A New Dawn for the Philippines

For three long years, the Philippines stood under the watchful eye of global financial regulators, burdened by its presence on the Financial Action Task Force’s (FATF) infamous ‘grey list.’ Investors hesitated, financial institutions proceeded with caution, and the nation’s reputation hung in the balance. But now, in a move that signals progress and reform, the country has officially exited the list, marking a significant milestone in its economic and financial journey.
The FATF’s decision wasn’t made lightly.

As FATF President Elisa de Anda Madrazo put it, “The Philippines is now actively combating the risk of dirty money flowing through its financial systems, including its casino sector.” This achievement is not just a bureaucratic win—it’s a testament to the country’s determination to strengthen its financial safeguards and uphold global standards. But as the Philippines celebrates, others take its place. Laos and Nepal have now been added to the grey list, and the continued suspension of Russia’s FATF membership raises critical questions about the intersection of geopolitics and financial regulation.

Background on the FATF and Its ‘Grey List’

The Financial Action Task Force (FATF) is a Paris-based intergovernmental watchdog established in 1989 to combat money laundering, terrorism financing, and other financial crimes. The organization monitors compliance with global anti-money laundering (AML) and counter-terrorism financing (CTF) standards, ensuring that financial systems worldwide are not exploited for illicit activities.
One of FATF’s most powerful tools is its ‘grey list’—a register of countries that, while not blacklisted, have strategic deficiencies in their AML/CTF frameworks. Being on this list carries significant consequences, including reduced international investment, heightened scrutiny from financial institutions, and increased borrowing costs. Countries placed under increased monitoring must commit to an action plan to address their shortcomings or risk further sanctions.

The Philippines’ Removal from the ‘Grey List’

The Philippines found itself on FATF’s grey list in June 2021, a move that sent ripples through its financial sector. To regain trust, the nation embarked on a rigorous reform journey, implementing key measures to combat money laundering and terrorist financing. The FATF cited several major reforms as the basis for the Philippines’ removal. These included strengthened supervision of Designated Non-Financial Business and Professions (DNFBPs) such as casinos and real estate transactions, stricter oversight of casino junkets—an avenue often exploited for illicit money flows—and the enforcement of registration requirements for Money or Value Transfer Services (MVTS), leading to crackdowns on illegal remittance operators.

Additionally, the country enhanced access to beneficial ownership (BO) information to prevent anonymous transactions and significantly increased the use of financial intelligence, resulting in more money laundering prosecutions. A pivotal moment in this reform journey came when FATF conducted an onsite visit to verify the country’s progress. Following this, FATF President Madrazo affirmed, “The Philippines has demonstrated strong commitment to sustaining these reforms, and we expect these measures to remain in place.” With this achievement, the Philippines now stands to reap economic benefits, including increased investor confidence, an improved business climate, and stronger financial credibility on the global stage.

Addition of Laos and Nepal to the ‘Grey List’

As the Philippines exits, Laos and Nepal find themselves entering the grey list, facing the challenges that come with it. FATF identified key areas of concern for both countries, including weak AML/CTF enforcement and regulatory gaps that allow illicit financial flows. For these nations, the economic consequences could be severe. Foreign investors may become wary, international financial institutions may impose stricter compliance requirements, and borrowing costs could rise. Both Laos and Nepal must now implement robust reforms to exit the list and restore confidence in their financial systems.

Ongoing Suspension of Russia’s FATF Membership

Beyond individual country listings, FATF continues to assert its influence in global geopolitics. One of the most significant developments in recent years has been the suspension of Russia’s membership due to its invasion of Ukraine. This move, while largely symbolic, signals the FATF’s willingness to take action against countries that pose broader threats to financial stability. Russia’s suspension limits its ability to shape global AML/CTF policies, potentially isolating it further from the international financial system. The FATF’s decision underscores how financial regulation can intersect with geopolitical conflicts, influencing economic sanctions and diplomatic pressure.

Broader Implications of FATF Decisions

The FATF’s grey list is not just a bureaucratic tool—it has tangible effects on international trade, banking relationships, and financial stability. Countries that fail to meet FATF standards risk exclusion from the global financial network, making compliance a critical issue for national economies. Several other nations, including South Africa, are actively working to exit the grey list, understanding that their economic prospects depend on meeting FATF’s stringent requirements. The Philippines’ successful removal serves as a case study, demonstrating that determined reforms can restore international credibility and unlock economic opportunities.

