines until last year, left behind a very controversial record. He launched the war on drugs which saw thousands killed and attracted the attention of the International Criminal Court. Sara Duterte, the former president’s daughter, is now Bongbong Marcos’s vice-president. But in Davos, President Marcos was keen to talk business. He was accompanied by the bosses of seven of the Philippines’ most important companies, including San Miguel, the drinks group, and the Ayala conglomerate. But as well as being business-focused, the Philippines delegation also had a strong family flavour, as I discovered when I had lunch with them on Monday afternoon in Davos. Sitting around the table were three of the President’s sons, including congressman Ferdinand Sandro Marcos, who, at the age of 28 is playing a leading role in pushing to create a Filipino sovereign wealth fund. Another jovial and outspoken presence at the lunch was Martin Romualdez, the speaker of the Philippines House of Representatives and also the president’s cousin. The Philippines has a population of around 110mn people, which makes it the 13th most populous country in the world. But at the very top, the country’s politics are still dominated by some powerful families, with the Marcoses foremost amongst them. Rather than meeting President Marcos in the bustle of the Congress Centre, I was driven to the snowy outskirts of Davos, where the president had taken up residence in a comfortable chalet. We sat down in the front room on a dark Tuesday evening as presidential aides hovered in the background. My first question was what’s changed since the Duterte presidency?

Ferdinand Marcos Jr
I suppose the difference will be the openness now of the government towards partnerships with private sector. I think that’s the main change in terms of the economy. If you’re going to talk about the other areas, there are very many different changes. One of the main issues that kept coming up during the campaign, for example, was what’s your approach to the drug war? And my position is very simple. I think the enforcement side has been handled by Duterte quite thoroughly, but it’s only taken us so far. We have, two weeks ago, asked for courtesy resignations for all our . . . from colonels of the police up to the generals. And we have formed a commission to investigate and to see who are those officers have been implicated.

Gideon Rachman
Implicated in what?

Ferdinand Marcos Jr
In drug distribution.

Gideon Rachman
In drug distribution. OK.

Ferdinand Marcos Jr
Because the truth is, the drug trade could not flourish the way it has in the Philippines without the police being in collusion.

Gideon Rachman
Yeah. And as you know, there was a lot of international criticism of the Duterte war on drugs, even an attempt at the International Criminal Court. Do you think there were abuses?

Ferdinand Marcos Jr
Yes, certainly. And the reason I can say that with such conviction is that there have been policemen who have been put in jail already who have been convicted of murder in certain cases. There are still cases that are being presently tried. There are still cases that will be investigated. Now, this new strategy that we’ve initiated, we still have to see exactly what the situation is. There are degrees of involvement. There are people who actively received money and used their command, for example, to deal the drugs. There are people who just turned a blind eye. So this kind of gradations of guilt is something that we’re going to have to deal with down the line, but it depends on what the commission’s findings are going to be overall and on each individual officer. So that’s the biggest change. Economically, I think the difference is that the Duterte government was content to depend on importation for anything that we needed, especially in food production. There are many abuses in that as well. And so that is the problem that we’re trying to solve. In the short term, the production of agricultural products is far below the demand, hence the skyrocketing prices. So we were forced, once again, to put out the sugar order and to import 22,000 tonnes of onion because the price was just crazy.

Gideon Rachman
So the message that you’re bringing to Davos I guess is that your government is more private-sector friendly.

Ferdinand Marcos Jr
Oh, yes, absolutely. I think we can claim that. You know, the pandemic also didn’t help the previous administration because their focus was very much on pandemic response. In fact, some of the big projects that were in the pipeline, the funds were diverted to top the pandemic response.

Gideon Rachman
What kind of projects would you like to see take off now?

Ferdinand Marcos Jr
Basics. We need to improve our agricultural production. We need to improve our energy. But you know that it gets complicated because there’s the issue of the mix between renewables and traditional, and then we’re in the middle of that. So we’re doing rather well, actually, because renewables, we’re up to 30 per cent contribution to the total production. But in terms of demand for energy and supply, we still have outages. Some of the problem is production. Well, basic problem is production, but there are also problems in terms of distribution. Because we are an island group, we have to put in submarine cables that we have not done. So that’s the cost as well. It is something that we’re going to have to deal with. So these are the problems that we feel have to be solved. You know, any industrialisation needs a good energy supply and that will increase as time goes on.

Gideon Rachman
Yeah, I mean, a lot of growth in south-east Asia, traditionally, and in China, has been driven by foreign investment. You got huge companies here in Davos. What kind of investment opportunities do you see for them?

