Riding Unruly Waves: The Philippines’ Military Modernisation Effort

This report is part of our special series on Asia’s Military Modernisation.

What’s new? Under President Ferdinand Marcos, Jr., the Philippines is modernising its military capabilities and accelerating efforts to shift focus from internal to external threats. Manila is increasing its defence acquisitions, augmenting its military partnerships and deepening its alliance with Washington – including by expanding U.S. troops’ access to Philippine bases.

Why does it matter? Manila’s military modernisation effort is unfolding amid growing tensions with Beijing in the South China Sea; worries about a confrontation between the U.S. and China over Taiwan; shifting geopolitics; and uncertainty surrounding the second Trump administration’s policies. Increasingly dangerous confrontations at sea risk more strategic distrust and even armed conflict. 

What should be done? In balancing deterrence with diplomacy, Manila should continue military modernisation; work to enhance its alliance with the U.S.; and cultivate other defence partners. As friction with China threatens to increase, Manila should bolster crisis management channels and avoid acts that might be perceived as provocative.

The Philippines is at a strategic inflection point. For almost six decades, its military has focused on domestic security challenges. But the insurgencies that once occupied so much of its attention are diminishing, while external conflict risks are increasing. In recent years, Philippine leaders have watched a rising China become more assertive in the South China Sea – expanding its territorial claims, inhibiting the Philippines’ access to its own Exclusive Economic Zone (EEZ) and creating friction with the United States (a treaty ally of the Philippines). Frictions around Taiwan also create growing worries. As its threat perceptions have spiked, Manila has accelerated efforts to modernise its military, while also cultivating its security partnerships with Washington and others. While the Philippines should continue down these roads, it will also need to balance deterrence with diplomacy, maintaining open channels of communication with China to defuse tensions at sea and keeping its dealings with Taiwan as low-profile as possible, so that it is not perceived as threatening the island’s fragile status quo.

The U.S. withdrawal from its long-held Philippine bases in the 1990s, following the Cold War’s end, forced Manila to begin reconsidering its strategic posture. It continued to grapple with domestic insurgencies, but maritime disputes in the South China Sea were also on the rise. Since then, successive presidents have pursued programs aimed at modernising the military, but inconsistent funding, political squabbles, corruption and oscillating priorities has often kept progress slow. 

Since launching the three-phase Horizon defence modernisation initiative in 2012, Manila has worked within that framework to upgrade its defence capabilities, both to keep pace with its neighbours and to respond to Beijing’s increasing incursions into the Philippine EEZ. Former President Rodrigo Duterte (2016-2022) undertook some modernisation reforms, but his geopolitical affinity with Beijing and a distracting surge in internal conflict limited cooperation with Washington during his tenure. Duterte’s successor Ferdinand Marcos, Jr., who is more closely aligned with the U.S., has set his sights on both modernisation and improvements to Manila’s defence partnerships. 

He has his work cut out for him. Pushing forward with Manila’s military modernisation means catching up on decades of neglect and pivoting from internal security to territorial defence. Fortunately, domestic conditions are increasingly conducive to the shift: after decades of conflict, the Bangsamoro region in Mindanao is slowly moving toward stability and the Maoist insurgency across the archipelago has been largely subdued. The government thus has space for reforms that will better position the armed forces to meet external defence needs. Among other things, the air force is acquiring modern aircraft, the navy is upgrading its fleet, so that it does not have to rely on decommissioned U.S. coast guard vessels for patrols, and the marines are getting a battery of BrahMos missiles. The military’s largest service, the army, has begun to reorient itself away from a counter-insurgency mission toward external threats.

But challenges remain. Procurement is slow, funding is inadequate and the Philippines lacks a strong industrial base to develop its own defence capabilities. Acquisition plans tend to focus on big-ticket hardware such as jet fighters or submarines, which many analysts see as costly and less useful than the asymmetric systems that are likely to pack a bigger punch when it comes to deterrence.

Manila’s alliances also require constant tending. Perhaps its most important defensive asset is the 1951 mutual defence treaty under which it and Washington promise to come to each other’s aid in the event of an attack. But China’s “grey zone” activities – ie, operations intended to test, provoke and fatigue Philippine forces without crossing the line into acts of war – raise questions about what this pledge means. Under the Biden administration, U.S. officials offered perspective on what sort of Chinese actions would and would not trigger a forceful response from Washington, but there was significant room for interpretation. The election of U.S. President Donald Trump, who is famously wary of alliances and the prospect of entanglement in foreign wars, injects further uncertainty into the alliance. 

For the moment at least, both countries are projecting unity. During the Biden administration, Marcos, Jr. granted the U.S. access to four military bases in northern Luzon and Palawan, which could be of strategic importance in a conflict over Taiwan, in addition to five previously agreed-upon locations. Under Trump, top U.S. officials have continued to stress the centrality of the alliance. In July, Trump received Marcos, Jr. for a cordial meeting in the Oval Office. The main agenda item was tariffs, but alliance solidarity was a sub-theme. 

Against this backdrop, Manila is increasingly expanding security ties with other countries both to draw even with its more militarily advanced neighbours and to hedge against scenarios in which the White House downgrades its commitment to its Asian allies (perhaps as part of some “grand bargain” that Trump strikes with Chinese President Xi Jinping). Come what may, Manila wants greater deterrent and defensive capabilities to help it discourage Chinese expansionism in the South China Sea – where Beijing blocks Manila from enjoying fishing rights and drilling for oil in its own EEZ – and to prepare for the prospect that China gives up on the notion of peaceful unification with Taiwan, tries to take it by force and triggers a conflict that could embroil the Philippines.

As it works to protect its interests – including in peace and security – Manila will need to walk a careful line between diplomacy and deterrence. Deterrence will require Marcos, Jr. and his successors to press forward with the work that is under way; building up the navy and air force and regearing the army so that the military is more trained on territorial defence; reforming glacial procurement procedures; improving joint planning and operations among the armed services; and deepening relationships in both Washington and other capitals. With respect to diplomacy, ensuring good communications with Beijing is vital, including by strengthening crisis channels to help manage escalatory risks when incidents occur. That does not mean Manila should stop exploring ways to counter Beijing’s grey zone tactics, but calibration is key. Similarly, if Manila continues to expand its quiet cooperation with Taipei, a careful, low-key approach will be essential to managing the risk of a counterproductive and dangerous reaction by Beijing. 

Manila/Washington/Brussels, 12 August 2025

Located between the South China Sea and the Pacific Ocean, the Philippines sits at the fulcrum of Asian geopolitics.^[1] As a former military commander in Manila put it, the archipelagic state is a strategic “chokepoint” for both the United States and China.^[2] Because the Philippine islands are situated in China’s path to the Pacific, Beijing wants to exert influence over them or, barring that, deny its adversaries access to them.^[3] Conversely, Washington sees the country as a vital part of the “first island chain”, serving as a natural barrier to Chinese naval expansion and a potential base of operations in defence of Taiwan, which sits less than 200km away.^[4]

Manila has learned to live with a constant level of threat in the waters around the archipelago, as Chinese ships challenge its ships and fisherfolk in the South China Sea and make other incursions into its Exclusive Economic Zone (EEZ).^[5] Adding to the stakes, the mutual defence treaty that has bound Washington and Manila since 1951 means that even minor skirmishes between Philippine and Chinese vessels have the potential to escalate quite significantly. 