Conclusion: A Landmark Achievement with Future Challenges

The Philippines’ removal from the FATF grey list marks a significant victory, reflecting years of dedicated reform efforts. However, the journey doesn’t end here. The country must maintain its AML/CTF standards, ensuring that its financial systems remain resilient against illicit activities. Laos and Nepal must now navigate the challenges of being on the grey list, while Russia’s suspension highlights the broader geopolitical stakes at play.

As the FATF continues to evolve, its influence in shaping global financial integrity remains as crucial as ever.As one financial analyst put it, “A nation’s reputation in the financial world is hard-earned and easily lost. The Philippines has taken a step in the right direction, but vigilance is key.” With a new assessment set for 2027, the Philippines must remain steadfast in its commitment to financial transparency, ensuring that its hard-won gains are not reversed.

The hum of the Philippine fisheries aircraft filled the cockpit as it approached Scarborough Shoal on a routine patrol. Below, the turquoise waters stretched endlessly, concealing both abundant marine life and geopolitical tensions simmering just beneath the surface. The pilot, scanning the horizon, suddenly caught sight of an approaching silhouette—fast, menacing, unmistakably military. Within moments, a Chinese Z-20 helicopter closed in aggressively, slicing through the sky at an alarming speed. The radio crackled with a warning in Mandarin, then an urgent transmission from the Philippine Coast Guard: “Unidentified aircraft, you are conducting dangerous maneuvers in Philippine airspace!”

But the Chinese aircraft didn’t back down. Instead, it banked sharply, cutting dangerously close, forcing the Philippine plane into evasive action. The tense standoff lasted minutes but felt like hours—an airborne chess game played over disputed waters. This was February 2025, and the Scarborough Shoal had once again become a battleground.

For decades, the South China Sea has been a theater of high-stakes geopolitical rivalry, where competing territorial claims pit China against the Philippines, Vietnam, Malaysia, and other regional players. At the heart of this struggle lies not just national pride but critical resources—fishing grounds that sustain millions, untapped energy reserves, and control over vital global shipping lanes.

Among the contested areas, few are as strategically charged as Scarborough Shoal. A triangle-shaped atoll about 120 nautical miles from the Philippines’ coast, the shoal has long been a rich fishing ground and a vital maritime outpost. Historically part of the Philippines’ Exclusive Economic Zone (EEZ), it fell under China’s control after a tense 2012 standoff, despite a 2016 ruling by the Permanent Court of Arbitration in The Hague rejecting Beijing’s sweeping maritime claims. Yet, rulings mean little in the face of military might, and Scarborough remains a flashpoint—one that erupted once more in February 2025.

The February 2025 Incident: Aerial Confrontation Over Scarborough

What began as a routine fisheries surveillance mission quickly turned into a dangerous encounter. The Philippine fisheries aircraft, tasked with monitoring illegal incursions into its EEZ, found itself aggressively intercepted by a Chinese military helicopter. The Philippine Coast Guard wasted no time, accusing China of “reckless maneuvers” that endangered the crew and violated international airspace protocols. China, however, had a different narrative.

Beijing denounced the Philippine aircraft’s presence as an “illegal intrusion” into what it claimed was Chinese airspace. The diplomatic fallout was immediate—Manila lodged a formal protest, while Beijing doubled down on its territorial assertions, warning against any further “provocations.” The incident underscored a dangerous reality: China’s expanding maritime assertiveness, the Philippines’ growing defiance, and the increasing risk of an unintended military escalation.

A Brewing Storm: Regional and Global Implications

This was more than just a close encounter—it was a symptom of a much larger conflict. The Scarborough Shoal standoff in February 2025 signified a turning point in the South China Sea dispute. It reflected China’s expanding maritime claims, the Philippines’ increasing pushback, and broader concerns about regional security. More critically, it raised questions about shifting U.S. foreign policy—would Washington intervene more forcefully in defense of its treaty ally, or would it recalibrate its commitments? As dangerous maneuvers at sea and in the air become more frequent, one thing is clear: the South China Sea remains a tinderbox, where the next flashpoint could ignite a conflict with global consequences.

