Running Assessments Summary

Political Stability and Civil Unrest

PSA is concerned that the ongoing conflict between President Ferdinand Jr. Marcos and former President Rodrigo Duterte is likely to escalate further, but it is unlikely to impact the day-to-day operations of the Philippine government.

PSA does not see the conflict escalating to levels that will result to the destabilization of the current administration in the short or long term.

Nonetheless, the ongoing conflict does put the current administration at risk for:

1) The reputational and political risk to the office of the Presidency arising from the ongoing political conflict;

2) The possibility of limited violence between members/groups of opposing political supporters in rallies/demonstrations if they occur

3) The possibility for a limited mutiny and/or public uprising in support of former President Duterte in/around Davao

Rift in the President’s Coalition

January 28 saw two events hosted separately by increasingly polarized factions of the once ‘strongly united’ President’s coalition: The day ended with the current and former Presidents reaching a heightened level of personal attacks not yet seen between the two, such as accusing each other of abusing drugs and former President Duterte insinuating that President Marcos Jr. will be ousted from power.

Former President Rodrigo Duterte did not only imply the possibility of destabilization plots, insurrections, coup d’état, or a people’s uprising happening during Marcos Jr.’s term, but the former President also hinted at the possibility of an assassination. These statements, coming from a former President to an incumbent President, are unprecedented in Philippine history.

“You’re entering treacherous territory, Mr. President, and you might go through what your father experienced. That’s what I’m afraid of. I do not want that to happen to you. That’s why I’m begging, this will divide the nation and it will be bloody…If you insist on it, you will leave Malacañang the same way your father and your family did. If this cannot be stopped, the military and police are there, and they should see what you are feeding the masses, and if they see something wrong, they will correct it.”

PSA understands this statement as implying the possibility of a military coup and a people’s uprising if Marcos Jr. continues to pursue charter change. Nonetheless, PSA believes that the likelihood of these scenarios happening in the immediate or long term is unlikely.

Possibility of Destabilization Plots: Unlikely, but Threats Cannot be Dismissed

While the former President is known for his sometimes rambling, stream-of-consciousness monologues, PSA believes that his threats however unlikely, cannot be completely dismissed out of hand. As evidenced by the turnout for the Duterte rally in Davao, the Duterte family still wields a considerable amount of popularity and influence. Critically, this influence extends to some members of the police and military, but not all.

Ronald Llamas, former Presidential Adviser for Political Affairs to late former President Noynoy Aquino notes that Former President Duterte “provided many benefits to the military in terms of pension, and salary. They still have some influence in the military.” Notably, President Marcos has not instituted any major increases to the military and police so far in his term.

While the military and police are almost certain to remain loyal to the government at the institutional level, Philippine history has shown that no more than a few dozen highly motivated mutineers can easily bring the nation’s political (and economic) life to a standstill (albeit briefly). The loss of Administration support from a critical mass of the leadership of the military establishment was critical in the 1986 EDSA Revolution, and the 2001 ouster of President Estrada. On the other hand, smaller-scale rebellions by groups of (mostly) junior officers against the governments of Presidents Corazon Aquino and Gloria Arroyo were rebuffed by an in-tact military command.

On the other hand, the Dutertes are politically constrained with few allies in Congress. Their lack of a sufficient base in “Imperial” Metro Manila make a people’s uprising or popular insurrection against the government extremely unlikely and the Dutertes will likely be limited to localized demonstrations of political support through rallies, etc. For similar reasons, it is very unlikely we will see a coup d’etat unfold approaching the scale of the 1986 EDSA Revolution – where a critical mass of the armed forces (including senior leadership) turned against the sitting government.