Against this backdrop, the Philippines has long been aware of the need to recalibrate its military to deal with external (rather than internal) threats, but for decades it took little action. Having achieved independence after World War II, the Philippines looked to its former colonial overlord, the United States, for protection, relying heavily on the 1951 treaty throughout the Cold War.^[1] Manila’s threat perceptions during this period were in any case more internally focused, and it directed the bulk of its efforts toward quelling insurgencies, including both Muslim Moro rebels fighting for secession (and later autonomy) in Mindanao and the nationwide communist movement with its armed wing, the New People’s Army. 

The threat landscape began changing for Manila with the Cold War’s end, however. In 1995, just a few years after U.S. troops were pushed out of the country by the Philippine legislature, China seized Mischief Reef, which lies in the Philippine EEZ in the South China Sea.^[2] This episode set off alarm bells in Manila, leading to a first attempt to modernise the country’s military under President Fidel Ramos (1992-1998).^[3]

But change was difficult. Economic woes in the wake of the 1997 Asian financial crisis, insurgencies, corruption and lack of foresight all distracted the country’s leadership and derailed modernisation plans.^[4] Successive presidents then failed to substantially boost capabilities for territorial defence.^[5] Indeed, there was backsliding after the 11 September 2001 attacks in New York and Washington, when conflicts with Moro and Maoist insurgents in Mindanao escalated and jihadist threats such as the Abu Sayyaf Group and Jemaah Islamiyah emerged. The army was then able to pull resources away from other services for its counter-insurgency campaigns. Against this backdrop, Philippine leaders were slow to develop what some have described as “archipelagic consciousness”, ie, a mindset focused on defending an island on all the requisite fronts.^[6] The navy and air force remained weak, placing the country at a disadvantage in deterring external threats.^[7]

Roughly a decade later, Manila’s focus shifted outward again. Elected in 2010, President Benigno Aquino called for faster military modernisation in light of China’s increasingly assertive moves in the South China Sea. These were epitomised by two incidents that occurred in quick succession near the Reed Bank and the Scarborough Shoal, both in Manila’s EEZ.^[8] In 2011, the Chinese coast guard expelled a Philippine survey vessel assessing gas reserves in the Reed Bank. Then, in 2012, a confrontation between Philippine fishermen and Chinese fishing and later maritime surveillance vessels at Scarborough Shoal led to Beijing occupying the reef. As talks with Beijing on the disputes hit a roadblock, Aquino took legal action to challenge Beijing’s territorial claims.^[9] Fortuitously, as tensions with China mounted, the domestic situation was calming down. In 2014, the government signed a major peace deal with the Moro rebels, allowing it to pay more attention to external challenges.^[10]

Under Aquino, military modernisation finally began to take off. The Philippines launched the Horizon Program, which established a blueprint for building up naval and aerial capacities while strengthening the army (see Section III.B.3). Manila also allocated more funds to the Philippine coast guard to boost its capacity.^[11] Then, in 2014, the Philippines signed the Enhanced Defence Cooperation Agreement (EDCA) with the U.S., giving U.S. troops rotational access to five Philippine bases.^[12] Amid shifting geopolitics, and as explored in Section II, Aquino’s successors Rodrigo Duterte and Ferdinand “Bongbong” Marcos, Jr. continued to acquire new capabilities, with Marcos, Jr. – the current president – making a particular point of accelerating the modernisation push.

This report examines the Philippines’ military modernisation efforts amid the growing tensions in the South China Sea and around Taiwan. It assesses how the country is positioning itself to defend its interests by updating its military capabilities and expanding security partnerships, while offering recommendations for how Manila can balance diplomacy with deterrence in the service of a more stable neighbourhood. The report is part of a series looking at how U.S. allies in Asia are responding to a changing and increasingly tense security landscape.^[13] It is based on dozens of interviews in Manila, central Luzon, Mindanao, Sulu and Palawan between February 2024 and July 2025, with current and former government officials, military officers, diplomats, journalists, academics, analysts and peace activists. It also draws on open-source literature and interviews conducted as part of previous research from 2020 to 2023. Given gender dynamics in the security sector, most interviews were with men.

Interactive map above: In 2014, Manila signed the Enhanced Defence Cooperation Agreement with Washington, giving U.S. troops rotational access to five Philippine bases. In 2023, it gave the U.S. access to four more bases. Source: Asia Maritime Transparency Initiative (CSIS) / CRISIS GROUP

The Philippines has been committed to modernisation since the Aquino administration was in office, but shifting politics and competing priorities have created obstacles to rapid progress. Managing tensions with China over the South China Sea and (to a lesser extent) Taiwan is the Philippines’ main external security challenge and one that the country’s political and military leaders know they will have to do more to meet. At the same time, incomplete peace processes, flare-ups on the island of Mindanao and a continuing (if flagging) insurgency in pockets of the archipelago will likely continue to command scarce resources and attention, at least in the short term.

Over the past decade, the Philippine government has pursued two distinct approaches to boosting the country’s defence posture and navigating big-power competition in the Asia Pacific. The switch has reflected the generally different orientations of President Duterte (2016-2022) and his successor Marcos, Jr.

Rodrigo Duterte came to power in 2016 after decades of experience as a small-town mayor and with ingrained scepticism toward the U.S. Particularly at the beginning of his term, Duterte worked to develop stronger ties with Beijing. When the Permanent Court of Arbitration in The Hague ruled in 2016 that China’s claim to vast swathes of the South China Sea has no legal basis, Duterte declared he would “set aside” the ruling, a posture that dovetailed with Beijing’s rejection of the opinion. The following year, he and Chinese President Xi Jinping agreed to the creation of a Bilateral Consultative Mechanism to manage their disputes in the South China Sea.^[1] This step was in line with Beijing’s preference for settling such disagreements bilaterally without outside input, including from other South China Sea claimants. 

As he tilted toward Beijing, Duterte simultaneously decreased the Philippines’ reliance on the U.S., reducing defence cooperation and the number of military exercises the treaty allies conducted together. Duterte also expanded ties with non-traditional allies, such as Russia and India, while continuing defence cooperation with Japan and expanding ties with South Korea. While some analysts called this strategy a form of hedging, others suggested that Duterte may not have been consciously trying to hedge; rather, he made a bet on Beijing’s support early on and, as a general principle, he tended to work with countries he did not consider difficult.^[2]

While he cultivated good relations with Beijing, perhaps hoping to lower the risk of Chinese provocations in the Philippines’ near seas, Duterte had his hands full internally. Manila faced a months-long jihadist uprising in Marawi City, Mindanao in 2017 and launched an “all-out war” on communist rebels in the rest of the archipelago. He also launched a controversial campaign against drugs that tested ties with Western countries.^[3] These developments strained the Philippine armed forces but elevated the military’s importance to the government. 

Maintaining good relations with the military remained a key objective for Duterte, even (or perhaps especially) as he drew closer to China, and he was generally successful in doing so. For instance, Duterte appointed retired officers to political and administrative positions and increased the pensions of soldiers and police officers.^[4] This desire to please, however, also created openings for the U.S.-oriented defence establishment to counter some of the president’s overtly anti-U.S. policies, even before Duterte himself began to pivot back toward Washington at the end of his term. Manifestations of the latter included his willingness to allow more public criticism of Beijing’s actions at sea (which the government had suppressed during Duterte’s early years), tone down his anti-U.S. rhetoric and create space to repair fraying defence ties.