A Battlefield of Waves: The South China Sea Dispute and the Scarborough Shoal Conflict

The waves lapped gently against the side of the fishing boat as Captain Delfin Mendoza cast his net into the rich, blue waters near Scarborough Shoal. It was a daily routine, one that had sustained generations of Filipino fishermen. But today was different. A shadow loomed on the horizon—a massive gray vessel marked with the insignia of the China Coast Guard.

Within minutes, loudspeakers blared warnings in Mandarin. Then came the water cannons. Mendoza and his crew barely had time to react as torrents of high-pressure water slammed into their boat, nearly capsizing them. “This is our sea,” Mendoza muttered under his breath, gripping the helm. But in the South China Sea, possession wasn’t about history or livelihood—it was about power.

The Nine-Dash Line: A Claim Without Borders

China’s claim over the South China Sea is drawn with a series of dashes on a map—the Nine-Dash Line, an ambiguous boundary stretching thousands of miles from the Chinese mainland, swallowing the Exclusive Economic Zones (EEZs) of the Philippines, Vietnam, Malaysia, and others. Beijing insists that these waters are part of its historical territory, despite the fact that they lie hundreds of nautical miles from its shores.

But in 2016, the Permanent Court of Arbitration in The Hague delivered a landmark ruling: “China’s claims…have been deemed inconsistent with the United Nations Convention on the Law of the Sea (UNCLOS).” The ruling should have settled the dispute. It didn’t. Instead, China doubled down, building artificial islands, militarizing reefs, and expanding its maritime presence with an armada of coast guard ships and militia vessels. Scarborough Shoal became one of the most contested sites in this struggle.

Scarborough Shoal: A Powder Keg in the Sea

Named after a British merchant ship that ran aground there in the 18th century, Scarborough Shoal is more than just a collection of rocks in the sea. It is a lifeline for Filipino fishermen, a potential military outpost, and a symbol of sovereignty. For centuries, Filipino fishers freely accessed its abundant waters. But in 2012, a standoff between Philippine and Chinese vessels ended with China seizing control of the shoal. Filipino fishermen, once the masters of these waters, now faced harassment and blockade. What was once a traditional fishing ground had turned into a maritime battleground.

The Philippines Fights Back

The Philippines has not remained silent. With its security tied to the United States, and a renewed focus on maritime defense, Manila has challenged China’s assertiveness at Scarborough Shoal and Second Thomas Shoal—another flashpoint where Philippine forces maintain a rusting, beached warship as an outpost. But China has responded with increasing aggression. In recent years: Philippine resupply missions have been intercepted by Chinese vessels. Chinese coast guard ships have used water cannons and blocked access to key areas. Surveillance drones and military aircraft have shadowed Philippine patrols.

The February 2025 confrontation between a Philippine fisheries aircraft and a Chinese military helicopter was just the latest escalation. For Captain Mendoza and countless others, the message is clear: this is more than a territorial dispute. It is a fight for survival, for sovereignty, and for the right to cast a net in their own waters without fear. But in the South China Sea, history has shown that small confrontations can quickly turn into full-scale crises.

The February 2025 Incident: Conflicting Narratives and Rising Tensions

A high-stakes aerial encounter near Scarborough Shoal in February 2025 has intensified tensions between the Philippines and China. According to the Philippine Coast Guard, a Chinese military helicopter flew within three meters of a Philippine fisheries aircraft, a move condemned as “reckless” and a serious threat to safety. Philippine officials decried the incident as yet another example of China’s aggressive tactics in the South China Sea.

China, however, offered a starkly different version of events. Its Southern Theatre Command accused the Philippine aircraft of “illegally intruding” into Chinese airspace, justifying the helicopter’s actions as “defensive measures” to protect sovereignty. The dueling narratives reflect a deepening battle over territorial claims—one that extends beyond physical confrontations into a fierce information war.

The media framing of the incident further exposes the growing divide. The Philippines describes China’s actions as provocative and dangerous, while Beijing insists it was merely defending its territory. This rhetorical war—where terms like “reckless action” clash with “illegal intrusion”—has fueled further diplomatic tensions.

Philippine Foreign Secretary Enrique Manalo expressed deep concern over the incident, denouncing China’s actions as “reckless and unprofessional.” The event adds to an escalating pattern of confrontations in disputed waters, underscoring the fragility of peace in one of the world’s most contested regions.

