Selective Accountability, Deepening Economic Crisis, and Continued US Subservience

The Marcos administration’s claims of reform and economic development are increasingly undermined by selective anti-corruption efforts, worsening economic conditions, and the continued repression of communities resisting state and corporate projects. At the same time, its deepening alignment with the United States, particularly amid intensifying great-power competition, further constrains Philippine economic and foreign-policy independence.

CenPEG Political Briefer August 2026

Introduction

August 2026 was marked by an intensifying struggle among the rival political factions, while economic growth slowed amid a persistent cost-of-living crisis. Repression of grassroots opposition has continued, while the Marcos administration has further deepened the Philippine government’s alignment with US strategic and economic interests. 

The impeachment trial of Vice President Sara Duterte and the flood-control corruption scandal continued to play out partly as part of the power competition among the Marcos and Duterte political elites, even as anti-corruption advocates rightly continue to press for Duterte’s punishment.

But questions over the credibility and reach of the administration's anti-corruption campaign remain unresolved. At the same time, labor leaders, environmental defenders, Indigenous peoples, and other grassroots sectors faced criminalization for opposing policies and corporate projects that threaten their rights, livelihoods, and communities.

These political tensions unfolded against an increasingly precarious economic and foreign-policy environment. GDP growth slowed to 2.3 percent in the second quarter even as inflation remained high and wages lagged far behind the cost of living.

Meanwhile, the Marcos administration's promotion of Pax Silica and its deeper security alignment with the United States demonstrate how economic development is becoming increasingly intertwined with great-power competition, even as Marcos seeks to preserve economic ties with China. 

Marcos admin putting pressure on rival Duterte faction, progressive opposition

Philippine mainstream politics in August 2026 remained dominated by the impeachment trial of Vice President Sara Duterte and the controversy over corruption in the Marcos administration. The two developments saw the intensifying struggle among rival political factions ahead of the 2028 elections.

The Senate impeachment trial of Vice President Duterte moved further into the presentation of evidence concerning the alleged misuse of confidential funds. Among the issues examined was the reported PhP125 million expenditure by the Office of the Vice President (OVP) within 11 days in December 2022, as well as questions concerning liquidation documents and acknowledgment receipts. The Supreme Court's August 5 dismissal of Duterte's petitions challenging the impeachment proceedings also removed a major procedural obstacle to the trial.

By late August, testimony from former OVP officials, including assistant chief-of-staff Lemuel Ortonio, was being used by prosecutors to establish Duterte's knowledge of and authorization for confidential-fund activities. The prosecution was considering shortening its witness list, arguing that evidence already presented could establish the first impeachment article involving PhP612.5 million in confidential funds.

The Duterte camp, meanwhile, continued to portray the proceedings as politically motivated.

At the same time, the flood-control corruption scandal continued to undermine the Marcos administration's anti-corruption narrative. The controversy increasingly reached figures within the president's own political network, particularly former House Speaker Martin Romualdez, Marcos' cousin. Ombudsman Jesus Crispin Remulla accused Romualdez's camp of influencing former bodyguards of Zaldy Co, who had recanted allegations involving Romualdez and Marcos; Romualdez denied the accusation.

Co, himself facing corruption investigations, continued to make allegations of massive kickbacks involving government flood-control projects and senior political figures. New graft and malversation complaints were also filed against Co in August.

The controversy has raised serious questions about the independence and credibility of the Marcos administration’s supposed anti-corruption drive, particularly as investigations increasingly involve the president's political allies and relatives.

The flood control issue became much more urgent given recent flooding in Metro Manila and many other parts of the country. It highlighted the extravagant amount of money allocated for flood control infrastructure, all the while many poor communities continue to be vulnerable to flooding. The administration's promise to prosecute those responsible therefore faces the test of whether investigations will reach politically powerful figures rather than only contractors and lower-level officials.

Labor leaders harassed

August also saw renewed concerns over the criminalization of dissent. On August 14, arrest warrants were issued against Kilusang Mayo Uno (May 1st Movement) chairperson Jerome Adonis, labor organizers Jacq Ruiz and James Edward Anajao on flimsy charges involving the May 1 Labor Day rally. Earlier complaints involving alleged public disorder had reportedly been dismissed for lack of evidence, while charges under the Public Assembly Act (B.P. 880) proceeded.