Duterte’s swing back to the U.S. can best be explained as the function of four overlapping considerations. First, the investment Beijing had promised in exchange for a realignment toward China did not meet the Philippine government’s expectations, as only a few infrastructure projects were undertaken.^[5] Secondly, after 2019 China became more assertive in ways that increased Philippine threat perceptions and made it more difficult for Duterte to resist pressure from the military and the public to bolster the archipelago’s defensive capabilities.^[6] Thirdly, though Duterte remained personally hostile to the U.S., the strong ties between the Philippine armed forces and their U.S. counterparts exerted a gravitational pull that Duterte struggled to resist, particularly when complemented by diplomacy that began in President Donald Trump’s first term and accelerated during President Joe Biden’s administration.^[7] 

A final reason for Duterte’s pivot was electoral realities: as the 2022 elections neared, repeated Chinese maritime incursions were making China particularly unpopular with Filipinos. Though he was legally barred from seeking another presidential term, Duterte had skin in the game, as he first considered running for vice president and later backed his daughter, Sara, who won that office on the ticket with Marcos, Jr. 

When Ferdinand Marcos, Jr. became president in July 2022, he was eager to maintain good relations with both Washington and Beijing amid an agenda focused on domestic priorities.^[8] He was much less reflexively antagonistic toward the U.S. than Duterte, but he had also developed ties with China during his time as governor of Ilocos Norte province and when serving in the Senate. He visited China in January 2023, emerging with agreements promising more than $20 billion in Chinese foreign investment to the Philippine economy. 

But Marcos, Jr. also made clear from the start his intention to stand up to China in the South China Sea. In his first state-of-the-nation address, he declared that he would not abandon “one square inch of Philippine territory”.^[1] The Chinese government soon forced him to demonstrate that this pledge was more than empty rhetoric. Shortly after his January 2023 trip to Beijing, China began a series of provocations in the South China Sea.^[2] In response, Manila edged closer to its traditional ally, the U.S., by granting Washington additional access to four bases around the country (an initiative that had been under discussion dating back to Duterte’s administration).^[3] The Chinese, in turn, were frustrated.^[4] 

Marcos, Jr. also introduced a “transparency initiative” that created friction with Beijing. It involved releasing videos documenting incidents with Chinese vessels in the South China Sea and embedding journalists on coast guard ships to report on Chinese actions. Manila has framed this initiative and related efforts as rooted in defending international law, hence saying it is acting in the spirit of the 2016 arbitral tribunal ruling.^[5] But together these manifestations of Manila’s newfound assertiveness ruffled feathers not just in Beijing, but also in the capitals of neighbours from the Association of Southeast Asian Nations (ASEAN) and fellow South China Sea claimant states, some of which chided the Philippines for poking the regional behemoth.^[6] Though the transparency effort helped ensure that altercations at sea regularly made international headlines, some questioned its effectiveness, suggesting that the actual costs imposed on Beijing were not all that great. Taking this criticism on board, Manila toned down the initiative in late 2024, though it was not necessarily convinced that its approach had been wrong.^[7]

From the perspective of domestic politics, Marcos, Jr. appears to be on solid ground with his approach to international affairs. Surveys suggest that Filipinos want their country both to be more assertive and to develop a stronger defence posture.^[8] There is, however, a possibility that Manila’s geopolitical outlook will change if Sara Duterte assumes power in 2028; like her father, she appears to lean toward China more than Marcos, Jr.^[9]

Slider above: A before and after comparison of the facilities on Thitu Island, compared from 2019 to 2025. Source: Planet Labs PBC / CRISIS GROUP

Though Philippine leaders have since the 1990s set their caps on building up the armed forces to face external threats, they have struggled for years to balance this strategic objective with shorter-term priorities. Until the 2020s, internal threats trumped the need to reorient the armed forces toward territorial defence. The latter project requires increasing navy and air force capabilities in the traditionally army-centric military. While Beijing’s growing pressure in the South China Sea has prompted Manila to put more time, resources and strategic thinking into territorial defence, domestic security remains on the agenda, and the government’s attention is still divided.

One way for Manila to deconflict its internal and external security priorities would be for it to finally resolve the former. In practice, it would need to see the Bangsamoro peace process to fruition and quell the Maoist insurgency that it has been fighting for almost six decades.^[1] These goals seem within reach. As regards the Bangsamoro, the peace process between Moro ex-guerrillas and the government is moving ahead, though concerns remain about persistent violence in parts of the newly created autonomous region in Muslim Mindanao.^[2] The communist insurgency, meanwhile, appears to be on its last legs, thanks to intensified counter-insurgency operations, though there are still pockets of instability.^[3]

But while conflict resolution trends in the Philippines are generally positive, the military is unlikely to reposition all its troops from Mindanao and other insurgency-affected areas, at least in the short or medium term, even if some redeployment is possible.^[1] As it is uncertain whether the police can assume control of security in these areas, some troops may need to stay behind. A foreign diplomat working with Philippine defence counterparts said Manila will need a “minimum amount of force presence” in Mindanao.^[2] The government will require a mix of residual infantry to deter renewed rebellion, coupled with more flexible, specialised units for counter-terrorism and a police force able to keep communal conflict in check. Until those capabilities are in place, it cannot pull out more troops. 

Nevertheless, the modernisation effort is not stuck. To the contrary, defence officials highlight that change is accelerating at the policy level, with new guidance on strategy, the acquisition of new assets, the creation of new units and more attention and funding for the navy and air force.^[3] Yet altering force structure, in particular transforming the army so that it is arrayed for territorial defence rather than counter-insurgency, is proving more challenging. So, too, is developing a new doctrine to accompany these changes. A foreign adviser to the Philippine military told Crisis Group that changes might very well backfire internally if they are perceived as being too drastic and coming at the expense of domestic security.^[4] As a result, Philippine planners are trying to work on two tracks – moving away from internal security to boost external defence needs to happen side by side.^[5]

Philippine officials’ threat perceptions relating to China, though nuanced, are the key driver of the modernisation effort. Manila’s view of Beijing remains multi-layered: officials often highlight that maritime disputes are only one aspect of the bilateral relationship, which is not all contentious. Trade between the countries, for example, continues to flourish.^[1] Nonetheless, defence officials and military officers think that Beijing’s actions at sea are the biggest threat to national security, and there is consensus among policymakers on the need for Manila to strengthen its defence posture. “They [the Chinese] have constantly validated our fears”, an army officer said.^[2] Officials are also concerned by what they consider “influence operations” on Beijing’s part.^[3] While Manila understands that it stands little chance of matching China’s firepower, it seeks a military that will be better positioned to counter China asymmetrically should the need arise, relying on capabilities such as anti-ship cruise missiles and air defence systems.