Ferdinand Marcos Jr
Let us just look at the industries that did well even during the pandemic, and that was the semiconductor . . . because we manufactured them. And that has been a very strong growth area. Mining has already been a strong growth area. We’re trying to rationalise the whole mining industry. We are now exporting just raw ore. So we have to find a way to keep the value added in the country. So that I think is a huge possibility. Infrastructure certainly is another area that can be invested in. Furthermore, there is what we perceive as an imbalance between the contribution of the service sector and the manufacturing sector. The Philippines, the contribution to GDP is about 70 per cent still in favour of service. So capital-intensive investment is what will build up our manufacturing base and hopefully redress the balance between the service industries and the manufacturing.

Gideon Rachman
Yeah. I mean, you’ve obviously come to power at a time of rising geopolitical tension between the US and China. We’ll get on to the strategic bit in a second, but economically, is that a problem for you? I mean with the semiconductor restrictions, or maybe, as people look to diversify out of China, can you say, well, “Come to the Philippines?”

Ferdinand Marcos Jr
Yes, that is an element, because, actually, we hear from our friends, American friends who have invested in China, that they are encouraged to leave and to find another base, perhaps in the region. And of course, we are presenting ourselves. If that’s the case, if that’s what you plan to do, then come to the Philippines. Now, that doesn’t mean that we don’t have to do anything. We have many structural changes that we need to make in terms of the way we do business, in terms of digitalisation, in terms of training of our people. So those are what we feel the government needs to work on to make it a more investment-friendly country.

Gideon Rachman
But I guess China’s your biggest trading partner, so if there’s real disruption, that’s a problem for you, yeah?

Ferdinand Marcos Jr
Well, it’s been steady and that’s why the diplomacy part of that relationship has become very, very important, because we do not need to any big changes in what we have been doing, especially not now that we are slowly emerging from the pandemic economy . . . 

Gideon Rachman
Yeah.

Ferdinand Marcos Jr
 . . . in the Philippines.

Gideon Rachman
I mean, if you read the American press, a lot of the coverage says, well, President Marcos is a bit more pro-US than Duterte who had a famously difficult relationship with America. And they’re looking to the Philippines to do a bit more on the military side. And vice-president Harris was there. How much scope is there for that?

Ferdinand Marcos Jr
Well, we have the mutual defence agreement, and we have the Visiting Forces Agreement. Our constitution does not allow a foreign power to establish a base; that can no longer be done. But the arrangements we have made with the Americans are that we allow them to use certain facilities in the country on a temporary basis. So there has to be a rotation. The command structure of those bases, those facilities remain Filipino.

Gideon Rachman
But do you expect to see more people rotating in and out?

Ferdinand Marcos Jr
Yes, we are in the process right now of determining which of these facilities are going to be suitable for what the Americans would like to do.

Gideon Rachman
Yeah, I think after the Harris visit, a leading member of the Filipino military said that the Americans were keen to do more in the north, which is obviously a bit closer to China and closer to Taiwan. Is that the case, and are you thinking about it?

Ferdinand Marcos Jr
Well, I think it’s probably more immediate in the sense that we must respond somehow to the “incidents” that we’re seeing in the South China Sea. We don’t have a joint response with the Americans. The Americans come along every once in a while to have their presence felt. We do the same, but of course, to a lesser degree than the Americans. We do not have that capability.

Gideon Rachman
And those incidents you refer to essentially as Chinese action in what you regard as Filipino waters.

Ferdinand Marcos Jr
Absolutely. The last couple of months, there have been incidents. Whenever China launches a rocket, it flies over the Philippines.

Gideon Rachman
You mean towards Taiwan?

Ferdinand Marcos Jr
No. They send up satellites.

Gideon Rachman
Right. OK.

Ferdinand Marcos Jr
And it’s always eastward. So it goes over. And there was an incident where the Philippine coast guard was recovering a part because it was a possible hazard to shipping. And they were basically blockaded by Chinese vessels, and they took back the rocket part. And this is something I brought up to President Xi, and I said there was no need for that.

Gideon Rachman
What did President Xi say?

Ferdinand Marcos Jr
He says no, but it was a very friendly exchange between the two commanders of the Chinese coast guard and the Philippine coast guard. So this shouldn’t be a problem. I said, “You know, all you have to do is ask. It is of no value to us. So it was just because it was a hazard to shipping.” So these things or the blockading of fishermen, these kinds of incidents, that one is quite the fundamental area.

Gideon Rachman
And then, of course, there’s Scarborough Shoal. Is that a fait accompli now? There’s nothing to be done?

