Reuters International

U.S. military forces cross a flooded area near the shore during the annual Philippines-US amphibious landing exercise (PHIBLEX) at San Antonio, Zambales province, Philippines October 7, 2016. REUTERS/Romeo Ranoco/File Photo


By Kanupriya Kapoor and Enrico Dela Cruz

OLONGAPO, Philippines (Reuters) - In a bar along the Philippines' Subic Bay owned by an American military veteran, the main topic of conversation is not the upcoming U.S. election despite the Donald Trump coffee mugs, photographs and caps on display.

The talk is of Philippines President Rodrigo Duterte's tensions with Washington and his courting of China, which is worrying the bar's mostly American clients who have settled in the vicinity of the huge Subic Bay base, a former U.S. navy installation.

"The biggest fear is that one day he's going to wake up and say 'everybody from the U.S., get out of town' and we'd have to leave our loved ones behind," said Jack Walker, a retired Marine sergeant who has lived in Olongapo, the town around the base, for five years.

For more than a century the Philippines and the United States have had a shared history of colonialism, wars, rebellion, aid and deep economic ties. That could change as Duterte's three-month-old administration re-examines the relationship.

In a series of conflicting statements, Duterte has insulted U.S. President Barack Obama and the U.S. ambassador in Manila for questioning his war on drugs, which has led to the deaths of more than 2,000 suspected users and pushers. He told Obama to "go to hell" and alluded to severing ties with Washington.

Then, after weeks of anti-American rhetoric, Duterte said the Philippines would maintain its existing defence treaties and its military alliances.

The comments have left Americans and U.S. businesses in the Philippines jittery about their future, said Ebb Hinchliffe, executive director of the American Chamber of Commerce.

"Every time he opens his mouth and says something negative about America, that hurts me personally ... and from a business standpoint, it's not helping," he said.

He said three trade delegations representing American technology, financial services and manufacturing companies had cancelled trips to the Philippines in recent weeks.

At least two American companies have opted to do business in Vietnam instead "because of the president's anti-American sentiment". Hinchliffe declined to name the companies or give further details.


The United States effectively ruled the Philippines from 1898, when it acquired the country from Spain, until recognising its independence in 1946.

About four million people of Philippine ancestry live in the United States, one of its largest minorities, and about 220,000 Americans, many of them military veterans, live in the Philippines. An additional 650,000 visit each year, according to U.S. State Department figures.

According to a Pew Research Centre study last year, the Philippines is the most pro-U.S. country in the world.

Despite the shared history, though, the Philippines has a strong nationalistic movement that has questioned the U.S. alliance. In 1991, the government asked Washington to vacate the Subic Bay naval facility and the nearby Clark Air Base.

But as tensions increased with China over the territorial dispute in the South China Sea, the Philippines signed an Enhanced Defence Cooperation Agreement (EDCA) with the United States in 2014 that grants Washington increased military presence through rotation of ships and aircraft for humanitarian and maritime security operations.

However, Duterte has said that agreement will be reviewed and he insists that the Philippines, the third-largest Asian recipient of American military aid after Pakistan and Afghanistan, can do without assistance.

He was to leave for China on Tuesday on a state visit that could shift alliances in the region.

Philippine government officials have sought to play down Duterte's comments.

"Where the president is coming from is that he wants to encourage the Filipino people to be more independent," said government spokesman Ernesto Abella. "It's not so much an anti-American relationship as a pro-Philippine sentiment."

Still, the mood was sombre at Dynamite Dick's bar in Olongapo when a Reuters reporter dropped in recently.

Edward Pooley, a former Marine colonel who has lived in the Philippines for nearly 30 years, said Duterte's words were "heartbreaking" but he remained optimistic about the bilateral relationship in the long term.

"We've always done a lot of charitable activities and ... we feel the appreciation. Don't give up on us," he said.

The mayor of the city of 220,000, Rolen Paulino, said his people were "pro-American" but that he supports Duterte's shift in foreign policy.

"If the president wants to invite Russia and China ... I will teach my people Russian and Chinese because we have to adapt," Paulino said.

But many in the business community have labelled Duterte's rhetoric as largely bluster and take comfort in the fact that he has yet to translate it into action.

The business process outsourcing (BPO) sector - expected to account for 9 percent of GDP this year - remains largely optimistic about growth in the Philippines.

"Suffice to say, there are questions that are being asked because of (Duterte's) statements," said Danilo Reyes, country manager of Genpact, one of the biggest American BPO companies in the country. "But it does not really translate to actions, we continue to expand."

(Additional reporting by Karen Lema and Ronn Bautista; Editing by Raju Gopalakrishnan)


 Reuters International