While former President Duterte was and remains a popular figure among some members of the military, his support has waned since he departed from the office of the president. Furthermore, translating tacit popularity into direct action in support of the Dutertes (and in the contrivance of the legitimate chain of command) is unlikely. PSA believes the following are true:

• Opposition within military leadership to several of President Duterte’s policies was evident in private even though it was not expressed publicly, such as opposition to stronger relations with China despite Chinese militarization of the West Philippine Sea.
• Support for the current administration is higher as one moves up the ranks of leadership.
• Support for the administration is higher amongst those who are currently serving, as opposed to those who are retired.
• Even amongst those who express grievances, the number of personnel who would actually be willing to risk their lives or careers on behalf of President Duterte is very low.
• Moves to modernize the military and bolster its capabilities under the Marcos Jr. administration are well-received by members of the military.

Possibility of Mindanao Secession: Unlikely as Well and Lacks any Real Support

On January 30, former President Duterte unveiled his Mindanao secession plan with Davao del Norte 1st District Representative Pantaleon Alvarez to separate Mindanao from the Philippines through a signature campaign. As former President Duterte explained:

“There’s a process, I think, before the UN [United Nations] wherein you would gather signatures from all sorts of Mindanao verified under oath in the presence of so many people [to] decide that we want a separate.”

The former President, who stepped down from office just a year and a half ago, went on to say that he “really want[s] it,” and that he has lost hope for the Philippines, adding, “So many presidents have come and gone…Nothing happened to the Philippines.”

In response, some members of Congress, the current Cabinet, and even the Bangsamoro leadership have expressed their firm opposition to the separation of Mindanao. This shows that The former President’s proposal for the secession of Mindanao lacks any tangible support at the national popular level, and among key government power brokers. Nonetheless, there is a possibility that it will serve to galvanize and further radicalize the former President’s most ardent local supporters.

But whether these local supporters will mobilize in rallies or demonstrations remains to be seen, as protests of any kind in the Philippines are rare to begin with. In reality, mostly left-wing groups and civil society organizations hold demonstrations in this country. By the off-chance that the former President’s local supporters do hold protests, there is a rare potential that it can turn violent, but in a small scale. The protesters can potentially hit back against authorities or get water cannoned by police if the situation deteriorates. If a pro-Duterte rally breaks out into violence, it will be more politically sensitive.

Possibility of former President Duterte’s Arrest: Unlikely (As of this Time)

In raising the Secession question, former President Duterte has given the Marcos Administration some leverage: the viability of leveling sedition charges against the former President and his allies. This is on top of the hanging Damocles’ sword of an arrest warrant from the International Criminal Court concerning the former President’s drug war.

But, the prospect of serving an arrest warrant on former President Duterte in his bailiwick of Davao City – whether it is on the basis of sedition or in relation to the drug war – is not only tactically daunting but also almost guarantees a political quagmire. There is a possibility that attempts of an arrest could lead to some form of violence – either from the family, the supporters, or the former President himself – in the city.

However, any potential arrest warrant is likely months away if it ever comes, and it is more likely that the Marcos administration seeks to try and keep the political situation from deteriorating further.

Scenarios and Recommendations

PSA believes that violence such as a coup d’état is out of the cards for the foreseeable future, as there is not enough resources or support for this kind of endeavor. However companies and organizations are advised to review their responses to some kind of political violence. While PSA does not see the possibility of any mutiny or coup d’état attempts in the near future, it is recommended that companies come up with an emergency plan that details what to inform staff of these incidents as they occur, and how to keep them safe until the situation calms down. If some kind of political violence breaks out, it is likely to be confusing and fraught with uncertainty. A potential course of action in the case of some kind of instability or civil unrest would be to ask employees to shelter in place until the security situation is clearer, and then make decisions from there as the situation develops.