Ferdinand Marcos Jr
There’s very little we do except to watch. There are many, many reports, but we haven’t been able to confirm all of them just as yet.

Gideon Rachman
Reports what of the Chinese building up facilities and . . . 

Ferdinand Marcos Jr
Well, we have to show that first because we need to determine whether or not that is, in fact, what is happening. If we are going to take action, or, possibly, I will send a group to go to Beijing and to again bring these issues up.

Gideon Rachman
Yeah. And there’s some talk of a defence agreement with Japan, bases, sort of reciprocal access agreement . . . Is that right?

Ferdinand Marcos Jr
That’s been proposed, and I think they’re trying to put together Australia, Japan, South Korea, Philippines. That’s I think on the American side, they’re trying to keep their presence there. With the Japanese, there’s no specific agreement as yet. For quite a while, they have wanted to move some of the facilities from Okinawa to somewhere in the Philippines. But again, a big run up against the constitutional prohibitions.

Gideon Rachman
And the Japanese have just announced this big increase in military spending . . . 

Ferdinand Marcos Jr
Military spending, yes.

Gideon Rachman
What do you think of that? Do you think it’s a good move?

Ferdinand Marcos Jr
I think they feel it’s necessary. But any arms race is worrisome. And that’s what’s really happening because even the naval assets of the Americans have grown in the past three, four, five, six months immensely.

Gideon Rachman
Just to clarify, you say they’ve grown. I mean, as in they’ve shown up more in the South China Sea or just . . . 

Ferdinand Marcos Jr
The number of ships that are stationed in Okinawa and the other ports have grown in number. For example, when there was a blockade, they showed up. If you remember a few months ago, I think it was a response more to North Korea, where everyone, even the Europeans, sent ships over. These are not joint exercises with the Philippine government, but this is on their own initiative. So . . . 

Gideon Rachman
Are you worried? I mean, it sounds like tensions are bubbling up. Are you worried it could boil over into actual conflict?

Ferdinand Marcos Jr
Perhaps not. I think it’ll be too dear for the Chinese in terms of loss in trade and their political standing, etc, etc. And as an actual military operation, it’s much more difficult.

Gideon Rachman
We’ll be talking about Taiwan now.

Ferdinand Marcos Jr
About Taiwan, yeah.

Gideon Rachman
Yeah.

Ferdinand Marcos Jr
A cross-strait unification, as the Chinese like to refer to it.

Gideon Rachman
Yeah.

Ferdinand Marcos Jr
But that’s very, very worrisome for us, because as I keep reminding many people, Kaohsiung, which is a southern city and is 40 minutes away from my province, which is in the northern part of the Philippines. So if there’s a conflict, then it’s inevitable the Philippines will somehow be involved. But I don’t think it will get to that point. And that amongst the leaders of Asean and then I think even the strategic planners and thinkers in different member states of Asean, we are one in saying that, first of all, let’s maintain the peace. We have all adopted “one China” policy which recognises the claim that Taiwan is part of China. But the only thing is that all interested parties should act with restraint. And again, peace. Peace is the primary consideration for all of this. And again, the economy will be the first victim if there is actual conflict, even if there isn’t a shooting war. But if it escalates and heats up, the trade that goes through that part of the world is, I think 60 per cent or say 60-plus per cent of shipping trade goes through there. So that would be a disaster for not only us in the Asia Pacific but for all those who are using those trading routes.

Gideon Rachman
Yeah, sorry to press you, but when you said it’s inevitable the Philippines will be engaged in some way if there was some conflict over Taiwan, do you mean that Filipino troops would be sucked in?

Ferdinand Marcos Jr
No, no, no. But just from the closeness of the geographical distance. China is 600km away. Taiwan is much less than that. So it’s just the spillover of anything that would happen. I mean, two parties start shooting at each other 100km off the coast of the Philippines. Then we have a problem. And that’s what I mean, is that any such operations will be conducted very close to the Philippines and that’s how we will get sucked into this situation.

Gideon Rachman
Yeah, I mean you talked about the non-military effects that even if just a rise in tensions is a problem. And when we were talking about the economic piece of what you’re trying to do, it’s classic globalisation: more trade, more investment. But do you think that the tensions between the US and China, two biggest economies in the world, could somehow mess all that up?

Ferdinand Marcos Jr
It could, if we don’t keep the lid on it. As it stands now, already in the last half of the last year, the increase in tension was quite measurable. And then the visit of speaker Pelosi, that really brought things into stark focus as to what the situation really is. And when we learned that she was going to visit Taiwan, well, immediately our first concern, of course, was we have 150,000 Filipino nationals in Taiwan. And how do we bring them back, take them out of danger. But after that, how do we position ourselves so that we can defend the country if there is outright conflict?

