The Philippines’ recently confirmed that it would end the Visiting Forces Agreement with the United States. The termination of the pact, which allows America to rotate its forces through the Philippines’ military bases, puts “at risk” a large number of joint military exercises held annually.

Broadly, the move could be interpreted in two ways: first, as President Rodrigo Duterte’s bargaining tool to extract US concessions on various issues; and second, as Manila’s way of pursuing closer ties with Beijing, which is challenging Washington’s influence in the region. The latter also impacts the calculations of other Southeast Asian countries in the South China Sea dispute.

The immediate provocation for the move was Duterte’s anger against Washington denying a visa to one of his key aides, former police chief Ronald Dela Rosa, also the architect of the war against drugs. Some of his own administration officials have questioned the termination and stressed that it requires the Senate’s approval.

Duterte stressed two more issues that influenced his decision. First, with Washington pushing Manila to increase joint naval exercise in recent years to counter Beijing, his administration is apprehensive that it could provoke a “shooting war” or conflict with China. Second, he also accused Washington of taking back modern weapons used in the war games, which Manila feels is a key part of its fight against terrorism and drug trafficking.

US President Donald Trump reacted in his customary fashion: “I really don’t mind, if they would like to do that…We’ll save a lot of money.” But the State Department was more circumspect, calling the termination “a serious step with significant implications for the US-Philippines alliance.”

Given the somewhat unpredictable nature of the presidents of the two countries, it is uncertain how this decision will pan out over the next six months, deemed as the notice period during which the agreement remains in force, allowing joint exercises to continue. If carried through, it could boost China’s influence in the region at the expense of the United States.

Experts have pointed out that the announcement will not impact the more important Mutual Defence Treaty signed in 1951. Likewise, the Philippines-US counterterror mission will continue against Muslim extremists in the south.

The Philippines is a former colony of the United States after Spain gave up the islands at the end of the 19th century. Though US colonial rule is viewed more positively than Spanish rule, Manila has pointed fingers at the United States for not apologising after the 1906 Battle of Bud Dajo, which killed 1,000 Filipino Moro Muslims.

This and other repression-related concerns have meant that despite the Philippines being the US’s oldest military ally in Asia, it was asked to vacate the Subic and Clark naval bases in Manila – the largest American bases outside the United States – in the early 1990s.

During a visit to China in 2016, President Duterte announced his military and economic “separation from the United States” because America “had lost.” Later he clarified that he could not sever ties with the United States because “the Filipinos in the United States will kill me.”

In a trend that extends across Southeast Asia, China is investing heavily in the Philippines’ infrastructure projects. These investments are symbols of a “newfound friendship and relationship,” largely related to the Belt and Road Initiative. In addition, Beijing is now eying sales of military products, especially drones.

Criticising American investors for having “no interest” in the country’s redevelopment plans, Duterte realigned his foreign policy towards Beijing and Moscow after assuming office in 2016. If the defence agreement is indeed terminated, Washington would have one important base less for force projection in the South China Sea, a key part of the US’s free and open Indo-Pacific plan. This would encourage Beijing to continue building military bases in ‘contested’ waters.

Analysts have pointed out that the Trump administration is less interested in Southeast Asia compared to its predecessors. This has pushed some in the Association of Southeast Asian Nations to align with China for infrastructure funding. A survey of Southeast Asian experts by a think tank in Singapore found that 68% believed that US engagement with the region has either decreased or decreased substantially. A similar number was unsure of, or had little confidence in, Washington’s role as a regional security provider.

The Gulf countries need to watch this contest closely. They have good ties with all three countries. The United States is the key security guarantor in the region, the Philippines is one of the key providers of workforce and China is the foremost economic partner. The goings-on in the Philippines and the big power competition in Southeast Asia serve as a precursor of potential developments in the Gulf and Middle East in the future. This requires continued foreign policy diversification and devising flexible tools of strategic autonomy to manoeuvre such complexities.