UNDER Rodrigo Duterte, president of the Philippines since
late June, things have a habit of spiraling out of control. First came his
campaign against drugs, which has led to the killing of almost 3,000 suspected
dealers by police and unknown assailants, without even a nod at due process. In
less than three months, he has presided over three-quarters as many
extra-judicial killings as there were lynchings of black people in America
between 1877 and 1950.
When Barack Obama expressed concern about the killings, Mr
Duterte called him a “son of a whore”. America’s president tried to shrug off
the insult. But Mr Duterte took the row to a new level this week, calling for
American special forces to leave the southern island of Mindanao, where they
have been training Filipino troops fighting several debilitating insurgencies.
“For as long as we stay with America,” he said, brandishing a picture of an
atrocity committed by American soldiers more than a century ago, “we will never
have peace.”
On September 13th he told his defense secretary to buy
weapons from
Russia and China rather than America, hitherto the Philippines’
closest ally, and the source of hundreds of millions of dollars in military aid
each year. He also said the navy would no longer patrol the South China Sea
alongside American vessels. “I do not like the Americans,” said Mr Duterte.
“It’s simply a matter of principle for me.”
In other words, Mr Duterte
is not just crass and brutal; he is alarmingly volatile. He has little
experience of national politics, let alone international affairs, having been
mayor of Davao, a city of 1.5m or so, since 1988 (apart from a brief stint as
vice-mayor to his daughter and three years as a congressman). Since becoming
president, he has threatened to withdraw from the United Nations and to declare
martial law. He idolizes Ferdinand Marcos, a former dictator who did impose
martial law. He says he wants to give Marcos a hero’s burial in Manila. All
this, naturally, frightens both local and foreign investors and threatens to
undermine the Philippines’ newly acquired status as South-East Asia’s economic
star.
The Philippine economy
grew by 7% in the second quarter, year-on-year, roughly double the long-run
rate, and faster than China, let alone most other countries in the region.
Unemployment, at 5.4%, is falling. The population is young and
English-speaking, and a booming service sector is keeping more educated Filipinos
from seeking their fortunes abroad. This burgeoning middle class—along with
growing remittances from Filipinos abroad—anchors strong domestic consumption.
During the six-year term of Mr Duterte’s predecessor, Benigno Aquino, the
Philippine stock market boomed. Foreign direct investment more than doubled
from 2009, the year before Mr Aquino took office, to 2015.
Mr Duterte thus took over
a country that was doing very well economically. His campaign focused not on
abstractions such as foreign investment and the proper strategic balance
between China and America, but on quotidian concerns: crime, traffic,
corruption. After admitting that economic policy was not his strong suit, he
promised to “employ the economic minds of the country” and leave it to them. His
advisers duly released a sensible ten-point plan for the economy: it emphasized
macroeconomic stability, improved infrastructure, reduced red tape and a more
straightforward and predictable system of land ownership. Mr Duterte has also
promised to focus on rural development and tourism. Workers’ advocates are
pleased with his promise to crack down on “contractualisation”, whereby
employers hire labour from third-party suppliers on short-term contracts to
avoid paying benefits. Internet in the Philippines is slow and expensive; Mr
Duterte has warned the incumbent telecoms firms to improve service or face
foreign competition.
Unfortunately, Mr
Duterte’s love of lynching and his propensity to impugn the mothers of foreign
dignitaries are making investors nervous. Earlier this month the American
Chamber of Commerce warned that the anti-drug campaign was calling into
question the government’s commitment to the rule of law. An Asia-based
financial adviser says that since Mr Duterte took over, investors are demanding
a higher risk premium to hold Philippine assets. As Guenter Taus, who heads the
European Chamber of Commerce in the Philippines, puts it, “A lot of people are
hesitant to put their money into the Philippines at this point.”
Mr Duterte’s critics fear
that the drug trade will only subside temporarily, but the damage done to
democratic institutions will linger. The police freely admit that drug
syndicates have taken advantage of Mr Duterte’s green light to kill rivals or
potential informants. Police impunity makes many nervous: one longtime foreign
resident of Manila says he has started to hear fellow expats talk about
leaving. He worries that an off-duty policeman could take issue with something
he said or did, shoot him and get away scot-free. “This didn’t happen under
Aquino,” he says. “You didn’t feel there was a group of people who could kill
someone and not go to jail.”
Local businessmen worry
that the president might simply denounce their firms as transgressors in some
respect, without producing any evidence. Mr Duterte, after all, did something
similar when he published a list of officials he accused of being drug dealers.
By the same token, Mr Duterte singled out Roberto Ongpin, the chairman of an
online-gambling company, as an example of a businessman with undue political
influence. Shares in Mr Ongpin’s company promptly plunged more than 50%; Mr
Ongpin resigned a day later, and promised to sell his stake in the firm.
“Everyone is scared,” says one corporate bigwig. “None of the big business
groups will stand up to him. They’re all afraid their businesses will be taken
away.”
A similar uncertainty
hangs over Mr Duterte’s foreign policy. He seems to be inclined to strengthen
the Philippines’ ties with China, at the expense of its alliance with America.
During the campaign he criticized his predecessor’s frosty relations with China.
The two governments are said to be preparing for bilateral talks—something that
has not happened since 2013, when Mr Aquino’s government took a territorial
dispute with China to an international tribunal. Shortly after Mr Duterte took
office, the tribunal ruled in the Philippines’ favour, but he seems reluctant
to press the point.
During the campaign Mr
Duterte mused about the dispute with China over the Scarborough Shoal, a rich
fishing ground in the South China Sea, “Build me a train around Mindanao, build
me a train from Manila to Bicol…and I’ll shut up.” He also admitted that an
anonymous Chinese donor had paid for some of his political ads. His reticence
with China is all the more striking given his otherwise belligerent rhetoric
and swaggering persona.
Of course, it is not clear
that Mr Duterte will be able to strike a deal with China, or even that he will
continue to pursue the diplomatic volte-face he seems to be contemplating. The
optimistic view sees Mr Duterte as more bluster than substance. His chief of
police claimed on Sunday that the anti-drug campaign had reduced the supply of
illegal drugs by 90%. That may allow him to claim victory and stir up some new
furore, even as his advisers soldier on with the more mundane business of
government. Optimists speculate that if he follows through on his pledges to
improve infrastructure and boost rural development, he might even leave the
Philippines in a better condition than he found it.
The pessimistic view sees
Mr Duterte continuing to lose friends and alienate people. He picks fights with
America, with business, with the other branches of government. China exploits
his weakness, increasing its military presence in the Scarborough Shoal without
building any railway lines. Investors stay away, and growth declines. The
strongman ends up weakening his country. In the Philippines, sadly, that is a
familiar story.
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