Crime

Foreign Conflict

PSA assesses that foreign conflict risk in the Philippines is currently low but geopolitical tensions over the next decade are likely to continue to increase between China and Taiwan, and any conflict over Taiwan would have a major impact on the Philippines even if the Philippines remains a neutral party. The territorial dispute with China over the West Philippine Sea may contribute to an accident or some kind of mis-encounter, but we don’t see any desire on the part of China, the Philippines, or the United States to fight a war over the West Philippine Sea.  The Philippines and China are increasingly on the path towards some kind of incident or crisis, with China continuing to use aggressive tactics, and the Philippines more determined to  maintain or even upgrade its outposts in the West Philippine Sea. Nonetheless, PSA continues to assess that the  possibility for a regional war is greatest  between China and Taiwan, and that the Philippine and Chinese  governments will  work to de-escalate from any potential conflict in the West Philippine Sea. 

On the Risk of Conflict in The West Philippine Sea 

There is a regular risk of an incident between the Chinese and Philippine militaries or coast guards in the West Philippine Sea. Military to military mechanisms of communication and deconfliction between the Philippines and China and the United States and China are not robust. Additionally, the Chinese navy, coast guard, and maritime militia appear determined to regularly engage in what foreign policy analysts call ‘grey zone tactics’ meaning that Chinese forces engage in risky activities less than war, pushing closer to a threshold of violence without actually conducting violent activities. Examples include turning on targeting radar against Philippine vessels, disrupting the resupply of Philippine outposts, and navigating dangerously close to Philippine vessels inside distances that go against international norms. This risk is most evident in the risk of a Chinese coast guard or maritime militia vessel ramming  a Philippine vessel, either intentionally or unintentionally.  Over the last several years, Chinese vessels have come closer and closer to Philippine vessels,  and a ramming incident is perhaps the most likely manner in which a crisis may start. 

Additionally, the Philippine government is  newly determined to maintain and even potentially expand its outposts in the West Philippine Sea.  This is currently most evident at Ayungin Shoal. Legislation is moving through the Philippine Congress to fund the expansion of Ayungin Shoal into  a more permanent outpost. Construction activities at Ayungin are particularly sensitive for the Chinese government, who appears to have convinced itself that at some point the Philippine government expressed a willingness to remove the outpost. 

However even if one of the worst-case scenarios occurred, that does not mean that the Philippines and China would be at war. If for example, a Chinese Coast Guard vessel rammed a Philippine Coast Guard vessel, the Philippine government would still be able to response with measures short of war.  However a major incident at sea would undoubtedly be a crisis. The Chinese government is likely to respond with coercive economic measures, including potentially trade sanctions and travel restrictions. Under the current political crisis in Manila, there are likely to be calls amongst political elites for sanctions against China as well. 

On China-Taiwan Tensions 

PSA maintains that likelihood of a conflict between China and Taiwan in the short term is low but that the likelihood of conflict is trending upwards. Over the next decade, there is a strong likelihood that geopolitical tensions between China and Taiwan continue to escalate.  A conflict between China and Taiwan is not likely until China believes it is capable of succeeding in an invasion. Some estimates from the US and Taiwanese defense departments assess that China may have the capability to conduct an invasion sometime between 2025 and 2027.  

Alternatively, many analysts believe that the People’s Republic of China might risk a war if certain red lines are crossed, even it does not yet clearly have the capability to invade Taiwan. China is likely to go to war if Taiwan declares independence for example, even if China does not yet have a clear capability to invade. In such a scenario, China may resort to a blockade of Taiwan, or move to seize outlying Taiwanese islands such as Kinmen or Matsu. A blockade of Taiwan, particularly if it was enforced violently with Chinese ground-based missiles and the Chinese air force, is more within Chinese military capabilities even now. China even now likely maintains a capability to close Taiwanese ports to ship traffic if it is willing to use anti-ship missile to target traffic into those ports, or to target the ports themselves with ballistic missiles. However, such actions would likely provoke a regional war with the United States. 

