Rising tensions over competing claims in the South China Sea have raised a new set of foreign policy challenges for the administration of Philippine President Benigno Aquino.

China’s increasingly aggressive posturing, especially among elements of the People’s Liberation Army Navy, has exacerbated the Philippines’ deepening sense of vulnerability. In light of this emerging security dilemma, Manila faces three challenges: (1) balancing bilateral relations with China and the United States without being forced to choose between the two; (2) ensuring that the multilateral track, primarily through the Association for Southeast Asian Nations, functions effectively as a tool for managing, if not resolving, territorial disputes; and (3) crafting a coherent diplomatic strategy while developing a military ‘minimum deterrent.’

Since last year, China’s increasingly tough rhetoric has prompted the Philippines to seemingly hedge its bets by further tilting toward the United States. Given the huge military asymmetry between Manila and Beijing, it’s perhaps no surprise that the Philippines will increasingly seek to leverage its ties with the United States to deter Chinese aggression.

China’s behaviour in the South China Sea, meanwhile, has been extremely sensitive to the region’s balance of power, and the country’s military truculence in the region has grown with the military disengagement of the Soviet Union and the United States. The Mischief Reef incident in 1994, when China started building structures on stilts in the area when the Philippines Navy had withdrawn for monsoon season, underscored to Manila that the withdrawal of US bases was encouraging Chinese expansionism. In response, by 1999, the so-called Visiting Forces Agreement facilitated the re-establishment of a US military presence in the country. The post-9/11 ‘War on Terror,’ meanwhile, allowed the United States to further intensify its military operation within the Philippines. As a result, the United States has remained the country’s most important politico-security partner.

Yet, China is also emerging as one of the Philippines’ major diplomatic-economic partners. China is one of the country’s biggest trade partners, and the Aquino administration is fully aware of how important China is to the country’s goal of tackling acute domestic economic woes, from infrastructure development to capital provision. Indeed, over the past decade, the primacy of economic considerations has encouraged Filipino leaders from Gloria Arroyo to Aquino to cultivate strong ties with the emerging global economic powerhouse that is China.

Ultimately, what the Aquino administration wants is to deter China’s military aggression, primarily through a US security guarantee, without jeopardizing booming economic ties with the mainland. This is a delicate balancing act, and a daunting task for any government, but Aquino’s recent visit to China signalled the potential for de-escalation and the revitalization of economic ties.

Ideally, the Philippines would have been able to rely primarily on regional multilateral institutions rather than major powers. The problem is that ASEAN’s efficacy is questionable, for two main reasons. First, there’s a lack of internal consensus on the South China Sea issue, not least because its members have varyingly close ties with either China or the United States. Second, ASEAN is a ‘soft’ institution that has so far been more effective at confidence-building and preventive diplomacy than conflict management. For example, the 2002 Declaration of Conduct is fundamentally a declaratory statement that lacks binding provisions to deter conflicting parties from engaging in belligerent acts. So far, renewed tensions have encouraged ASEAN to develop guidelines for the Declaration. However, there’s no indication of any movement towards an effective and binding code of conduct to manage the dispute. In the absence of such a regime, the ASEAN track is more about moral suasion than finding lasting political-legal resolution of conflicts.

The Philippine foreign policy bureaucracy also faces challenges. The bulk of the bureaucracy is focused on foreign economic policy and issues tied to the protection of migrant Filipino workers around the world. Ministry personnel are overstretched, while budget allocations don’t match the seriousness of their responsibilities. Meanwhile, the country’s army is underfunded, under-equipped, and is primarily oriented towards domestic security threats.  All this means that at present, the Philippines is yet to develop a credible ‘minimum deterrent’ to ensure its maritime security.

Aware of the challenges the bureaucracy has in helping develop a robust response over the South China Sea, legislators and civil society organizations have pressed the government to be more decisive. Early this year, for example, a Filipino legislator, Walden Bello, pushed for a House resolution to rename the South China Sea as the West Philippine Sea, in an amusing attempt to undercut China’s ‘historical’ claims of ownership. Both the military and the foreign affairs bureaucracy welcomed the move.

In late July, a congressional delegation led by Bello visited one of the largest of the disputed Spratly islands, Pag-Asa Island, on a so-called peace and sovereignty mission. The group expressed its support for the Philippines’ claim in the area, while advocating a diplomatic resolution to the conflict, a reflection of how seriously the public is taking the issue.

The pressure is therefore now on the Aquino administration to manage tensions in the region without compromising economic linkages and security relations with either the United States or China.

Javad Heydarian is a foreign affairs analyst focusing on international security and development issues. His articles have been featured or cited in Foreign Policy in Focus, Asia Times, UPI, Transnational Institute and the Tehran Times, among others. He was a participant in the first Manila Conference on the South China Sea.