Meanwhile, China perceives the Philippines as working hand in glove with the U.S. to thwart its efforts at power projection beyond the first island chain.^[4] It finds U.S.-Philippine cooperation vexing. The Chinese military has increased its incursions into the Philippine EEZ, which have led to more encounters at sea.^[5] The tensions came to a boiling point on 17 June 2024, when an altercation between the Chinese coast guard and a Philippine navy resupply mission to the Second Thomas Shoal resulted in a Filipino sailor losing a finger.^[6] Maritime provocations have also increased around other Philippine land features in the South China Sea.^[7] In recent months, Chinese warships have also ventured much closer to Philippine shores than in the past.^[8]

Taiwan is increasingly a sore point as well. While maritime disputes in the South China Sea have long been a core Philippine national security concern that directly affects Filipinos, Taiwan has tended to be a secondary issue. But it has slowly become more prominent over the last year amid increasing U.S.-China tensions and confrontations with Beijing at sea.^[1] The reason owes both to the Philippines’ geography and to its commitments under the 1951 mutual defence treaty. The archipelago’s northernmost island of Itbayat is less than 160km from Kaosiung in Taiwan, and Manila lies closer to Taipei than to any other capital. As for the Philippines’ treaty obligations to the U.S., they create a basis for Washington to ask Manila for assistance in case of conflict in the Indo-Pacific.^[2] A request seems highly likely in that contingency: three of the four military bases to which U.S. troops have been granted rotational access are in Cagayan and Isabela – the provinces nearest to Taiwan.^[3] In the event of conflict, the Philippines would also need to evacuate some 150,000 Filipinos who work in Taiwan.^[4]

Manila understands the risks. Marcos, Jr. has stated that, should war break out in the Taiwan Strait, the Philippines “would necessarily be involved”.^[5] To date, Manila has trodden carefully, adhering to a “one China” policy, which recognises the People’s Republic of China as the sole legal government of China, and generally avoiding high-profile cooperation with Taipei. That said, a mid-July article in the Washington Post described a deepening security relationship between the Philippines and Taiwan, enabled in part by Marcos, Jr.’s easing of constraints on exchanges between Philippine and Taiwanese officials in April. Indicia of the closer ties reportedly include expert dialogues, joint coast guard patrols in the strategic Bashi Channel, which runs between the northernmost Philippine islands and Taiwan’s Orchid Island, and the presence of Taiwanese observers at the annual U.S.-Philippine Balitakan military exercises in April, which (as noted below) simulated a Taiwan war contingency and included the participation of Japan and Australia.^[6]

The Philippines’ main objective with its defence posture is “minimal credible deterrence”.^[1] Manila has long had this aim but only recently come closer to achieving it.^[2] For the Philippine military, deterrence refers to the ability to impose costs sufficient to dissuade a potential foe – whether China or another country – from staging either an attack on the archipelago or an armed confrontation on the high seas.^[3] Manila is slowly making progress toward having this capacity, but it is not yet there. The Philippines has difficulty deterring Chinese grey zone activities and without the U.S. backstop it would likely struggle even more.^[4]

While Manila is unlikely to wean itself entirely from dependence on the U.S., it can acquire new military assets that would allow it to be more self-reliant. Over the last ten years, the Philippine defence budget has steadily increased to close the gap with those of its neighbours.^[5] As he presses forward with modernisation in the service of deterrence, President Marcos, Jr. has repeatedly highlighted that these steps are purely “defensive” in nature.^[6]

At the core of Manila’s effort to modernise its armed forces is the Horizon Program, launched by President Aquino in late 2012. Divided into three phases, frequently referred to as Horizons One, Two and Three, the program has the overarching goal of developing greater cohesion among the various armed services and shoring up Philippine external defence capabilities. It also aims to bring the Philippines’ capabilities in line with those of other Asian countries, including immediate neighbours such as Indonesia and Vietnam. The program is the military’s main source of funds for arms purchases and equipment upgrades.

Horizon One (2013-2017) concentrated on maritime domain awareness, humanitarian/disaster relief and internal security operations.^[1] The first phase’s main output was the development of a modest naval capability through small acquisitions of ships and aircraft. The U.S. provided three decommissioned patrol vessels, and Manila purchased twelve Korean-made FA50 jet fighters to replace its air force’s failing old equipment.^[2] The Aquino administration also announced the Frigate Acquisition Project (an initiative to buy two modern warships) and commissioned two amphibious landing craft.^[3] Other acquisitions included aircraft for inter-island transport, helicopters, air search radars and radio communications systems. The plan is behind schedule, however: as of late 2023, the military had completed only 36 of 53 Horizon One projects.^[4]

Horizon Two (2017-2022) started during the Duterte presidency, at a time when Manila was focused on balancing internal and external security needs.^[5] Most of the acquisitions were for the army, as they coincided with ground offensives against jihadists and communist guerrillas.^[6] They also, however, included two frigates and one corvette for the navy, as well as air defence systems.^[7] From India, Manila acquired shore-based anti-ship BrahMos cruise missiles, at a cost of approximately $375 million, which have given the Philippines a new, if modest, deterrence capability.^[8] Given Duterte’s strained relationship with Washington, other non-U.S. partners such as South Korea and Israel provided much of the other equipment procured by Manila. Like Horizon One, Horizon Two has proceeded in fits and starts, with only about half the projects completed so far, in part because the COVID-19 pandemic led to slimmed-down budgets and delays.^[9]

In January 2024, Marcos, Jr. approved a redesign of the third phase of the Horizon project (2023-2028) to better respond to escalating tensions in the South China Sea. The Re-Horizon Three “wish list” of acquisitions is not public, but officials Crisis Group spoke to indicated that the government is aiming to bolster the navy and, to a lesser extent, the air force.^[1] Big-ticket items include air defence and missile systems, jet fighters and ships.^[2] Another emphasis is on cyber radar and surveillance capabilities.^[3] Interlocutors from the Philippine defence department and armed forces told Crisis Group that anti-access weapons and long-range missiles capable of reaching potential adversaries at sea would be particularly useful assets, as would asymmetric capabilities such as drones and more mobile missile batteries.^[4] Many naval officers also hope to get submarines, though their utility is a subject of debate.^[5] As of July, the defence department still needs to approve some of these items. 

In sum, more than a decade into the modernisation program, it is beginning to show results, but challenges remain. Some defence analysts suggest that it would have been hugely difficult to finance military modernisation without a specific budget allocation, adding that the Horizons initiative has proven key because its basis was a law mandating modernisation.^[6] As mentioned, Horizon Three has led to efforts to procure assets designed for external defence. Alignment among the services also appears to be getting better.^[7]

Still, critics suggest that acquisitions are driven first and foremost by “shopping lists” designed to secure expensive equipment without a clear strategy or theory of success.^[8] “We need to ask ourselves what we need to perform first”, noted a military officer.^[9] In some cases, the procurement process itself has proven flawed. For example, some ships were purchased lacking sophisticated weapon systems that had to be obtained afterward, significantly increasing the cost.^[10] Another challenge is to ensure maintenance for acquired hardware, which tends to be highly technical and costly for naval and air assets.^[11] 

Making the ambitious defence upgrades planned under the Horizons program is difficult for several reasons. For one thing, the government’s budget is limited, as the constitution puts a priority on education spending and the legislature often cuts funding earmarked for defence. In addition, procurement is sometimes cumbersome as it features complicated bidding processes that often bring delays.^[1] Other issues revolve around defence budget allocation: drawing from finite resources, military planners must balance the desire in some quarters for large-scale acquisitions such as submarines and new combat aircraft with more asymmetric capabilities, such as aerial and naval drones, or second-hand assets – for example, used ships.^[2]

