Fitch unit sees no breakdown of Philippines-US ties

MANILA, Philippines — Fitch Solutions Macro Research does not see a complete breakdown in Philippine-US relations despite the decision of President Duterte to terminate the Visiting Forces Agreement (VFA).

In its recent political analysis, the research arm of the Fitch Group said Malacañang’s decision to end a part of the country’s military agreement with the US is likely to further cool ties between Manila and Washington.

“While the move may continue the foreign policy pivot toward China and Russia under Duterte, we at Fitch Solutions do not foresee a complete breakdown in relations with the US,” it said.

Fitch Solutions said the termination does not spell the end of military relations between the long-term allies, with the long-standing Mutual Defense Treaty (MDT) and more recent Enhanced Defense Cooperation Agreement (EDCA) both still in place.

Fitch Solutions pointed out China remains President Duterte’s main focus, given its potential to provide huge investment into infrastructure and social services in the Philippines.

“The pivot toward China has paid off in some ways, with the share of total foreign direct investment from China  rising during Duterte’s presidency, compared to previous administrations, coming in at around 10 percent,” it said.

However, the research arm of the debt watcher said Chinese investment could fall short of Duterte’s expectations given slowing FDI inflows into the country.

“We expect Duterte to continue to seek stronger diplomatic ties with China and to a lesser extent Russia, nonetheless, over the remainder of his presidential term ending 2022,” it said.

Fitch Solutions expect relations between the Philippines and the US to improve post-Duterte, depending on his successor and the outcome of the US presidential elections.