Additionally, PSA assesses that there will likely be a variety of short-term indicators of a potential conflict as tensions rise between China and Taiwan rise, and for the most part, these indicators are still not present. These indicators could include a major military build-up on the Chinese coast that would be visible to civilian observers, an increased demonstration of China’s ability to conduct large-scale amphibious invasions, and a significant increase in Chinese stockpiling of fuel in its strategic oil reserve. These indicators, which PSA will use to help monitor the risk of conflict in the region for our clients, are detailed in-depth in our foreign conflict risk report, which is available to our clients here. Unfortunately, the visible indicators for a potential invasion are more numerous compared to a blockade of Taiwan, which would be easier for China to implement on short notice.  

PSA still does not believe that a conflict is imminent or unavoidable, and we still don’t see significant short-term signs of conflict. However, we continue to assess that tensions are likely to be elevated over the next decade, and that tensions are likely to grow as China’s military power and capabilities increase relative to Taiwan and the USA. The risk of war between China and Taiwan is likely to grow over the next decade.  

Any conflict between China and Taiwan would be deeply damaging to the Philippine economy, even if the Philippines was a neutral party. Any conflict would disrupt global trade and supply chains, but even more so for organizations based in the Philippines, due to the geographic position of the Philippines neighboring Taiwan. A conflict between China and Taiwan would partially be fought in Philippine territorial waters, the northernmost point of the Philippines is only some 100 kilometers from Taiwan, and Metro Manila is only 800 kilometers from Taiwan. It is difficult to imagine that the normal importation of fuel, food, and raw materials would happen in the Philippines while a major armed conflict was taking place in the region. The Philippine internet may also be vulnerable to disruption due to its reliance on undersea cables.  There is also a concern that the Philippines will host an influx of refugees from Taiwan amidst a conflict. Planning for how the Philippine economy would function under wartime conditions is not robust, but there is increasing recognition in the foreign policy and national security communities about the importance of planning for a Taiwan contingency in all its aspects, including economic. 

Furthermore, if tensions result in a war between China and the United States, there are strong possibilities that the Philippines will be pulled into a conflict directly. China for example could preemptively strike Philippine bases where the United States maintains military forces on a rotational basis. If the Philippines becomes a direct party to a conflict, the government will call up the reserves of the armed forces and potentially redirect the economy to a war footing, redirecting economic capacity to military purposes. Critical infrastructure, some of which serves dual military and civilian purposes, such as ports and airports, could be targeted. A war would partially be fought in Philippine waters, but we don’t see the Philippines being subject to widespread violence or indiscriminate targeting by a foreign military. Outside of some scenarios involving Batanes, we don’t see an invasion of any kind as plausible. 

There are also likely to be opportunities for the private sector in light of increasing geopolitical tensions.  There may be opportunities to expand the Philippines military industrial base, or otherwise leverage the growing relationship between the Philippines and its allies for business opportunities. 

Communist Insurgency

PSA’s Forward-Looking Assessment: Over the short term, PSA anticipates that communist insurgency activity will continue to fluctuate on a month-to-month basis, but it will continue to trend downwards. NPA operational capacity is clearly diminished in comparison to 2017 and 2018, and the vast majority of NPA activity is conducted by small groups of rebels attacking soft targets, such as isolated government soldiers, CAFGU checkpoints, and isolated pieces of heavy equipment in the case of businesses.

Over the long term, the situation is characterized by uncertainty depending on several factors – including the success of the government’s humanitarian relief and economic development policies. The CPP-NPA retains a level of popular support particularly in rural areas, although the military claims that the group’s recruitment and fund-generation capabilities for its “legal fronts” have now been significantly diminished, hence the decision to tag all guerilla fronts in the country as “weakened guerilla fronts.”

Recently during the celebration of the NPA’s 55th anniversary, the Communist Party of the Philippines (CPP) ordered NPA rebels to intensify their tactical offensives against government security forces in the country. While the government believes that the Communist group is in a state of decline, troops were still ordered to intensify their security operations to watch out for small-scale offensives by NPA rebels. The NPA is becoming less and less capable of launching violent attacks due to numerous arrests, surrenders, and military operations resulting in rebel casualties that have depleted the group’s capabilities. Nonetheless, analysts note that the small groups of NPA rebels can still mount small-scale attacks against isolated government troops and extortion-related incidents against businesses.

