Photo: Tr3/Adobe Stock
On April 21, the Philippines opened the 40th edition of the Balikatan military exercise, an annual large-scale drill completed with its treaty ally, the United States, and partners Japan and Australia. At least 14,000 troops joined the drills and, for the first time, integrated air and missile defense simulations in training for a “full-scale battle scenario.” This exercise follows U.S. secretary of defense Pete Hegseth’s visit to Manila three weeks prior, where he reaffirmed the U.S. commitment to the 1951 U.S.-Philippines Mutual Defense Treaty amid simmering tensions between the Philippines and China in the South China Sea.
Exercises like Balikatan demonstrate U.S. commitment to regional allies and build the operational capabilities of involved forces. However, these simulations often overlook real-world constraints that arise when the United States cannot be present or involved to the same extent as in the exercise. Under the Enhanced Defense Cooperation Agreement (EDCA), the United States does not maintain a permanent troop presence in the Philippines and instead rotates forces on a temporary basis. This lack of sustained presence reveals a strategic gap in both U.S. force availability and Philippine host-nation readiness.
The U.S.-Philippines alliance is a primary deterrent keeping China’s actions in the South China Sea from escalating beyond the grey zone. Still, a more capable Armed Forces of the Philippines (AFP) could provide an additional layer of regional stability. Yet, the Philippines currently lacks the capacity to counter Chinese aggression independently. Shortfalls in maritime capabilities combined with a limited though growing defense budget continue to constrain its ability to respond effectively. Beyond large-scale exercises like Balikatan, the United States and its partners should prioritize sustained, concrete efforts to strengthen Philippine capabilities before military escalation occurs.
Philippine Maritime Capabilities and Limitations to Improvement
While the Philippines has made significant improvements in developing maritime capabilities, it remains underequipped to stand against China without U.S. assistance. The Philippines maintains approximately 25,450 active navy personnel and 30,700 in the coast guard. By contrast, China’s maritime forces have a steep numerical advantage. The People’s Liberation Army Navy alone numbers roughly 252,000 personnel, with additional capacity from a large coast guard and growing fleets of maritime militia, which most commonly confront the Philippine Coast Guard and fisherfolk. The imbalance is not just stark; it is overwhelming, leaving the Philippines dangerously outmatched in any direct confrontation at sea.
Acknowledging the need to bolster its capabilities, the Philippines has increased its defense budget to $6.73 billion in 2024, up 8 percent from 2023, making it the 11th largest in Asia. But despite growth year on year, this value amounts to only 1.2 percent of the Philippines’ GDP, among the lowest ratios in Southeast Asia. The Philippines is constrained by its own constitution which states that education must receive the “highest budgetary priority.” This prevents defense spending from exceeding that of education spending, which also remains relatively low. By contrast, Chinese defense spending is set to increase to $225 billion in 2025, up 7.2 percent year-over-year.
Policy Recommendations to Strengthen Philippine Capabilities
Competition with China is an increasingly important pillar of U.S. foreign policy. As such, the Philippines must be prioritized in U.S. Indo-Pacific strategy as the only treaty ally with a claim to the South China Sea. While exercises like Balikatan elevate the Philippines’ military posture, the AFP does not yet maintain a credible first line of defense against Chinese coercion in the region. To build a capable and resilient Philippine force, the United States should pursue a more ambitious set of initiatives to bolster the Philippines ability to defend itself, both independently and alongside allies and partners.
With rising tensions in the South China Sea, the United States and the Philippines should implement EDCA in a way that establishes more sustained logistical hubs. While permanent basing would offer the greatest operational flexibility for the United States, political sensitivities in the Philippines make this approach untenable. Instead, the United States should pursue a model of heel-to-toe rotational deployments, ensuring a continuous presence through back-to-back troop rotations. This would enhance crisis responsiveness and maritime domain awareness while respecting Philippine sovereignty. Increasing the number and scope of rotational personnel—modeled on the U.S.-Australia posture in Darwin—could also expand platforms for advanced training and joint exercises with the AFP. Sustained engagement would accelerate the AFP’s professionalization and capability development, empowering it to conduct independent operations and reduce long-term reliance on U.S. support.
Second, the United States should expand efforts to strengthen the AFP by prioritizing the transfer of critical military equipment through Excess Defense Articles (EDA) and highly subsidized sales. While the Philippines has made meaningful strides in defense modernization, constitutional budget caps and limited absorptive capacity continue to constrain its ability to scale rapidly. Recent increases in U.S. Foreign Military Financing (FMF) to the Philippines have reached the limit of what the AFP can spend in any given year; the United States quintupled annual FMF to $500 million in 2024, and $336 million was still unspent as of February 2025. This makes EDA a more practical tool to accelerate AFP modernization beyond the current pace. The United States has already transferred Hamilton-class cutters and Cyclone-class patrol craft through EDA, establishing a precedent for deeper engagement. To build on this, Washington should proactively identify surplus equipment aligned with Philippine operational needs, streamline transfer procedures, and provide technical assistance to support rapid integration. Simultaneously, the U.S. should encourage Manila to pursue legal and sustainable increases in its defense budget to ensure long-term self-reliance and complement external support.
Third, the United States should lead minilateral efforts with close security allies and partners—such as Japan, South Korea, Australia, the United Kingdom, and Israel—to coordinate broader assistance for Philippine military development. Many of these countries already provide EDA to the Philippines and have unique capabilities that could address critical gaps. Information sharing efforts, especially among regional partners, could also prove beneficial to improving the Philippines’ maritime domain awareness capabilities. Coordinated initiatives would maximize resources and create a more interoperable Philippine force capable of defending its sovereignty and contributing to regional security.
If the United States wants the Philippines to stand as a capable ally against Chinese coercion, it must accelerate the move beyond annual military exercises and limited rotational presence. The United States should deliver its enduring presence, critical military capabilities, and coordinated multilateral support before deterrence fails and drills like Balikatan become irrelevant in the face of a kinetic conflict.
Sophia Datta is a former research intern with the Southeast Asia Program at the Center for Strategic and International Studies in Washington, D.C.