A Region on the Brink: The Wider Implications of the February 2025 Incident

The near-collision between a Philippine fisheries aircraft and a Chinese military helicopter was not an isolated event. It was the latest in a pattern of Chinese assertiveness in the South China Sea—one that has seen Beijing deploy coast guard and military assets to challenge, intercept, and intimidate regional claimants. Over the past year alone, Chinese forces have blocked resupply missions to Philippine outposts, harassed Vietnamese fishing boats, and even shadowed U.S. and Australian naval patrols. With China’s newest coast guard law allowing its forces to fire on “trespassing” vessels, the risk of a military clash is higher than ever.

A Powder Keg: Rising Risks of Military Escalation

The February 2025 confrontation highlighted the fragile nature of the South China Sea dispute. A split-second miscalculation—whether in the air or at sea—could ignite a broader conflict. The region has already seen dangerous close calls: In December 2024, a Chinese fighter jet nearly collided with a U.S. reconnaissance aircraft over the Spratlys.

In early 2025, Chinese ships used water cannons against a Vietnamese coast guard vessel near the Paracels. Just weeks before the Scarborough Shoal incident, a Malaysian patrol aircraft was intercepted by Chinese jets near Luconia Shoals. Each of these incidents increases the probability of an accidental clash spiraling out of control, dragging multiple nations into an unpredictable conflict.

U.S. Commitments and Philippine Security Fears

For the Philippines, the stakes are existential. With its aging navy and limited air force, Manila relies heavily on its 1951 Mutual Defense Treaty with the United States. After the February 2025 incident, U.S. Secretary of Defense Lloyd Austin reaffirmed Washington’s “ironclad commitment” to defending the Philippines in the event of an attack. Yet, questions remain about how far the U.S. is willing to go. China has been steadily testing Washington’s resolve, calculating whether the U.S. would risk direct conflict over contested reefs and shoals.

“China is constantly pushing the envelope to test both Manila’s resolve and America’s treaty commitments.” – Richard Heydarian, regional analyst

At the same time, Manila is hedging its bets. Philippine Foreign Secretary Enrique Manalo has emphasized the country’s strategy of “multi-alignment,” seeking stronger security ties with Japan, Australia, and India. In April 2025, the Philippines will host a regional security conference, bringing together key Indo-Pacific nations to strengthen collective deterrence against Chinese maritime expansion.

“We’ve been doing [multi-alignment] and we will even enhance our cooperation further.” – Enrique Manalo, Philippine Foreign Secretary

China’s Strategy: Salami-Slicing and Testing Limits

For Beijing, the Scarborough Shoal incident was part of a broader playbook: gradually expanding control over disputed areas while avoiding outright war. The Nine-Dash Line remains the foundation of China’s South China Sea claims, despite the 2016 Permanent Court of Arbitration ruling rejecting them. By incrementally increasing its presence and pressuring weaker claimants, China aims to normalize its dominance, making its control an accepted reality. With tensions running high and U.S. credibility on the line, the February 2025 incident is a warning: The South China Sea remains a geopolitical flashpoint where a single reckless maneuver could change the course of history.

Competing Narratives: Who Controls the Truth?

From the moment the Philippine fisheries aircraft reported a dangerous interception, Manila took control of the story. The Philippine Coast Guard issued a strongly worded statement, calling the Chinese maneuver “reckless and unprofessional.” This framing dominated international media, portraying China as an aggressor willing to endanger lives to assert its territorial claims.

Beijing responded with a counter-narrative. China’s Southern Theatre Command called the flight an “illegal intrusion into Chinese airspace,” justifying the helicopter’s actions as a necessary defensive measure. Chinese state-run media, including Global Times and CCTV, flooded social platforms with articles accusing the Philippines of provoking the incident to gain international sympathy. This media battle was not just about one event—it was part of a broader war of words shaping global opinion on the South China Sea dispute.

Verifying the Truth: A Challenge in High-Stakes Confrontations

The chaotic nature of military encounters, especially in disputed zones, makes objective verification difficult. Satellite images and radar data—often relied on for neutral assessments—can be interpreted differently by opposing sides. In this case: Philippine sources claimed radar tracking confirmed the Chinese helicopter’s dangerous proximity (within three meters).

Chinese reports argued that the aircraft had violated a no-fly zone and that the helicopter’s movements were defensive, not aggressive. Independent analysts noted a lack of publicly available imagery from either side, making it difficult to confirm the exact sequence of events. This lack of clear evidence allowed both sides to push their own versions of reality, further fueling tensions.

