The effects of the falling out between the Philippines and the United States are beginning to show.
The Duterte administration may just shrug off the fallout arising from Digong’s incessant verbal attacks on the US but the business sector is concerned with its ripple effect on the economy. The peso has fallen to 48.50 vis-a-vis the dollar in Wednesday’s exchange rate. While it may be good for the local manufacturers export products, it is bad news in that the cost of importing raw materials for making its products has become more expensive.. Forex dealers foresee the peso hitting P50 to a dollar early next year.
Another area which could be dealt a blow is the business process outsourcing industry which employs hundreds of thousands of Filipinos as call center agents. This is seen as a vibrant sector that could surpass BPO global leader India in the coming years. Most of these call centers in the country are US companies. Some of them are spillover business from India that could no longer be handled by the locals themselves, forcing these companies to relocate to the Philippines.
The departure of the US companies as a result of the uncertainty spawned by Duterte’s ambiguous “separation from the US” statement during his four-day state visit in China, has sent chills in American companies operating in the country. Washington and the American Chamber of Commerce in Manila have tried to assuage this fear but the pall of gloom hangs heavily in the air. We don’t know what economic policy this administration is pursuing but it seems to defy the sound policy that more is better. Duterte’s move to diversify the country’s source of foreign investments is good economics, but why shed long and traditional ones ?
Russia, the other country aside from China that Digong is courting, is having its own economic problems since the fragmentation of the former Soviet Union…It is not the same Soviet empire that used to control satellite states like Georgia, Uzbekistan, Azerbaijan, Ukraine, Kazakhtan. Moldovia, and Belorussia. These newly formed republics are not willing to return to the Russian orbit that used to dominate them. These countries now have their own flags and national anthems. Some of the nuclear weapons Russia stored in these satellite states are still with them and they are not about ready to relinquish or return them to mother Russia.
A deal of 26,000 assault rifles worth a billion pesos was stopped from going through by US Senator Ben Cardin who expressed concern the weapons would be used in the extrajudicial killings of drug suspects in President Duterte’s brutal take-no-prisoners war on traffickers and users.
Philippine National Police Director General Ronald dela Rosa said the PNP can source the weapons from another American company while President Duterte claimed the Philippines can purchase weapons from Russia and China and calling the officials in Washington who stalled the sale of the Sig Sauer rifles as “ fools and monkeys.”
At what cost and under what terms will the Philippines be buying weapons from Russia?
Reacting to the latest blast from the Philippine president, US State Department spokesman John Kirby said at a press briefing in Washington that “US-Philippine relation does not rest on the shoulders of just one man, particularly President Duterte.” Read between the lines and and read what you want into what Kirby said.
There are other areas the US can turn the screw on the Philippines but I won’t talk about them. Let’s just wait and see how the US can play tit-for-tat with Digong depending on the gravity of his verbal attacks. Will Duterte cease and desist or continue on his foul-mouthed outbursts against America in the new year? The President’s planned scrapping of the annual Balikatan war games between US and Filipino troops is an area where the military establishment is not happy about. They are fully aware of the benefits the war exercises add to the AFP’s defense capability particularly in light of China’s aggressive moves in the South China Sea and the region.
The US presidential election is coming up in less than a week. Its outcome, whether Hillary Clinton or Donald Trump makes it to the White House, will determine the course of Washington’s policy with Manila. Hillary may just be the Iron Lady that Duterte is not expecting. Outgoing President Barck Obama took Digong’s insults in stride but Hillary might be the fury who could unleash the same verbal venom that Duterte dishes out.