Gideon Rachman
You were really thinking that was possible?

Ferdinand Marcos Jr
You have to look, consider the whole spectrum of possible outcomes so as to be able to plan properly. So, you know, so as the Americans like to call, gaming it, we got to that point from just simply evacuation of Filipino nationals all the way to if there’s a shooting war, what do we do? And then in terms of the diplomacy, how do we handle the Americans, we handle the Chinese? Where do we position ourselves? Where are we in all of this? And it’s not an easy determination to find where the proper middle ground for the Philippines is. I keep quoting the African saying that when two elephants fight, the only thing that loses is the grass. We’re the grass (Gideon laughs), and they’re the two elephants. So we have to be terribly, terribly careful.

Gideon Rachman
But you’ve talked to both elephants. You were in Beijing. You had vice-president Harris. You’ve been in Washington.

Ferdinand Marcos Jr
Yeah.

Gideon Rachman
Do you think you have any kind of agency in trying to calm it down, or do you just have to navigate your way through?

Ferdinand Marcos Jr
Well, I don’t know if in the larger sense, as in the dynamic between Beijing and Washington. In terms of the Philippines and China, certainly, I was quite encouraged by the visit that we had in Beijing earlier this month. It was quite encouraging because we re-established, again, formal contacts. And I was able to enumerate all the different problems that we feel need attention between our two countries. So I think we can work on that basis.

Gideon Rachman
Is there enough trust, though, because people say the Chinese will listen, they’ll nod, but then they’ll go back to doing what they were doing.

Ferdinand Marcos Jr
Well, so I have instructed my ambassador to China and also our secretary of foreign affairs to keep going, because if, you know, we just leave it up in the air and then nothing’s going to happen. So we have to make something happen because this is the livelihood of very, very many Filipinos. And it’s affecting the economy because they cannot fish. We have to import fish. It has far-reaching effects. And just to show you the importance of this, shall we say, again, dynamic between China and the Philippines this time, it’s the first time in a national election — this last one — is the first time where foreign policy was an issue. Generally, Filipino voters do not concern themselves with foreign policy. And they say, you know, they’re the experts, let them do it. But this time, all candidates have to answer, what are you going to do so that we can go back to our fishing grounds? What is your policy with China? And that’s how deep the effects have become. And that’s why I thought it would be very important to go and visit with the President Xi.

Gideon Rachman
Did the Chinese give you any encouragement on the fishing grounds that the fishermen will be able to go back?

Ferdinand Marcos Jr
Yes, they were very encouraging. But I think the onus is on the Philippines to keep pushing and to actually get that agreement that there will be no harassment of fishing boats. And, you know, again, I could not see the logic because these are small fishing boats. They are not armed. They have no weapons. They present no risk to anyone.

Gideon Rachman
But right now, they’re too concerned about harassment to go out and fish.

Ferdinand Marcos Jr
Yes, absolutely, because the Chinese approach is they are defending their territory. China is making claims on Philippine territories. And that’s the position that we’ve taken. And I think it’s a sensible, it’s a reasonable one, I think. And it’s one that I told the Chinese, and they said, as far as we’re concerned, this is our view. Our baselines have already been accepted by Unclos. I helped write the baselines law, actually, to the protest of all my Chinese friends in the Chinese embassy. That is the basic rule that we think should be followed. And that’s why I stressed the need for the code of conduct that we should have between Asean and China because it’s not only the Philippines that has these issues. Vietnam has a similar . . . it’s settled the Paracels, they just took it over by force. So . . . 

Gideon Rachman
And Scarborough Shoal, they took over. Is there anything you can do about that?

Ferdinand Marcos Jr
No. We have done all that we can do in terms of diplomatic options. We will continue to work at it and hope that something will break through. But in terms of capability, military capability, I mean, I think we both understand that it’s a very asymmetric situation.

Gideon Rachman
Sure. And are they still building these artificial islands they built, which are military bases? As far as you can tell, are they still developing those?

Ferdinand Marcos Jr
There’s a suspicion, we have to confirm that. I mean, satellite images change and even the analysts are not quite sure. There are certain things that we need to do to confirm that. But it gets worrisome because the number of incidents are increasing.

Gideon Rachman
Incidents of harassment.