The Role of Disinformation and Propaganda

Beyond traditional media, social media platforms became a battlefield of their own. Pro-China accounts flooded Twitter and Facebook with claims of Filipino “provocation”, while Philippine officials warned of Chinese disinformation campaigns aimed at sowing division and confusion. China’s state-controlled media has long been accused of spreading narratives that justify Beijing’s maritime expansion, and in 2025, this information warfare has only intensified.

Meanwhile, the Philippines has stepped up efforts to counter Chinese propaganda, with official fact-checking initiatives and diplomatic outreach to rally international support. In the South China Sea, physical clashes are only one part of the conflict. The war for global perception—fought through news outlets, social media, and diplomatic statements—may ultimately shape who wins the battle of legitimacy in the eyes of the world.

Conclusion: Lessons from the February 2025 Incident and the Path Forward

The February 2025 Scarborough Shoal incident was not an isolated event—it was a flashpoint in a broader struggle for dominance in the South China Sea. The confrontation between a Philippine fisheries aircraft and a Chinese military helicopter exemplifies the increasingly dangerous encounters between regional forces, where split-second decisions could have far-reaching consequences. At the heart of this crisis are competing national interests, historical grievances, and a contest for maritime control that is growing more volatile with each passing year.

The Future of the South China Sea Dispute

If the Scarborough Shoal standoff is any indication, future incidents are inevitable. However, the frequency and intensity of such confrontations must be managed through diplomacy, not brinkmanship. Key factors that could shape the future of the dispute include: ASEAN’s Role: The regional bloc must take stronger steps toward finalizing a Code of Conduct to prevent unchecked maritime aggression.

International Law Enforcement: The 2016 Permanent Court of Arbitration ruling rejected China’s nine-dash line claims, yet enforcement remains weak. Global players must push for stronger adherence to UNCLOS to maintain order in disputed waters. Confidence-Building Measures: Bilateral and multilateral dialogues between the Philippines, China, and other stakeholders are critical to avoiding direct military escalation.

Final Thought: A Call for Peaceful Resolution

The Scarborough Shoal incident is a stark reminder of the volatility in the South China Sea. Tensions will not dissipate overnight, but conflict is not inevitable. Through strategic diplomacy, international law enforcement, and mutual engagement, regional players can avoid military escalation and prevent a localized confrontation from spiraling into a larger crisis. The world is watching—whether the South China Sea remains a region of rising tensions or a model of peaceful dispute resolution will depend on the choices made in the coming months and years.

The radio crackled aboard the Philippine Coast Guard (PCG) vessel BRP Teresa Magbanua. A Chinese militia ship was shadowing them—again. But this time, the response was swift. Holding their course, the Filipino crew delivered a firm message over the radio: “You are in the Philippine Exclusive Economic Zone. Leave immediately.” Moments later, a Philippine resupply boat slipped past the blockade, successfully delivering provisions to its outpost in the South China Sea. A small but symbolic victory—a sign that the Philippines is no longer backing down.

For centuries, the Philippines has been shaped by the sea. With over 7,600 islands and an Exclusive Economic Zone (EEZ) spanning 2.2 million square kilometers, its waters hold vast marine resources, critical trade routes, and strategic outposts. Yet, these same waters have become a battleground, with foreign incursions—especially from China—threatening its sovereignty. But the tides are shifting. No longer a mere bystander, the Philippines is fighting back.

Modernizing its navy and coast guard, forging alliances with the U.S. and Japan, strengthening its legal standing through international rulings, and amplifying its voice on the global stage, the country is building a maritime force that can defend its blue frontier. But will it be enough? Can deterrence and diplomacy prevent further aggression? The answer remains uncertain, but one thing is clear—the Philippines is no longer standing idly by.

The Philippines’ Maritime Awakening: Rising Against the Tide

In early 2024, a Philippine Coast Guard vessel patrolling the West Philippine Sea found itself in a dangerous game of cat and mouse. A Chinese vessel, flying no flag but unmistakably part of Beijing’s maritime militia, attempted to block its path near Ayungin Shoal. Over the radio, a calm but firm Filipino voice declared, “This is the Philippine Coast Guard. You are in our Exclusive Economic Zone. Leave immediately.”

For years, these encounters have been routine—intimidation, shadowing, water cannon attacks. But something is changing. The Philippines is no longer retreating. With a growing fleet, stronger alliances, and an unshakable legal foundation, the country is reinforcing its maritime power. The battle for the sea is not just about ships—it’s about survival, sovereignty, and economic security.

