Boston, MA -- (SBWIRE) -- 08/01/2012 -- BMI's Philippines Defence & Security Report Q3 2012 examines the country's strategic position in the Asia Pacific region and the wider world. It provides an overview of the contemporary geopolitical challenges facing the country, and the challenges it may face in the future.

The report examines the trends occurring in the country's current and future defence procurement, and the order of battle across its armed forces. The intention is to provide a clear and concise discussion of these issues. The report's general conclusion is that tensions with China caused by territorial disputes in the South China Sea will lead to some long-overdue investment in the Armed Forces of the Philippines (AFP), Manila is increasing its own defence budget, while allies such as the US and Japan can be expected to provide excess defence articles either freely or cheaply.

However, BMI regards Manila's deteriorating relationship with Beijing as a significant security challenge. Investment in the AFP will take years to come through, and the Philippines cannot be completely confident that its Mutual Defence Treaty with the US would protect it in the event of a conflict with China. For the Philippines, much will depend on ASEAN's ability to broker a deal with China in the form of a new code of conduct governing behaviour in the South China Sea.

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Domestically, though, the threat of militancy has declined. The elimination of several Abu Sayyaf leaders appear to have cowed that group, at least for the time being, while ongoing peace talks with the Moro Islamic Liberation Front have been making important headway.

Over the last quarter BMI has revised the following forecasts/views:

- The Philippines' territorial disputes in the South China Sea are discussed in detail. In particular, a standoff at a contested group of reefs called Scarborough Shoal has put China-Philippines relations under severe strain in Q2 2012. Neither side appears willing to back down, and even if this particular episode reaches a peaceful conclusion significant damage will have been done to the bilateral relationship.
- Manila's attempts to re-equip its armed forces are discussed against the backdrop of the standoff with China. The Philippine defence and foreign secretaries both travelled to Washington in April to discuss military assistance. A second ex-US Coast Guard cutter was due to be delivered in Q2, while Japan is also reported to be considering donating some patrol boats. The US may also be preparing to provide a squadron of F-16s, while the procurement of a second aircraft type and a jet trainer is also being considered.

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