Ferdinand Marcos Jr
Anything, like when they blockade areas or when they somehow intercept Philippine vessel, both coast guard and civilian. So it’s become very delicate. I think the visit of speaker Pelosi to Taiwan, I wouldn’t say it made the situation worse. What it did was, this was just sort of under the surface. There was somehow a kind of modus vivendi already that we are “OK, let’s just keep it this way. This is going to be good.” But her visit just brought it up to the surface and remind us, oh, look, no, there is some serious problems here and some serious issues here which we are going to have to attend to. So the Americans will do what they will do. The Chinese will do what they will do. We adjust. And that’s as much as we can manage.

Gideon Rachman
Yeah. Last two questions on non-strategic stuff. I know you’ve mentioned climate change, that the Philippines is absolutely on the front lines of this. How intense are the problems now? Can you see it getting worse year by year?

Ferdinand Marcos Jr
If you remember that very big typhoon that we had, Haiyan. It was a hundred-year typhoon. It was followed eight years later by another typhoon of equal destructive capacity. So it’s just getting worse. This season, we are still feeling the rains. The rains generally end in August but it did not rain at all until around approaching Christmas time. So it played havoc with our crops. That’s why the agricultural sector suffered greatly, because, of course, we’re planting in the traditional time, we’re using traditional varieties and not so resilient to the differences now in the weather. So yes, climate change is something that’s very, very urgent or immediate to the Philippines. We have the dubious distinction of being one of the most vulnerable countries, if not the most vulnerable country, to the effects of climate change. That’s why I’ve shifted my thinking. I talked to the experts. I listen to environmentalists and I say, “Look, I’m tired of whining about it and saying we are vulnerable, you know, and I need to make some solid proposals. How do we handle this?” And that’s what we are trying to put together because the damage and loss concept now for climate financing is a new concept and it’s very important one that we accepted that there is such a thing. But how do you determine that? How do you quantify that? And even if you can manage to quantify that, what do you do with that number?

Gideon Rachman
Who do you go to? Who do you get the . . . 

Ferdinand Marcos Jr
Exactly. And one formulation is to blame it all on England because they started the Industrial Revolution so it’s all their fault. So, you know, it doesn’t work. So that’s why we need new proposals. And the proposals that we are seeing is what we can do to adapt already that can be shown. Because the green financing that’s going around now — green bonds, some other instruments, EU has green bonds, the UN also has their own instruments. So we are trying to establish with the different organisations and the different NGOs as well how we can access that funds so that we are able to adapt.

Gideon Rachman
What would adaptation look like?

Ferdinand Marcos Jr
Adaptation would look like moving communities. R&D into varieties of agricultural products. Fifty per cent of our coastal communities are in danger for the rise in sea levels.

Gideon Rachman
So you’re saying that up to 50 per cent of the population in the Philippines may have to move?

Ferdinand Marcos Jr
No, it’s 50 per cent of the communities.

Gideon Rachman
But 50 per cent of communities might have to move?

Ferdinand Marcos Jr
Well, no, they are in danger. They’re not necessarily have to move. We can do things, perhaps to protect them. But these things need to get done, and they need to be funded. The Philippines cannot fund all of that on our own. But I sense a change from the past years. This happened, I think, in the last year or two, that there’s now a willingness by the developed countries to mitigate, let’s say, the effects of their development. So that’s a big step. And that damage and loss concept for Europeans, for Americans, for developed countries to accept that was a big step. So I think we’re moving in the right direction, but we need to move a bit faster. Every conversation I have about any sector of the economy, of government touches on climate change or climate change comes into it somehow. Even the infrastructure development. When can you build? You can’t build when it’s raining. So that affects even your schedule for building roads and bridges and things like that. So the effects of climate change are insidious.

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Gideon Rachman
That was President Ferdinand Marcos of the Philippines speaking to me in Davos last week. But before we go, I should add that our conversation was edited for length. And there’s one important topic that we did discuss that some listeners will be keen to hear about, and that’s the fate of Maria Ressa, a journalist and Nobel Peace Prize winner who’s faced several court cases that began in the Duterte era. President Marcos is also under pressure to release Senator Leila de Lima. She’s a critic of the Duterte drugs war who was jailed in 2017 on narcotics charges that supporters say were fabricated. President Marcos told me that he thought it unlikely that Maria Ressa would be sent to jail. And indeed, the following day, she was acquitted in one of the major cases she was facing, although there’s still another case pending. He also said that he’d spoken to Senator de Lima in prison, and she did not want an amnesty or a pardon but rather wanted to be acquitted in a trial. Speaking on background, some of Marcos’s allies told me that the president well understands the need to get these high-profile human rights cases wrapped up quickly. So we’ll see. Meanwhile, Filipinos will be hoping that President Marcos can deliver on his promise to keep the peace and increase prosperity. That’s it from the Rachman Review for now. Please join me again next week.