Geopolitical Imperative: The Battle for the South China Sea

The South China Sea is one of the world’s most hotly contested waters. Several nations, including the Philippines, Vietnam, Malaysia, and Indonesia, claim parts of it. But it is China’s sweeping nine-dash line—which covers almost 90% of the sea—that has turned the region into a geopolitical flashpoint. Beijing has built artificial islands, deployed military assets, and harassed smaller nations’ vessels, directly threatening Philippine sovereignty. Philippine officials have not minced words. Defense Secretary Gilberto Teodoro Jr. recently stated: “We will not be bullied in our own waters. The Philippines has the right to defend its territory, and we will continue to do so.”

The country’s legal foundation for this stance is rock solid. In 2016, the Permanent Court of Arbitration in The Hague ruled in favor of the Philippines, invalidating China’s expansive claims under the United Nations Convention on the Law of the Sea (UNCLOS). Yet, China continues to ignore the ruling, pushing the Philippines into a defensive but determined position. The question remains: Will international law be enough, or must the Philippines build its deterrence at sea?

Economic Necessity: Protecting the Blue Gold

Beyond geopolitics, the ocean is the Philippines’ lifeblood. The country’s fishing industry supports over 1.6 million Filipinos and contributes nearly P300 billion to the economy annually. The West Philippine Sea alone provides over 25% of the nation’s total fish catch—a critical food source for millions. But illegal fishing, particularly by Chinese vessels, has put this at risk.

A glaring example occurred in 2019 when a Chinese vessel rammed and abandoned a Filipino fishing boat near Recto Bank, leaving 22 fishermen stranded in open water. This area is also believed to contain over 5.4 billion barrels of oil and 55.1 trillion cubic feet of natural gas, resources that could fuel the Philippines’ energy security for decades. Yet, due to persistent maritime threats, these riches remain largely untapped. Without control over its own waters, the Philippines risks losing not just territory, but the economic future tied to its seas.

National Security Concerns: Defending the Blue Frontier

Maritime power is not just about fish and oil—it’s about protecting the nation from threats beyond the horizon. The Philippines faces a surge in smuggling, piracy, and human trafficking in its vast maritime domain. The Sulu-Celebes Sea, for instance, has been a hotspot for kidnappings by terrorist groups like Abu Sayyaf. China’s gray zone tactics—harassment through its maritime militia, aggressive maneuvers, and economic coercion—pose a direct threat to Philippine sovereignty. A report by the Asia Maritime Transparency Initiative warns that Beijing’s control of key maritime areas could give it strategic dominance over vital sea lanes, choking off the Philippines’ economic lifelines if tensions escalate.

Against these challenges, the Philippines is taking action. A sweeping naval modernization program is underway, bringing in missile-capable frigates, offshore patrol vessels, and new surveillance technology. Strategic partnerships with the United States, Japan, and Australia are strengthening its defense posture. And on the legal front, Manila continues to rally international support to uphold the 2016 arbitral ruling. But will it be enough? As the tides shift in the Indo-Pacific, one thing is clear—the Philippines is no longer just a bystander in the battle for the seas. It is standing its ground, one wave at a time.

The Philippines’ Maritime Power Surge: Turning the Tide Against Adversity

At dawn, the BRP Jose Rizal, the Philippine Navy’s first missile-capable frigate, sliced through the waves of the West Philippine Sea. Onboard, a young officer scanned the horizon, his eyes fixed on the radar—a capability that, just a decade ago, the fleet sorely lacked. The message was clear: the Philippines is no longer sailing blind. After years of struggling with outdated equipment, limited funding, and an overwhelming adversary in the South China Sea, the country is now transforming into a rising maritime power.

This shift is not just about new warships or missiles. It is a comprehensive, multi-pronged approach that includes military modernization, an empowered coast guard, strategic alliances, and diplomatic maneuvers. From defending territorial waters against illegal incursions to asserting sovereign rights in international forums, the Philippines is no longer a passive player—it is stepping up to the challenge of securing its vast maritime domain.

The Geopolitical Imperative: A Maritime Chessboard

At the heart of this transformation is the South China Sea dispute. For years, China has aggressively expanded its claims, building artificial islands, deploying coast guard and militia vessels, and harassing Filipino fishermen. The Philippines, with its extensive Exclusive Economic Zone (EEZ) covering over 2.2 million square kilometers, is at the center of this geopolitical storm.