Exact numbers on government expenditure are hard to come by, but estimates point to Manila having spent roughly $3.89 billion on Horizon One and Two.^[3] Given the goals laid out for Horizon Three, which include several big-ticket items such as jets and possibly submarines, the government will need to part with much more silver, with estimates reaching $36 billion over ten years.^[4] But that figure will likely be hard or impossible to reach. Funds approved by Congress are often less than the military’s requested annual budgets. In 2025, the military asked for $4.38 billion for modernisation but received only $1.34 billion.^[5]

Smaller budgets could cause friction with Washington. Given recent statements by Trump and his top advisers about the need for U.S. allies to spend more on defence, Washington may press Manila to allocate more funds to military modernisation in coming years. For now, however, U.S. officials are not pushing Manila for a major increase.^[1] For their part, Philippine security experts and military officers recognise the need to spend more, but they are also aware that a boost would have to be proportionate to domestic expenditures so as not to alienate the electorate.^[2]

Additionally, two structural factors pose major challenges to the furtherance of the modernisation program. First, a significant chunk of the defence budget goes to pensions – for retired military personnel – and is therefore unavailable for other expenditures.^[3] Servicemembers do not contribute to their pensions, adding to the burden borne by the state. For many observers, this issue is the “elephant in the room”, one that the government has repeatedly failed to address given the political sensitivity of reducing a benefit on which servicemembers have come to rely.^[4]

Another issue is the absence of an Indigenous defence industry, which forces the Philippines to rely on foreign acquisitions. Non-commercial domestic shipbuilding, steelwork and aircraft manufacturing are rudimentary.^[5] In October 2024, the legislature passed a law promoting a self-reliant defence posture, which identifies developing an industrial base as a priority. Some analysts caution that the law is unlikely to have much impact, due to its vague language.^[6] Still, it could help foster domestic weapons production over the long term. 

A major challenge for Philippine strategists wishing to strengthen the country’s external defence has been shifting away from the longstanding priority given the army in both the military command structure and expenditures. The military was built primarily to deal with internal threats to the state, with regional commands focused on Moro and Maoist insurgencies.[1] For 2024, the army received 51.8 per cent of the defence budget, the air force 19.1 per cent and the navy 17.5 per cent. [2]

But things are slowly changing. Although an army general has almost always occupied the position of chief of staff, an appointment made by the president, top jobs such as the operational heads at military headquarters and regional commanders in northern Luzon and Palawan have gone to others in recent years, including air force and navy officers.[3] Moreover, even the army leadership knows its responsibilities are increasingly in realms beyond counter-insurgency.[4] It has actively encouraged the army’s infantry branches to think beyond internal threats.[5] Consistent with these admonitions, the army is positioning itself to guard national security infrastructure and key waterways, so as to be involved in coastal defence in the event of invasion.[6] To this end, it has begun to form bigger units, such as the Brigade Combat Teams now in the making, to cover Luzon, the Visayas and Mindanao.[7] (Bigger units are better adapted to multi-faceted tasks because of their capacity to include specialised formations such as artillery, reconnaissance and signal corps.)

Beyond the army, the Philippine military has started making organisational shifts, for instance putting stronger emphasis on the need to improve the major services’ capacity to conduct joint operations.[8] It is also creating and strengthening new cyber and psychological operations units, better aligning special forces (both with one another and the respective services), and trying to expand the reserves.[9] It also seeks to activate new entities such as a Strategic Defence Command, which would coordinate military exercises but also be in charge of interoperability with partner nations.[10] All these steps suggest that the armed forces aim to reduce residual inter-service rivalry – but whether the leadership has reached this goal is open to question.[11] 

Given the Philippines’ geography, a defence upgrade necessarily entails strengthening maritime capabilities. In 2024, the Marcos, Jr. administration created the National Maritime Council (NMC), which took control of the West Philippine Sea task force that was previously in charge of patrolling waters near the Spratlys. The NMC’s role is to develop and coordinate maritime governance policies and promote coherence among government branches, which is a broader and more strategic mandate than its predecessors’, which was more operational.[12] Another step in the same direction was Defence Secretary Gilberto Teodoro’s proposal for a Comprehensive Archipelagic Defence Concept (CADC), a strategic framework to enhance the country’s territorial defence by projecting power into the Philippine EEZ.[13]

In 2024, the military started rolling out the CADC.[14]In practice, this policy involves more naval and aerial patrols and exercises in littoral areas, while trying to position Manila for more ambitious goals such as reopening access to fishing grounds and hydrocarbon deposits in the EEZ. At present, Philippine fisherfolk are kept out of traditional fishing grounds around Scarborough Shoal, and Philippine businesses are unable to exploit oil and gas reserves in the Reed Bank, north west of Palawan, which was the site of maritime incidents with China in 2011 and 2019.[15] To date, however, Manila has been hesitant to challenge Beijing over the status quo, and given the power differential between the two, it could well remain so.

The Philippine navy is also upgrading its capabilities. “At any given time, three and a half ships patrol our seas”, noted a senior commander, implying that things have improved but still have some way to go.^[1]The navy plans to modernise its facilities and build new ones, for example ports and bases in Cebu, Zambales, Palawan and Aurora.^[2] The navy has also increased monitoring of sensitive locations, such as the straits between various Philippine islands, which would be of great strategic importance in a conflict.^[3]

Beyond the navy, the marine corps – the only armed service that has both counter-insurgency and maritime capabilities – also has an important role to play in the shift to territorial defence. Three fourths of the force is now deployed in coastal areas, evidence of its ambition to rediscover its “maritime soul” after fighting land-based insurgencies for decades.^[4] The corps’ coastal defence regiment, founded in 2021, is responsible for handling the anti-ship BrahMos missiles acquired from India, which are intended to deter would-be attackers. While the missiles are primarily defensive, they are also a serious instrument of force projection because of their range beyond the Philippine coastline. 

The final piece of the puzzle is the coast guard, which is seeking to become more streamlined, more agile and better equipped.^[5] Marcos, Jr. has followed his predecessors’ lead in increasing funding for the service.^[6] Under his administration, the coast guard also boosted its presence in the South China Sea, where it remains primarily responsible for resupplying the Spratlys (where it has posts on seven features), and where it comes into confrontation with both the Chinese navy and coast guard (which is under military control).^[7] Proponents of this approach argue that deploying the civilian coast guard as the main service conducting patrols – albeit in coordination with the navy – is a helpful form of non-escalatory signalling toward China.^[8] Others favour the navy taking the lead, due to the coast guard’s perceived lack of results and since the contested areas at sea are far from territorial waters.^[9] For the time being, however, the coast guard is likely to continue being a key actor in Philippine waters, particularly in the South China Sea.

