By Zachary Abuza —

The United States and the Philippines held their annual Balikatan military exercises from April 4 to 15. While the exercise identified no threat, the symbolism of training exercises that included retaking an oil platform and an amphibious beach landing was none too subtle.

This year’s exercise is worth noting for several reasons. Just under 100 Australian troops joined the 8,500 U.S. and Philippine forces for the second straight year. The Vietnam People’s Army and Japan Self Defense Force also sent observers to the exercise for the first time.

Balikatan is evolving into a multilateral exercise for the region, as uncertainties about the joint U.S.-Thai Cobra Gold exercise linger over  Thailand’s protracted political instability, and the Thai military government’s ham-fisted lean toward China in hopes to end its diplomatic isolation.

The Philippines, meanwhile, is keen to deepen defense relations with the United States and other regional partners in the face of growing Chinese assertiveness and in anticipation of the expected retaliation from China when the Permanent Court of Arbitration makes its ruling, expected in mid-2016. Most law of the sea experts expect the ruling to be largely in Manila’s favor.

The Philippines is the primary beneficiary of the five-year, $425 million Southeast Asia Maritime Security Initiative, which the U.S. Department of Defense has just kick started. About 80 percent of the $40 million allocated to the Philippines this year will go toward establishing a maritime domain awareness information system to the Philippine navy with better sensors, an aerostat reconnaissance platform, and access to some U.S. intelligence. Meanwhile, the first rotational deployment of U.S. troops, maritime reconnaissance aircraft, and humanitarian assistance and disaster relief supplies under the Enhanced Defense Cooperation Agreement (EDCA) is slated to take place as soon as Balikatan is concluded. This will include 200 pilots and crew, six maritime surveillance planes and helicopters. Secretary of Defense Ashton Carter traveled to the Philippines to discuss deepening the alliance, and it was announced that the Philippines was now participating in joint maritime patrols with the US, though it was not clear if they would participate in more controversial freedom of navigation operations (FONOPs).

The Philippines concluded an agreement with Japan on the transfer of defense technology in February, and the two countries are negotiating a status of forces agreement (SOFA), which could lead to the deployment of Japanese maritime surveillance aircraft to Philippine facilities. Japan has also agreed to lend the Philippines five second-hand Beechcraft TC-90 King Air short-range reconnaissance planes. If a SOFA is concluded, the Japan Self Defense Force will join future Balikatan exercises.

Despite Manila’s robust defense engagement with external partners, there are palpable concerns regarding the capabilities of the Philippine military. This exacerbates Philippine insecurity as to how “iron-clad” U.S. security commitment toward the Philippines under the Mutual Defense Treaty really is.

Despite having roughly the same level of defense expenditures (in U.S. dollar terms) as the Philippines since 2003, Vietnam has fundamentally transformed its military into a modern fighting force, equipped with a new fleet of submarines and warships, squadrons of third- and fourth-generation fighters, and the most robust missile force in Southeast Asia.

By comparison, the Armed Forces of the Philippines (AFP) remain largely reliant on the donation of decommissioned weaponry from partner states. Although President Benigno Aquino had pushed through a modernization program—including a 25.5 percent increase in spending over the 2014-2015 period—the reality is that these efforts will not make up for decades of neglect and lack of investment. The current defense budget is about $2.5 billion, or 115.8 billion pesos. The flagships of the Philippine navy are retired U.S. Coast Guard cutters, over 50 years old, which are absolutely no match for the destroyers that the Chinese navy fields.

And despite the constant refrain from the government that it intends to acquire submarines, this is unrealistic. The Philippines cannot afford to field modern surface warships let alone submarines, which are far more costly to build and maintain.

In addition, the AFP has a legacy of failing to invest in the maintenance of its equipment to maintain an adequate degree of operational readiness. This has recently improved with U.S. assistance, but the starting point is nonetheless very low.

There are also other reasons for concern. The AFP, despite having 15 years of U.S. assistance in training and equipment in support of its counter insurgency in the southern Philippines, continues to underperform. A recent RAND report highlighted the benefits of U.S. support, arguing that the presence of U.S. Special Forces “enabled the Philippine government to substantially reduce the transnational terrorist threat in the southern Philippines.”

In reality, the $50-million-a-year in assistance and presence of U.S. forces have yielded paltry results. A small group of poorly armed and localized Abu Sayyaf attackers continues to wreak havoc in the south. This is a group with no ideology, no popular support beyond kinship ties, no social welfare offers, and without a narrative; and yet the Philippine armed forces remain incapable of eliminating it. AFP units that are trained for counter-insurgency are easily broken up.

The Philippines’ inability to defeat Abu Sayyaf or police its waters has led to friction with its neighbors. The greatest security threat to Malaysia continues to emanate from the southern Philippines, as the group’s abductions of Malaysians in Sabah State have surged. Likewise, in response to the abduction of 10 Indonesian sailors by Abu Sayyaf last month, Indonesia has readied its own security forces in a sign of exasperation, and has not taken kinetic operations off the table.

Moreover, with the peace process with the Moro Islamic Liberation Front (MILF) on indefinite hold, the hardline splinter group the Bangsamoro Islamic Freedom Fighters feels vindicated. Not all MILF factions will stay committed to the peace process under the next Philippine government. If the next administration decides to renegotiate the Bangsamoro Basic Law that the Aquino government had signed with the MILF, it could cause greater frustration and mistrust toward Manila.

The unfinished peace process, too, has regional implications: as disarmament is tied to the phase-in of the peace process, the region will remain awash in weaponry as long as fighting still goes on in Mindanao. The weapons used in the January 14 terrorist attack in Jakarta came from Mindanao, as did many of the arms used by the Mujahideen of Eastern Indonesia, or MIT, terrorist group, which has pledged its allegiance to the Islamic State.

Aquino set out to wind down the insurgencies in the south in order to refocus the AFP’s limited capabilities on the growing maritime threats from China. But at the end of his term, threats to Philippine security continue to come from both domains.

Dr. Zachary Abuza is a professor at the National War College where he focuses on Southeast Asian politics and security issues. Follow him on twitter @ZachAbuza.