Philippine President Rodrigo Duterte has informed Washington that he will tear up a longstanding military pact, a decision that would have ramifications far beyond the South-East Asian nation.

Key points: Observers say ending the agreement amounts to ending defence cooperation

Observers say ending the agreement amounts to ending defence cooperation The US and Australia were instrumental in defeating IS-inspired militants in the Philippines

The US and Australia were instrumental in defeating IS-inspired militants in the Philippines China is likely to take advantage of receding US influence in the South China Sea

The Visiting Forces Agreement (VFA), signed between the two countries in February 1998, sets the rules for the US-Philippine alliance.

"[The VFA] operationalises the mutual defence treaty with the United States," said Richard Heydarian, a Manila-based analyst.

"Absent that, the alliance is essentially an empty shell.

"This is one of the geopolitical shocks of the decade."

Duterte's 'lasting legacy'

Under the VFA, American troops have been allowed to enter the country without a passport or visa, allowing them to work on at least five US bases across the country.

The decision to terminate it came shortly after US senators voted in favour of a resolution invoking the Magnitsky Act to impose sanctions against senior Filipino security forces figures responsible for thousands of extrajudicial killings in the drug war and for the prolonged detention of Senator Leila de Lima, a prominent critic of the Duterte administration.

"President Duterte, or at least people in his inner circle, were hoping through the VFA they could leverage some concessions from the United States," Mr Heydarian said.

"Probably they were hoping for that, but President [Donald] Trump made it very clear: he's not going to beg for it. He's fine if the Philippines don't want to be helped."

US and Philippine forces conduct hundreds of joint exercises each year. ( Reuters: Eloisa Lopez )

Indeed, Mr Trump appears completely unfazed by Mr Duterte's decision, which critics say is tantamount to ending the alliance — one that has been strong since 1951 and is a key peg of US power in the region.

"If they would like to do that, that's fine. We'll save a lot of money," Mr Trump said during a White House press briefing.

But Mr Trump's view is hardly mainstream in the US defence establishment.

Defence Secretary Mark Esper called the move a "move in the wrong direction".

Another top US official told reporters in the Philippines that the decision could effectively see the alliance "be reduced or disappear".

Huong Le Thu, a regional security expert at the Australian Strategic Policy Institute, told the ABC that "since coming to office, Duterte has advocated for more 'independent' posture which in his understanding was more 'less America, more China'."

"It will be Duterte's lasting legacy."

Australia 'strongly supports' ongoing US presence

The termination of the VFA will take 180 days to implement. Its reinstatement will require both the US and the Philippines to agree on doing so.

But Mr Heydarian said it will likely have immediate consequences, telling the ABC at least half of the 318 military exercises scheduled this year are expected to be scrapped.

Pro-Islamic State militants seized swathes of Marawi City for five months in 2017. ( Reuters: Romeo Ranoco )

"The implications for Australia are obviously immense because Australia is now I think the only country with a similar agreement with the Philippines," he said.

The US and Australia both played key roles in defeating Islamic State-inspired militants who laid waste to the southern Philippine city of Marawi in 2017.

In the words of Mr Trump, "when ISIS was overrunning the Philippines, we came in and, literally, single-handedly were able to save them from vicious attacks on their islands".

After the Marawi siege, Australian Defence Force personnel provided training to Philippines security forces in urban combat, joint maritime training and air training for some 10,000 local troops.

A report last year by the Jakarta-based Institute for Policy Analysis of Conflict concluded that "the Philippines will be living with the impact of ISIS for years to come, regardless of what happens in the Middle East".

It has warned of the rising threat of Islamic State in South-East Asia and elsewhere in the Asia Pacific in the wake of Islamic State's collapse in Iraq and Syria.

"ISIS and China are the biggest winners of President Duterte's latest decision," Mr Heydarian said.

Australian Defence Force personnel delivered maritime operations training to their Philippine counterparts in the wake of Marawi. ( AP: Bullit Marquez )

China likely to be emboldened in the South China Sea

Three Australian warships were challenged by the Chinese military as they travelled through the disputed South China Sea in 2018.

During a visit to Hanoi in August last year, Prime Minister Scott Morrison emphasised the need for an "open, inclusive and prosperous Indo-Pacific neighbourhood", seen as a thinly veiled dig at China's aggression.

Australia and Vietnam have both expressed concern with Chinese expansionism in the South China Sea. ( Reuters: Kham )

His Vietnamese counterpart Nguyen Xuan Phuc said at the time that "we are deeply concerned about the recent complicated developments in the [South China Sea] and agree to cooperate in maintaining peace, stability, security, safety and freedom of navigation and overflight".

Along with Vietnam, the Philippines had previously been one of the strongest critics of Chinese military conduct there.

"We're really looking at the possibility of China reclaiming and militarising the Scarborough Shoal with the prospect of American deterrence receding," Mr Heydarian said.

China has fortified low-lying reefs across the disputed South China Sea in recent years. ( Asia Maritime Transparency Initiative/Centre for Strategic and International Studies )

The US has routinely conducted "freedom of navigation" operations in the South China Sea as part of pushing back against Beijing's wide-ranging claims in the contested waters.

A Department of Defence spokesperson told the ABC that "Australia strongly supports a continued US presence in the region, which has underwritten growth, prosperity and stability in the Indo-Pacific for many decades".

Beijing deployed its second aircraft carrier into the South China Sea in late 2019, which analysts suggested was a way to further project China's status in the region.

In recent months, Jakarta was engaged in a stand-off with Beijing over Chinese vessels trespassing into Indonesian waters near the South China Sea.



"The termination of the VFA will seriously affect deterrence capacity in the South China Sea," Dr Le Thu said.

"On the diplomatic and perception level, it gives opportunity for a narrative — notably promoted by Beijing — that the US, and its forces, are not welcomed in the region."