The Philippines’ efforts to boost its navy and coast guard aim to secure its maritime borders and enable Manila to project power into the South China Sea, but some defence planners and analysts worry that the country is unprepared for the possibility of a conflagration over Taiwan. They say the focus on the South China Sea trains the government’s attention on the archipelago’s west, instead of its largest island, Luzon, which lies in the north.^[10] 

Manila began taking steps to address this concern under previous presidents, and under Marcos, Jr., it has picked up the pace. In an April policy statement, Philippine military chief Romeo Brawner, Jr. urged his troops to prepare for the impact of a possible Chinese invasion of Taiwan. The April and May military exercises with the U.S. focused on such a scenario, and (as noted above) quiet security cooperation with Taipei is on the rise.^[11]

A key aspect of the Philippines’ strategy for modernising its military has been nurturing foreign partnerships. In addition to reinvigorating its partnership with the country’s main ally – the U.S. – Manila is expanding its defence network with regional partners.

The central pillar of the U.S.-Philippines alliance is the 1951 mutual defence treaty.^[1] The treaty stipulates that any attack on one party is to be treated as an attack on both, yet past U.S. actions have created uncertainty in Manila about how committed Washington is to its defence and whether U.S. administrations consider the treaty applicable to attacks that take place in the South China Sea.^[2] The Biden administration, building on U.S. efforts to improve the relationship during Trump’s first term, worked hard to demonstrate that in Washington’s view the alliance is “ironclad”, through dozens of high-level visits and exchanges.^[3]

It was amid this diplomatic offensive that the parties negotiated new treaty guidelines, which were signed by the two defence secretaries of the time, Lloyd Austin and Carlito Galvez, in 2023. The guidelines laid out ways for the two nations to cooperate to strengthen the alliance in salient respects.^[4]

The U.S. also shared through various channels (with both Manila and Beijing) additional information about how it would approach the mutual defence commitment. As regards encounters with China in the South China Sea, the Biden administration said the U.S. response (which is not specifically prescribed by the 1951 treaty) would depend on the circumstances under which Manila triggered the treaty – and might stop short of the use of force.^[5] In deciding whether to respond militarily, Biden’s team said, the U.S. would take into account considerations like whether a deadly incident was the result of intentional action or an accident.^[6] On one end of the spectrum, Washington communicated to Chinese officials that seizing Second Thomas Shoal would remain a red line.^[7] But elsewhere along the spectrum, the nature of Washington’s likely response remains unclear, as do questions about whether Beijing’s grey zone tactics would qualify as “armed attacks” that trigger the mutual defence commitment under the treaty’s Article IV. 

Whether or not they would, both Manila and Washington are choosing not to treat many of China’s grey zone provocations as Article IV events.^[8] To take a recent example, on 20 June, a Chinese flotilla blocked and used water cannons against Philippine vessels distributing aid to fishermen around Scarborough Shoal.^[9] While such incidents are naturally unwelcome in Manila, Philippine leaders appear ready to swallow a considerable amount of frustration.^[10] The Marcos, Jr. administration has avoided reciprocating with acts that China would perceive as escalatory.^[11] For example, Manila did not take up the Biden administration’s offers to undertake joint resupply missions to its troops on Second Thomas Shoal in 2024. Indeed, officials show every sign of wanting to avoid a situation that could escalate beyond their control and force Washington’s hand, not least because they are not certain how the U.S. might respond.^[12] In his 28 July state-of-the-nation address, Marcos, Jr. emphasised that the Philippines continues “to exercise restraint and remain patient”.^[13]

Another pillar of the U.S.-Philippines alliance is the 2014 Enhanced Defence Cooperation Agreement (EDCA), which provides U.S. troops, planes and ships with rotational – rather than permanent – access to Philippine military bases. Progress in fulfilling the agreement stalled under Duterte, but in early 2023, soon after Marcos, Jr.’s election, the allies agreed to expand the agreement to four new bases, bringing the total to nine.^[1] According to the Pentagon, U.S. access to the sites – which remain under Philippine jurisdiction – would allow both allies’ troops to “respond more seamlessly to address a range of shared challenges in the Indo-Pacific region, including natural disasters”.^[2] The agreement also allows the U.S. to build facilities such as runways, field storage units and housing, as well as to pre-position defence equipment.^[3]

Washington has already started deploying assets at the EDCA sites to build airstrips, hangars and fuel depots.^[4] But progress in refurbishing the bases is uneven.^[5] Bureaucracy and financing are among the key reasons for delays. In August 2024, the U.S. promised $500 million to the Philippines, as a part of a defence package, and another $120 million for the sites.^[6] Despite uncertainties about its alliance commitments in general, Manila seems confident that the Trump administration will honour this pledge.^[7] Philippine analysts say the alliance could gain more traction once the EDCA sites are developed and looped into joint trainings or air exercises.^[8] In March, the two sides committed to take “bold steps” in improving the sites, without providing details.^[9] Work at the sites is under way, and the U.S. is also assisting its ally with building facilities outside the EDCA framework.^[10]

In areas near EDCA sites, public sentiment about the U.S. military presence varies. Local politicians are mostly agnostic when it comes to their country’s geopolitical alignments, but they express hope that their constituents may benefit from defence investments. Other elites – some of whom have ties to China – consider “militarisation” a side effect of the pro-U.S. tilt that is detrimental to their business interests, given the danger of a possible conflict.^[11] In interviews with Crisis Group, officials and residents in Palawan conveyed support for the two EDCA sites there, partly because of growing local concerns about Chinese intrusions into the Philippine EEZ, which lies nearby.^[12] Others, however – particularly those residing in northern Luzon – voiced concern about the bases being too close for comfort should conflict break out.^[13]

Another key element in the alliance are joint exercises involving the two militaries. In the last few years, the flagship Balikatan (Shoulder to Shoulder) exercises have grown in scope and scale. These drills are an opportunity not just for both countries to ensure inter-operability but also for the U.S. to deploy new assets in the region. During the 2024 exercise, Washington sent in the long-range Typhon missile system, which has both offensive and defensive capabilities, for the first time.^[1] After the drills, the missile system remained at an undisclosed location in the Philippines, infuriating China.^[2]

From the Philippine perspective, conducting exercises and having missile systems in place sends an important signal to Beijing.^[3] The above-referenced 2025 exercises, which focused on the Philippine north and simulated a Taiwan contingency, included a “full battle test” with scenarios involving missile defence, maritime strikes and counteraction of an amphibious landing.^[4] Philippine interlocutors stressed that, among other benefits, these exercises have been good for building mutual respect among the troops from the partner militaries.^[5]

The U.S.-Philippines alliance continues to expand to other areas of collaboration as well. In November 2024, for example, Manila and Washington signed the General Security of Military Information Agreement to facilitate better intelligence sharing. Washington also committed to assisting its ally on both military restructuring and other aspects of modernisation, which could give Manila a boost in areas such as procurement reform.^[6]

Trump’s return to the White House has raised questions about Washington’s commitment to the U.S.-Philippines alliance. But Philippine officials appear sanguine, at least for now.^[1] It is still early days, and Trump (perhaps distracted by crises in Ukraine and the Middle East) has not taken a big visible step concerning Asia beyond boosting tariffs on countries in the region. Many signals from Washington have been positive. Senior members of the Trump administration have reached out to their counterparts in Manila and underscored the importance of the alliance.^[2] The Philippines was the first Asian country to get a visit from U.S. Secretary of Defense Pete Hegseth. During his stay, he affirmed that accelerating the defence partnership with the Philippines and “re-establishing deterrence” in the region were major U.S. policy objectives.^[3] 