The cases were condemned by international labor and human rights organizations as attacks on freedom of assembly, association, and free expression. Progressive leaders, including Bagong Alyansang Makabayan (Bayan-New Patriotic Alliance) president Renato Reyes Jr., also faced cases related to protest actions. 

These state attacks on progressive leaders continue to escalate at the grassroots level, where people’s organizations and individuals face reprisals for their resistance to so-called development projects that they foresee will harm the environment, exacerbate the climate crisis, and threaten their livelihoods and communities.

A stark example of the repression of grassroots opposition is one that has been happening to residents of Kasibu, Nueva Vizcaya, who have intensely resisted corporate destructive mining operations. On August 28, police arrested 11 residents of Kasibu who were participating in a barricade against mining operations linked to OceanaGold. The firm is a multinational gold and copper mining and exploration company headquartered in Vancouver, Canada.

The arrests are part of a broader pattern of criminalization of environmental defenders in Nueva Vizcaya. More than 30 cases have now reportedly been filed against the defenders and Indigenous leaders over the past 10 months, while groups such as the Center for Environmental Concerns (CEC) have warned of escalating attacks against anti-mining residents. 

The Nueva Vizcaya cases thus illustrate a wider contradiction in the Marcos administration's promotion of mining as a pillar of economic development: the state encourages corporate extraction, while grassroots communities that defend their land and livelihoods are subjected to police action and lawfare. Rather than addressing the substantive grievances of affected communities, the criminalization of protest shifts the burden of conflict onto environmental and Indigenous defenders.

Economic growth slows as cost-of-living crisis intensifies

The Philippine economy entered the second half of 2026 on increasingly shaky ground, with weak growth coinciding with persistently high prices and wages that remain far below the cost of living. 

The Philippine Statistics Authority (PSA) itself reported that GDP grew by only 2.3 percent in the second quarter, the slowest quarterly growth since 2021 - during the pandemic. It is also well below the government's 3.5-4.5-percent target for 2026. First-half growth stood at 2.6 percent. Investment contracted for the fourth consecutive quarter, while construction plunged by 14.8 percent, with the disruption caused by the investigation into anomalous flood-control projects contributing to the slowdown. Household consumption, meanwhile, grew by only 2.8 percent, reflecting a continued weak domestic demand.

The slowdown comes amid persistently high prices. The latest official data available in August put July inflation at 6.2 percent, more than twice the government's 3-percent target. Food inflation remained high at 5.3 percent, while housing, utilities, and fuel prices rose by 8.2 percent and transport by 11.9 percent.

Food, housing and utilities, and transport together accounted for the largest share of overall inflation. Importantly, the easing of inflation does not mean that prices have fallen; it only means that they are increasing at a slower rate from an already elevated price base.

The continuing squeeze on households is highlighted by the IBON Foundation's August assessment, which found that the national average minimum wage had risen by only PhP31, from PhP481 to PhP512 per day. This is dramatically below an economic think tank's estimated family living wage of PhP1,277 per day for a family of five and PhP1,533 for a family of six. IBON consequently argues that Filipinos cannot keep up with rising prices despite nominal wage increases. The figures clearly show that there is a persistent structural gap between wages and the cost of maintaining a decent standard of living.

The dispute over the PhP85 Metro Manila wage increase further exposed this gap. Even this modest increase was temporarily blocked by a court order, while labor groups continued demanding a substantially higher PhP200 nationwide wage increase. From the perspective of workers and progressive economists – who have been fighting for decent wage increases for years - the argument that wage increases necessarily cause inflation obscures the deeper sources of price pressures, including dependence on imported food and fuel, weak domestic production, and supply constraints.

Fuel prices, it goes without saying, continued to increase. After substantial rollbacks early in August, gasoline, diesel, and kerosene prices rose again later in the month as tensions in the Middle East kept international oil markets volatile. The Philippines remains particularly vulnerable because of its heavy dependence on imported petroleum.