As of this time, the communist insurgency is characterized by the following tactics, techniques, and characteristics:

Targeting Security Forces

• Assassinations
• Harassment (limited engagements with small arms)
• Ambushes with small arms and improvised explosive devices or IEDs (the NPA has displayed a continued capability in a limited number of instances to conduct complex small arms and IED ambushes. Our sense is that the security forces disrupt far more of these attempted attacks than the NPA successfully executes).

Targeting Corporations with Distributed Operations in Rural Areas:

• Extortion
• Arson attacks targeting isolated and poorly protected pieces of heavy equipment
• Raids that involve the seizure of firearms and other supplies

Other Violence Affecting Civilians:

• Targeted assassinations of former rebels, suspected informants, local government leaders, and tribal leaders
• Unintentional civilian casualties resulting from NPA ambushes against security forces and other targets

Most NPA-related violent incidents will still be armed encounters resulting from government operations targeting Communist insurgents. The NPA historically has an infrequent capability to conduct large-scale and coordinated attacks against multiple targets. The incidents that show the most capability in recent years include the May 2021 ambush of a PNP convoy in Occidental Mindoro, and the October 2022 ambush of an AFP convoy in Abra. Incidents such as these ones, where the NPA demonstrates a capability to ambush squad-sized formations or larger are increasingly rare. Most NPA ambushes are now against groups of one or two isolated government personnel.

Islamist Insurgency

PSA’s Forward-Looking Assessment: PSA is still optimistic that the security gains stemming from the Bangsamoro Peace Process may potentially be more permanent in nature. The peace process has survived the transition to a new Presidential administration, and even appears more inclusive with the members of the Misuari faction of the Moro National Liberation Front (MNLF) in the Bangsamoro Transition Authority. Key milestones in terms of Moro Islamic Liberation Front (MILF) demobilization and disarmament have been achieved, while foreign terrorist influence on armed groups is limited. Increased economic development and private sector investment are still needed to provide economic dividends from the political and security gains in Mindanao.

Eyes are increasingly on the May 2025 elections, in which MILF-linked politicians will contest their seats in the Bangsamoro Parliament. How the various elements of the MILF would react if they lost the elections remains a concern. But most likely, after the 2025 elections there will be a new governing coalition in which the United Bangsamoro Justice Party at least plays a major role.

PSA assesses that while security gains in the Bangsamoro Region – particularly against the threat of terrorism – may be more permanent, there will continue to be security issues in terms of rido or clan violence, armed criminal groups, political assassinations, and some low-level violence from terrorist-affiliated groups. Police statements indicate that officials attribute most Islamist-related atrocities of late to members of the Maute Group and the Bangsamoro Islamic Freedom Fighters (BIFF). Authorities suspect that these groups remain resolved in conducting retaliatory attacks, particularly against isolated targets in the Lanao and Maguindanao provinces, amid successive military offensives targeting Maute and BIFF militants in these provinces.

In terms of geography, most terrorism-related activity is limited to the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) and its immediate outskirts in Mindanao. The activities will be characterized by the following tactics and techniques:

Targeting Civilians and Corporations:

• Limited risk of kidnapping (concentrated in the Sulu Archipelago, the Zamboanga Peninsula, and the surroundings seas)
• Small-scale bombings and grenade attacks (within the BARMM and surrounding provinces)

Targeting Security Forces and the MILF:

• Harassment with small arms fire
• Roadside improvised explosive device (IED) attacks
• Assassinations

Since the end of Marawi siege, the high end of Islamist insurgent and terrorist capability has consisted of the Basilan car bomb attack on July 31, 2018 and the coordinated suicide bombing attacks in Sulu on June 28, 2019 and August 24, 2020.