Military cooperation has continued unhindered, and bilateral ties seem solid. While Trump’s tariff demands in early July raised concerns in Manila, Marcos, Jr.’s subsequent visit to Washington on 20-22 July, including a cordial Oval Office meeting, went smoothly (though it did not significantly reduce tariffs).^[4] During the Oval Office meeting, Trump spoke pointedly of former President Duterte (noting that the latter reversed his tilt toward China after Trump first came into office) but also left space for Manila to engage with Beijing, telling the press, “I don’t mind if he [Marcos, Jr.] gets along with China because we’re getting along with China very well … He has to do what’s right for his country”.^[5]

While the trajectory of the U.S.-Philippines relationship under the second Trump administration is not easy to forecast, three scenarios present themselves.^[1] In the first, the status quo would prevail, with Manila and Washington continuing to cooperate in several domains and strengthening their military alliance. Some evidence points in this direction. The influential U.S. undersecretary of defense, Elbridge Colby, who generally considers the U.S. overextended in its alliances and advocates for a more restrained U.S. approach to foreign policy, has nevertheless emphasised that the alliance should remain “a top priority”.^[2] (That said, other advocates of restraint worry that deepening ties to the Philippines could raise tensions with China and increase the risk of the U.S. being drawn into a conflict between the world’s two biggest powers.^[3])

A second possibility is that an increasingly inward-looking and risk-averse U.S. takes a dimmer view of its alliance with Manila. In this scenario, Washington would take a minimalist view of its 1951 treaty obligations both with respect to grey zone encounters and more broadly – calling into question its reliability should Manila trigger Article IV.^[4] The Trump administration could do so as a concession to China (perhaps as part of a deal struck between Trump and Xi on economic and security issues) or simply as a reflection of Trump’s misgivings about entangling alliances.^[5] For this reason, expressions of support for Manila, even when conveyed by top cabinet officials like Hegseth and Secretary of State Marco Rubio, always come with an implied asterisk: they cannot be assumed to correspond to Trump’s own views or to presage what he might say or do in U.S.-China trade talks and a possible summit with Xi in the autumn.^[6] 

A third scenario flips the second one on its head. It would see the U.S. becoming more aggressive in how it positions itself in the region, with the aim of containing China more decisively. This tack could lead to even stronger defence ties with the Philippines; more forceful U.S. actions in countering Beijing in the South China Sea; and ramped-up U.S. pressure on Manila to increase military spending. In this scenario, the risk of a direct U.S.-China conflict that involves the Philippines would likely increase – and for that reason moving too far in this direction could run afoul of Philippine public opinion. Some politicians, left-of-centre academics and civil society representatives, as well as some retired military officers, are already expressing concerns about “over-militarisation” heightening the risk of conflict.^[7] 

At this point, Manila would most likely prefer the first (status quo) scenario, hoping for a relationship in which it can look to Washington as a consistent partner willing to invest in strengthening the alliance.^[8]

Diversifying its security partnerships beyond the U.S. is a priority for Manila. This effort started when Aquino was president, continued under Duterte and has intensified during Marcos, Jr.’s administration. 

Several factors drive the desire for diversification. Manila finds political value in the diplomatic support it receives from a wide range of countries in the aftermath of maritime incidents in the South China Sea (even if the impact on Beijing is less than it might hope) and strategic value in the more tangible contributions these partners make toward boosting Manila’s capabilities. The latter include both arms sales (see Sections III.B and IV.B) and opportunities to participate in joint military exercises with Singapore, Germany, Japan, Indonesia and Canada.^[1] Defence chiefs from the Philippines and Indonesia have committed to defence industry cooperation, and Manila has also signed an agreement with Vietnam on incident prevention in the South China Sea (focusing on efforts to prevent and manage maritime issues involving both countries) and a defence pact with Singapore.^[2]

Partnering with a wide array of countries – including other U.S. allies – helps Manila avoid overreliance on Washington as it pursues its modernisation agenda.^[1] Manila already enjoys close relations with Tokyo, which has been its largest provider of development assistance and remained a key partner in maritime security throughout the Duterte administration despite its foreign policy swings.^[2] Concerns about Beijing’s grey zone activities have prompted Japan to ramp up coast guard cooperation with the Philippine coast guard and navy.^[3] In July 2024, the two countries signed a Visiting Forces Agreement, allowing reciprocal access for their militaries and permitting Japanese forces to train alongside their Philippine counterparts.^[4] Australia, which together with Japan joined the latest Balikatan exercises, and South Korea, as Manila’s main ship supplier, are also close defence partners.^[5]

The Philippines also participates in the region’s evolving security architecture through multiple minilateral arrangements. This latticework of alliances – which aims to both unite like-minded governments and allow U.S. partners to reinforce their mutual defence ties – was a key feature of the Biden administration’s Indo-Pacific strategy. With Washington’s encouragement, several groupings have emerged over the last few years. One is the so-called Squad, a quadrilateral comprising the U.S., Japan, Australia and the Philippines, which had its first summit in June 2023.^[6] Another important milestone in regional cooperation was the first trilateral summit of the U.S., South Korea and the Philippines in April 2024. The future of these (for now mainly ad hoc) nascent coalitions remains uncertain, especially given mixed messages from the Trump administration about whether it will continue nurturing them.^[7] Regardless, Manila is likely to pursue deeper bilateral ties with each of the countries involved. 

The Philippines also collaborates with countries outside the region. Many governments in the West share Manila’s perception that China poses a threat to the international order and are increasingly open to boosting defence ties with the Philippine government.^[8] Canada, for example, has donated a vessel detection system, worked with maritime agencies, expanded its diplomatic presence in the Philippines and made port calls.^[9] France, the only European country with a Pacific presence, has sent ships and conducted military exercises with the Philippines. Paris is also negotiating a Visiting Forces Agreement with Manila and will sell 40 ships to the Philippine coast guard.^[10] The European Union has increasingly ventured into coast guard and maritime cooperation. That said, U.S. retrenchment, budgetary considerations and crises closer to home are likely to have an impact on how much help Euro-Atlantic states can offer Manila over the long term.^[11]

The Philippines, like many other countries in the Indo-Pacific, is simultaneously trying to manage external threats, by boosting its military capacity, and trying to avoid an escalatory spiral that will make it less safe. Meeting this challenge requires a careful balancing between diplomacy and deterrence.

Military modernisation is both necessary for effective deterrence and a major challenge for the Philippine government. While top political and military leaders appear committed to the policy, they face major practical obstacles. These range from the persistent need to manage domestic conflicts, to procurement inefficiencies and funding shortfalls that are weighing down the Horizon program, to the difficulty of helping the under-developed navy and air force catch up with the army. 

In considering these challenges, resolving the Philippines’ internal conflicts belongs at or near the top of the list of priorities, given the need to free up resources and bandwidth to focus on external threats. To this end, Manila needs to boost the Bangsamoro peace initiative by speeding up “normalisation” – ie, the process by which Moro rebels and other outfits are disarmed, their former compounds are transformed into safe and prosperous communities, and stability is entrenched through the integration of these individuals and communities into civic life.^[1] Not everything about the peace process is in the government’s control, but investing Manila’s attention and resources in stabilising Mindanao is key. As it moves in this direction, Manila will also need to divide responsibilities between the military and the police, so that law enforcement agencies can take over more tasks the military has been carrying out in insurgency-affected areas in Mindanao and beyond. 