The 2016 Permanent Court of Arbitration ruling in The Hague ruled in favor of the Philippines, invalidating China’s sweeping “nine-dash line” claim. Yet, China has ignored the ruling, increasing its presence in disputed waters. Philippine officials have repeatedly emphasized the need to strengthen maritime power to safeguard national interests. As National Security Adviser Eduardo Año recently stated:

“Our maritime domain is not just a source of resources—it is the lifeline of our economy and our security. A weak maritime force means a vulnerable nation.”

With fisheries, offshore energy, and trade routes at stake, the Philippines has no choice but to invest in its maritime future.

Modernizing the Armed Forces: From Coastal Defense to Blue-Water Ambitions

For decades, the Philippine Navy was considered a “brown-water” force, limited to patrolling coastal areas. Now, an ambitious modernization program is transforming it into a credible blue-water navy, capable of operating in deeper and contested waters.

The acquisition of two Jose Rizal-class frigates in 2020 marked the beginning of this shift. Equipped with modern radar, anti-ship, and anti-air capabilities, these warships are the backbone of the fleet. But the navy is not stopping there. The government has approved the procurement of submarines, with France and South Korea competing to provide the country’s first underwater combat platform. Additionally, the Shore-Based Anti-Ship Missile System (SBASMS) featuring India’s BrahMos supersonic missiles is expected to significantly boost deterrence.

In 2024, the defense budget hit ₱282 billion ($5 billion USD), with a growing portion allocated to naval and air defense. While these advancements mark significant progress, challenges remain. Defense expert Collin Koh from Singapore’s RSIS notes:

“While modernization is commendable, the Philippines must integrate these new assets into a coherent maritime strategy. A strong navy is not just about ships, but about coordination, sustainability, and long-term capability building.”

In March 2023, the Philippine Coast Guard (PCG) found itself in a tense standoff near Bajo de Masinloc (Scarborough Shoal). Chinese vessels attempted to block a resupply mission, but this time, the PCG was prepared. Armed with Japan-built patrol ships and supported by real-time intelligence, the coast guard successfully executed a maneuver that forced the Chinese vessels to retreat—without escalating tensions into direct conflict.

The PCG has become a frontline force in defending Philippine waters, focusing on maritime law enforcement, illegal fishing prevention, and search-and-rescue operations. This strategy allows the Philippines to counter “gray zone tactics”—coercive moves that fall short of open conflict—without immediate military escalation. Strategic support from Japan, the U.S., and Australia has further enhanced the PCG’s capabilities. With new vessels, surveillance technology, and increased training, the coast guard is now a critical player in maintaining maritime security.

Building Strategic Partnerships: Strength in Unity

Recognizing that it cannot face maritime threats alone, the Philippines has strengthened its security partnerships with allies and regional powers. The U.S.-Philippines Enhanced Defense Cooperation Agreement (EDCA) has allowed for joint military exercises, intelligence sharing, and the pre-positioning of defense assets in key areas. The Visiting Forces Agreement (VFA) ensures that U.S. forces can train with and assist Filipino troops in maritime security operations.

Beyond the U.S., Japan has emerged as a key defense partner, supplying patrol boats, radars, and surveillance technology. Australia has also increased cooperation, engaging in joint naval drills and maritime law enforcement initiatives. Meanwhile, partnerships with Vietnam and Indonesia have strengthened regional coordination on illegal fishing and security concerns.

These alliances send a clear message: the Philippines is not alone in defending its waters. By leveraging international support, it is building a maritime force capable of deterring threats while maintaining regional stability.

Legal and Diplomatic Efforts: Fighting with the Law

While military power is crucial, the Philippines also wields international law as a weapon. Since the 2016 arbitral ruling, the country has consistently raised issues of Chinese incursions in global forums, from the United Nations to ASEAN summits. Diplomacy remains a key pillar in asserting its maritime rights.

The Philippine government has increased patrols in the West Philippine Sea, filed diplomatic protests, and strengthened ties with nations that support a rules-based order in the region. By using legal frameworks and international advocacy, the country is ensuring that its maritime claims remain recognized on the global stage.

