President Marcos’ Likely Foreign Policy Towards the Gulf States

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President Marcos’ Likely Foreign Policy Towards the Gulf States

Good relations with the Middle East would support the Philippine leader’s three main domestic policy priorities.

President Marcos’ Likely Foreign Policy Towards the Gulf States
Credit: Facebook/Bongbong Marcos

What will be Philippine President Ferdinand “Bongbong” Marcos Jr.’s foreign policy toward the Middle East? This article will focus on Marcos’ most likely orientation toward the member states of the Gulf Cooperation Council (GCC): Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE).

Since the 1980s, the Philippines has relied on energy exports from  GCC countries and strong demand for Philippine domestic labor, making these countries crucial to the country’s economic growth. However, such significance has not always consistently been reflected in the Philippines’ foreign policy across different administrations. The administration of President Benigno Aquino III (2010-2016) downplayed the importance of the GCC, while both the Gloria Macapagal Arroyo (2001-2010) and Rodrigo Duterte (2016-2022) governments chose to prioritize the GCC countries in their respective foreign policies.

Just like any Philippine president, Bongbong Marcos will not only want to hold onto power but also further consolidate his grasp over the Philippine political scene. So far, Marcos has been keen to follow in Duterte’s footsteps in three different policy spheres. First, he has emphasized infrastructure, picking up from where Duterte left off. The new president confirmed that he would not only continue Duterte’s “Build, Build, Build” infrastructure program but would also expand it under the “Build, Better, More!” theme. From 2023 until Marcos steps down in 2028, the Philippines is expected to spend an annual average of 5.2 percent of GDP on infrastructure projects, totaling P7.48 trillion ($126 billion). While the budget initially proposed by the president was reduced, even then the Philippines, like other nations, will find it challenging to sustain the economic growth necessary to finance such mega-plans in a post-COVID-19 world.

Second, Bongbong has affirmed that the new administration will continue with the independent foreign policy pursued by the Duterte government. While this does not mean following Duterte’s alienation from the United States, his pursuit of nontraditional partners and allies will continue to be a defining feature of the Bongbong administration. The third defining point of continuing is domestic taxation. In one of the few interviews that he has given since his election in May, Marcos directly linked the prosperity and sustainability of the economy to the collection of taxes and tariffs. In his first state of the nation address, he spoke about his administration’s plans to adjust the country’s taxation system to keep up with “the rapid development of the digital economy.” In July, Marcos pledged to reform the Filipino tax system and increase infrastructure spending in order to achieve 8 percent annual economic growth during his term.

Understanding these three policy dimensions enables us to better situate the GCC countries in the Philippines’ foreign policy agenda for the next six years. It is difficult to mention the wealthy bloc without thinking about energy. Saudi Arabia is the world’s third-largest oil exporter and it has the world’s second-largest proven oil reserves after Venezuela. In 2021, Saudi Arabia, UAE, and Kuwait were responsible for approximately one-fifth of the world’s total oil supply, at 14.8 billion barrels daily. In 2018, almost 85 percent of the Philippines’ crude oil imports came from Saudi Arabia, Kuwait, UAE, Qatar, and Oman. The remaining 15 percent was sourced from South Korea and Malaysia.

This dependence on oil will continue in the coming decades unless the Philippines limits this by developing its own energy systems, shifting to alternative means, and increasing support for renewable energy sources. In a 2006 newspaper interview, then President Gloria Macapagal-Arroyo expressed her nation’s desire for Saudi Arabia to extend its traditional role beyond exporting oil to the Philippines and become a partner in helping the country diversify its energy sources away from its import dependency. However, until today this remains a wish. The Philippines relies heavily on energy imports for its development and economic growth. The importance of oil and other fossil fuel in economic development across Southeast Asia and the rest of the world has ensured a constant demand for these commodities. Additionally, infrastructure projects, manufacturing, and urban development necessitate the use of fossil fuels.

Another determining reality of the Philippines’ relations with the GCC is its economy, which is built on a service and remittance-led growth model. The country relies heavily on an export-labor strategy, which sends out hundreds of thousands of Filipinos annually. These blue- and white-collar workers earn foreign-denominated currencies, which are sent back as remittances to their families in the Philippines. The transfer and conversion processes enable the country to acquire dollar reserves, even out current account deficits, and artificially suppress unemployment figures. These remittances are spent domestically, contributing to domestic consumption, and helping generate value-added taxes for the government.

Overall, the GCC states comprise the second largest share of Overseas Filipino Workers (OFWs), numbering 2.2 million in January 2020, with Saudi Arabia and the UAE taking the brunt of the share. As a result, Filipinos have become one of the largest overseas working populations in the GCC states. Across the GCC states, Filipinos work in a wide variety of sectors, comprising both blue- and white-collar workers. Construction workers, domestic helpers, and cargo operators comprise the former, while doctors, nurses, engineers, and programmers comprise the latter. Saudi Arabia has approximately 1.5 million workers from the Philippines, constituting the largest population in the Middle East and the second largest source of remittances to the Philippines. The UAE boasts the second-largest population, comprising nearly 700,000 Filipino workers. Qatar hosts 260,000 OFWs, Kuwait has around 260,000, Oman has 50,000, and Bahrain has the lowest at 40,000. The economic mobility and development of the GCC states explain the surge of foreign workers. In 2020, remittances from OFWs to the Filipino economy hit an all-time record, amounting to $34 billion, accounting for 8.9 percent of the country’s GDP.

Marcos’ focus on infrastructure, which involves the pursuit of foreign partnerships with multiple foreign countries, situates the GCC countries favorably within the Filipino foreign policy agenda. As a result, Marcos will likely follow the footsteps of Arroyo and Duterte, strengthening the Philippines’ links with GCC states in various dimensions. Given his economic and political strategy, his need for the GCC states to achieve meaningful success is quite understandable.

An infrastructure strategy needs foreign remittances to generate dollars to purchase construction materials and building inputs. A significant source of foreign remittance is the GCC. Infrastructure construction also requires fossil fuels, which the Philippines sources overwhelmingly from GCC states. Stronger relations with the GCC support the notion of an “independent foreign policy,” a mantra and foreign policy strategy inherited from Duterte. Marcos has also shown that he is willing to increase taxation on Filipinos to pay for his projects. Raising taxes is only possible if social stability is maintained. The export labor strategy and acceptable energy prices are both things that can help maintain social stability in the Philippines, which will help keep Marcos in power. Therefore, Bongbong will likely prioritize the GCC, just as Duterte, Arroyo, Ramos, and Estrada did before him,

Indeed, one could argue that Marcos will likely prioritize relations with the GCC behind only the United States and China, the two great powers of our time today. Energy supplies, the labor-export strategy, and infrastructure development offer three good reasons why the GCC states will likely occupy a central position in the foreign policy agenda of the Marcos administration.