Global Risks Facing the Marcos Presidency: Geopolitics vs Economics

WE are now in the most dangerous situation in the world since 1945, according to Dr Steinbock, founder of the global think tank Difference Group. There was a promising possibility in 2016 where we could have had a global recovery, but that didn’t happen due to US-led trade wars that increased trade deficits.

Two decades of progress have been reversed in just two years. Inflation has become a real problem, and many countries could fall into major stagflation reminiscent of the 1970s. The absolute number of international migrants has tripled, and this phenomenon is occurring in a context of closing borders. The number of displaced people worldwide is more than twice as high as it was during the two world wars.

The countries most affected by food crises are the emerging economies which are importers of raw materials. In ASEAN-6, the weight of food in the consumer price inflation basket is 20-40%, and with fuel, at least 50-60% of the basket, presented Dr. Steinbock.

(L to R) US President Joe Biden, Ukrainian President Volodymyr Zelenskyy, Vice President Sara Duterte-Carpio, President Ferdinand “Bongbong” Marcos Jr., Russian President Vladimir Putin and Chinese President Xi Jinping. ARTWORK BY IDSI

Indeed, according to OCTA’s “Tugon ng Masa”, “controlling the prices of basic goods” was the main concern of more than 63% of people living in the National Capital Region and more than 52% of classes D and E. The survey was conducted in March 2022, when the economy was still bullish on first-quarter GDP reports of 8.3%. Interestingly, only 3% or less believe that maritime disputes with our neighbours, controlling population growth, changing the Constitution are pressing national concerns.

The war in Ukraine is just the tip of the iceberg

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The current situation is often blamed on the war in Ukraine, which is a very limited war physically, but a global war politically. Global instability is actually due to the fact that the United States printed over $5 trillion at the start of the pandemic in the form of “stimulus bills” and sanctions against non-aligned countries. Exports of energy oil and food weren’t really much restricted, until the United States continued to increase sanctions against Russia and Ukrainian President Volodymyr Zelenskyy blocked exports to get more concessions from the United States.

An independent foreign policy is more important than ever. Looking at the development of the miracle cases of East Asia and the Brics, we see that the countries that are successful in their economic development have a “zero conflict principle”, but this is very difficult to maintain, as can be see when a small country is sandwiched between two giants.

So far, President Ferdinand Marcos Jr. has said he will continue Duterte’s independent foreign policy of befriending all, while prioritizing the Philippine national interest and aligning closely on the interests of ASEAN. According to George Siy, geopolitical analyst and director of IDSI, the Philippines must find a position of cooperation with regard to Chinese and American objectives and achieve the continuous economic growth that the Filipino people need and want.

Provocateurs of war

The Taiwan question is a major flashpoint in the Asia-Pacific region, and it is where a Ukraine 2.0 could eventually break out in Asia. Right now, there is already a confluence of events that could make this possible, according to Professor Bobby Tuazon, Director of Policy Studies at CenPEG. Beijing has repeatedly said it will pursue peaceful reunification with Taiwan. But if Taiwan decides to declare its independence from China, China will use all military means to prevent Taiwan from being separated from China.

A similar playbook in the Ukraine crisis, Taiwanese tensions stem from provocative US actions against China, including constant media orchestrations, information blocking, monthly increases in major naval exercises across the strait from Taiwan. The United States has also provided Taiwan with military “aid” and sold $70 billion in weapons to Taiwan, all in violation of the one-China principle and international law. While the US interest is interpreted as a policy of “strategic ambiguity” on the Taiwan question, it is clear that the United States is pushing China to launch military action.

NATO is now centrally involved in both the war in Ukraine and the Taiwan issue. When a war between the United States and China occurs over the Taiwan question, the Philippines will be involved in this inevitable war as security allies of the United States.

The Marcos administration should begin to review its security alliance with the United States, such as the Mutual Defense Treaty and the Visiting Forces Agreement, which the Philippine Congress has ratified, but not the US Congress. These oblige the Philippines to support US aggression not only in Asia but all over the world, but do not oblige the United States to do the same for the Philippines, warns the political analyst and professor of the UP Tuazon.

Countries are constantly forced not only to choose sides, but to choose between geopolitics or economic development.

When Xi Jinping enacted his Belt and Road Initiative plans in 2013, there was a lot of idealism that China and the Western world could work together and cooperate. But the worst has happened is the loss of strategic confidence; and it will be difficult to restore. This kind of situation where geopolitics takes precedence over economic development has and will continue to harm the United States. The US economy, while still dominant in the global economy, is footing the bill for many other countries, according to Dr. Steinbock.

Recommendations for the Marcos administration

In the short term, the country needs to focus on managing inflation on food, transport and electricity and President Marcos has already said he will answer these questions.

Our OFW, BPO, tourism, manufacturing will benefit from the devaluation of the US dollar, it’s not bad for everyone, but it’s going to be bad for the working class as they spend on these essential items. But there are things we can do, like speeding up our digitalization and productivity, advises business community leader George Siy.

In the medium term, the country must prepare for the 4th industrial revolution, education and the digitalization of the economy, where we are already overtaken by our neighbors in Asean. Accelerated connectivity will increase business and reduce traffic, without as much investment as capital-intensive industries and development.

In the medium and long term, foreign policy — the case of Ukraine is a living lesson that war easily destroys the fruits of decades of development. Yet we do not have to continue to react defensively to the maneuvers of powerful countries trying to dictate what should be done. We can and should take initiatives to help shape the political directions of ASEAN and the world.

The world is facing many turning points and our contribution in this area will allow us to be more proactive in international affairs, instead of being just pawns. The current position of the Philippines allows us to do so.

To watch the “Conflict Privatization” webinar: https://bit.ly/GlobalRisksForum

Austin Ong has helped Filipino agencies organize training programs for Filipino entrepreneurs. He taught global developments at De La Salle University and studied at UP Diliman, Tsinghua and Northeastern Boston.

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