Concerning the Horizon program, which has struggled with delays, the defence department should try to winnow the list of projects that are in the queue, discarding or putting to one side those that are not at the core of military necessity. It should focus on procuring asymmetric military capabilities, which offer better value for the money and take into account the power disparity between Manila and Beijing. Creating a two-tiered system of acquisitions, with some that need to be completed before the end of Marcos, Jr.’s term in 2028, and others that can wait until afterward, will help relieve bottlenecks. 

Changes within the military are also needed. The navy and air force require resources and equipment to assume the role they should be playing in territorial defence.^[1] The army has begun retooling, but it is not optimally configured. It has redeployed special forces units to Palawan in order to be better positioned for territorial defence. But it should also consider reassigning more infantry from the largely stable interior to coastal locations near the Luzon Strait and other strategic waterways.^[2] Army training should focus more on marine manoeuvres and protecting critical infrastructure. Army units already present in coastal areas should prepare for more littoral operations. More broadly, military training should emphasise joint planning and inter-operability among the services. Finally, over the longer term, Manila also needs to reform the military pension system to free up financing for modernisation. A bill in front of the Congress would require new recruits to contribute to their pensions, which seems like a sensible place to start.^[3]

With the Trump administration’s approach to the Indo-Pacific shrouded in uncertainty, and China’s grey zone activities calling into question the value of the 1951 treaty, Manila will need to manage its relationship with Washington very carefully. It will need to thread a needle, looking for responsible ways to work with the U.S. to deter China from taking more control of features and resources in the Philippines’ EEZ, while helping itself withstand potential pressure during future resupply missions or even routine navy and coast guard patrols. But Philippine officials will also have to pick their battles, lest they generate major pushback from Beijing that Washington is unprepared to help Manila absorb.^[1] 

Key to managing conflict risk in the region will be good communication between Manila and Washington, especially regarding how to respond to Chinese actions while keeping the chances of escalation in check. Though it should seek mutual understanding by working through channels at every level, Manila should remain mindful that power in Washington is highly concentrated with the president, and that issues touching on U.S. relations with other major powers are especially sensitive. There are accordingly limits to how much any senior official can reliably say he or she is speaking for Trump. 

Beyond its U.S. alliance, Manila should continue to expand and strengthen its network of defence relationships. As a U.S. analyst said, “Connecting the spokes is really important”.^[1] Building on existing partnerships with Japan and Australia – and continuing to engage with South Korea and Euro-Atlantic states – could help provide something of a backstop in the event that Washington’s commitment to the Philippines’ security wanes.^[2] Despite its misgivings about the (so far) inconclusive ASEAN-China negotiations around the Code of Conduct in the South China Sea to manage tensions at sea, Manila should also continue to engage its ASEAN partners to maintain good relations with its neighbours as well as to enhance deterrence by building stronger regional partnerships.^[3]

As it cultivates defence partnerships, the Philippines should also do more to ensure that assistance programs are efficiently coordinated. It could do so through a task force composed of members from the defence and foreign affairs departments, the national security council, and the president’s office; together, they could tailor what the Philippines receives through its various bilateral relationships according to different partners’ strengths. 

Manila’s main challenge with Beijing remains to respond tactically to the tensions in the South China Sea, while finding a strategic modus vivendi with China. Given the power asymmetry in the relationship, developing effective deterrence is clearly a tall order. 

Regarding China’s grey zone activities, Manila should sync up to the extent possible with Washington, as noted, but it will also need to keep its own counsel as it looks to counter what Beijing is doing. Calibration will be key. For example, Manila should continue to reduce the number of incidents it publicises as part of its transparency initiative, while still discreetly bringing relevant episodes to the attention of its partners.^[1] China would thus have less reason to overreact.^[2] Secondly, it should conduct informal exchanges with expert institutions and think-tanks from other Asian powers to draw on their most successful responses to China’s assertive behaviour, for example by strengthening digital infrastructure. Thirdly, to minimise the impact of the much larger Chinese vessels ramming its ships, Manila could use more robust civilian craft for its resupply missions, patrols and escorts for fishing vessels in the South China Sea. These could include non-traditional craft such as oil tankers or bulk carriers.^[3]

Fortunately, neither Manila nor Beijing appears interested in an uncontrolled escalation in the South China Sea, and both appear to see value in dialogue and de-escalation channels.^[1] The Bilateral Consultative Mechanism, created as a confidence-building measure in May 2017 to de-escalate tensions at sea through high-level diplomatic meetings, especially following incidents, is an imperfect tool but at least offers a forum for exchange.^[2] Another welcome innovation is the 2024 agreement between Beijing and Manila to create a presidential hotline for use in crisis situations.^[3] But Manila should not expect too much; Philippine operators of the hotline say China often fails to “pick up the phone” in times of trouble.^[4] 

Finally, preparing for over-the-horizon risk of a crisis in the Taiwan Strait requires an especially delicate touch by Philippine leaders. On some aspects there is room for manoeuvre. For example, Manila has legitimate security interests around the Philippines’ northern shores, and it can argue that boosting defence in the north should not be viewed as escalatory. Its actions to that end might include creating new naval detachments and upgrading existing ones. The Philippines can also reasonably be expected to conduct coast guard and military exercises in accordance with the Law of the Sea around the provinces of Cagayan, Isabela and Batanes, though it should take pains to communicate clearly with Beijing about the purpose of these drills. Developing plans to evacuate its roughly 150,000 nationals from Taiwan should the need arise is also a core sovereign function that should not raise eyebrows.

The most sensitive activities relating to Taiwan are likely to be cooperative defence efforts, as well as other initiatives that Beijing might see as inconsistent with Manila’s “one China” policy because they appear to treat the island as a sovereign. The farther Manila goes down this road, the more it will likely strain relations with Beijing. More broadly, such activities could be perceived by China as more evidence that the fragile status quo around Taiwan – which preserves the prospect of peaceful unification – is dissolving. That is a conclusion best avoided, since reaching it could lead Beijing to decide that the time has come to seek reunification through non-peaceful means. Accordingly, any Philippine engagement with Taiwan should remain low-key and, to the extent that reports surface, Manila should be sure to use its channels to Beijing to reassure Chinese officials that it respects the status quo around the island and has no intention of derogating from its longstanding “one China” policy. 

The Philippines is trying to modernise its military against the backdrop of growing U.S.-China rivalry, rising tensions with China in the South China Sea and deepening worries about the possibility of war over Taiwan. As it presses forward to improve its capabilities and reconfigure its military to fit the threat environment, Manila will face diplomatic tests as well. On one hand, it will need to cultivate the Trump administration in order to build as much confidence as possible in the 1951 mutual defence treaty’s continued viability. On the other, it will need to reassure China that, as it works to protect its interests, it is not seeking to escalate tensions with Beijing or upend the status quo around Taiwan. In working to strike this balance, the Marcos, Jr. administration can contribute both to Philippine interests and regional stability – and help create a template for its successors to do the same.

Manila/Washington/Brussels, 12 August 2025