Challenges, Future Outlook, and the Philippines’ Maritime Course

While the Philippines is making strides toward a stronger maritime presence, several challenges remain. These obstacles could slow progress, limit operational effectiveness, and create vulnerabilities that adversaries might exploit. Building a credible maritime power requires massive financial investment. The ₱282 billion ($5 billion USD) defense budget for 2024 is a step forward, but it still lags behind regional counterparts like Indonesia and Vietnam. Naval modernization—especially acquiring submarines, missile systems, and surveillance aircraft—demands sustained long-term funding, something that fluctuating economic conditions and competing domestic priorities make difficult.

The challenge is balancing internal development with defense spending. Infrastructure, healthcare, and social programs all demand funding, often making defense modernization a lower priority. Without a clear long-term budgetary commitment, modernization efforts risk stagnation. Compared to China’s PLA Navy, which fields over 350 ships—including aircraft carriers, advanced destroyers, and nuclear submarines—the Philippine Navy remains limited. The technological gap is stark, especially in anti-air warfare, undersea warfare, and electronic warfare capabilities. Even against regional players like Malaysia or Vietnam, the Philippines still lacks advanced assets such as stealth frigates or modern submarine fleets.

In intelligence and surveillance, Chinese vessels operate with cutting-edge radar, satellite integration, and drone support. The Philippines, by contrast, still relies heavily on allied intelligence-sharing agreements, which, while beneficial, limit its independent situational awareness. Without a robust defense-industrial base, the country remains dependent on foreign suppliers for ships, missiles, and aircraft. Delays in procurement—often due to funding or bureaucratic inefficiencies—also widen the capability gap.

The Philippines has a history of defense procurement delays and inefficiencies, sometimes due to corruption or mismanagement. Past projects have been plagued by cost overruns, questionable deals, and logistical bottlenecks. Transparency International’s Corruption Perceptions Index often ranks the country as struggling with governance issues, which can slow military acquisition processes. Bureaucratic red tape complicates policy execution. Even when agreements for new ships or radar systems are signed, implementation delays can stretch procurement timelines by years, affecting operational readiness.

Future Outlook: Steering Toward Strength

By 2028, the Philippines aims to strengthen its naval capabilities with the acquisition of at least two attack submarines, with France and South Korea emerging as the leading contenders for the deal. This marks a significant leap in the country’s maritime defense strategy, introducing a new layer of deterrence in the contested waters of the South China Sea.At the same time, the expansion of missile defense is underway, with additional BrahMos supersonic missiles set to fortify coastal defenses. These high-speed, precision-strike weapons will enhance the country’s ability to deter and respond to potential threats near its maritime borders.

The Philippine Navy’s fleet is also poised for growth, with plans to acquire more multi-role frigates, offshore patrol vessels (OPVs), and fast-attack crafts. These additions will significantly improve patrol capabilities, ensuring a more robust presence in critical areas. Beyond hardware, the country is investing in enhanced maritime domain awareness, integrating satellite surveillance, unmanned aerial vehicles (UAVs), and cyber warfare capabilities. These advancements will provide real-time intelligence, strengthening the Philippines’ ability to monitor and respond swiftly to maritime threats.

The South China Sea remains one of the most contested regions globally, with growing tensions between the U.S. and China. The Philippines’ Enhanced Defense Cooperation Agreement (EDCA) with the U.S. has expanded American military access to key bases. If geopolitical tensions escalate, the Philippines could become a crucial player in regional deterrence strategies. China’s maritime assertiveness continues to escalate, using a mix of coast guard, maritime militia, and naval forces to pressure Philippine claims. As Beijing strengthens its hold over artificial islands and critical chokepoints, Manila must carefully balance military posturing with diplomatic restraint to avoid direct confrontation.

Conclusion: Charting a Course for a Stronger Maritime Future

The Philippines is navigating turbulent waters, balancing military limitations, geopolitical challenges, and internal obstacles in its quest for maritime power. Modernization is underway, but long-term success depends on sustained investment, effective governance, and strengthened alliances. While the country will never match the naval giants of the region, its growing maritime presence, legal assertiveness, and strategic partnerships position it as a critical player in Indo-Pacific security.

The road ahead remains challenging, but one thing is clear—the Philippines is no longer merely reacting to threats. It is actively shaping its maritime destiny. As new warships patrol disputed waters and alliances deepen, the nation is making a statement: the Philippines will defend its seas, its sovereignty, and its future.