The Bangko Sentral ng Pilipinas (BSP, Central Bank of the Philippines) responded by raising its benchmark policy rate to 5 percent on August 27, its third consecutive increase, citing continuing inflation risks, including elevated energy prices and geopolitical tensions. For households already facing weak purchasing power, higher interest rates risk further depressing consumption and investment.

CenPEG and IBON analyses point to a deeper structural problem behind these developments: Philippine growth remains heavily dependent on services, consumption, and foreign investment, while domestic agriculture and manufacturing remain sorely inadequate to provide stable, productive employment and affordable basic goods. IBON has particularly criticized the government's foreign-investment-led “industrialization strategy” for failing to build sufficient Filipino productive capacity.

Pax Silica and the continued PH subjugation to US interests  

Opposition continued to intensify against the Philippine participation in the US-led Pax Silica initiative in August over its implications to national sovereignty, land and water use, environmental sustainability, and the country's growing strategic alignment with the US government. The initiative, presented by the Marcos administration as a vehicle for semiconductor manufacturing, artificial intelligence (AI) and high-technology investment, proposes to establish a major industrial hub in New Clark City, Tarlac, among others. The government has promoted the project as potentially generating more than 130,000 jobs and integrating the Philippines into secure global technology supply chains.

Growing protests, however, forced the administration and the Bases Conversion and Development Authority (BCDA) to clarify and revise the way the project was being described. 

BCDA President and CEO Joshua Bingcang - despite earlier statements to the contrary - clarified that the plan was not to build a hyperscale data center project but an advanced semiconductor and manufacturing hub. At the same time, concerns intensified over the project's potentially enormous requirements for electricity and water. BCDA earlier disclosed that the proposed development could require tens of millions of liters of water daily, while promising the use of surface water, rainwater harvesting, storage, treatment, and recycling. This was easily refuted by many environmental advocates and experts, who pointed out previous experiences of other countries, including in the United States itself.

Questions over land and displacement also became increasingly prominent. BCDA initially rejected reports that the project would displace farmers, stressing that the land involved was government-owned. But amid protests by farmers, Indigenous communities, environmental groups, and progressive organizations, the agency and local authorities subsequently said that there was indeed a need for consultations. On August 19, youth and progressive groups marched toward BCDA headquarters to reject the project.

Anti-administration legislators, including, ironically, Sen. Imee Marcos, challenged the administration's narrative by raising questions about an alleged draft economic-security framework associated with Pax Silica and warning about possible implications for Philippine control over land and strategic resources. President Marcos, meanwhile, defended the initiative, assuring that foreign investors could not simply exploit Philippine minerals without government approval. He characterized Pax Silica as an economic rather than political undertaking and maintained that participation did not mean Manila was distancing itself from China.

Asean members-countries Malaysia, Indonesia, and Vietnam have not opposed the initiative, but they have chosen to "hedge" rather than immediately sign on. Instead of joining Pax Silica, these countries have prioritized alternative bilateral trade agreements or critical mineral deals with the US, viewing the initiative carefully within the context of US–China tech competition.

The Marcos administration’s assurances were undermined by admission from other government agencies that they have not been up to speed in Pax Silica preparations. DENR officials, for instance, acknowledged that there was not yet a clear project-specific description or environmental impact assessment for Pax Silica, despite the administration's extensive promotion of the proposed hub. This raised questions over whether the government was prematurely advancing a major strategic investment before its environmental, social, and resource implications had been adequately assessed.

The controversy therefore increasingly exposed a central contradiction in the administration's foreign-economic policy: Pax Silica is presented domestically as an economic development and industrialization project, but internationally it forms part of a US-led effort to secure high-technology supply chains amid intensifying strategic competition with China and the US’ continued involvement in wars of aggression such as that in Iran and Palestine. 

Meanwhile, the Philippines' relations with the United States continued to deepen, particularly in the security sphere. During his Manila visit on August 10, US Undersecretary of Defense for Policy Elbridge Colby declared that the Trump administration was not disengaging from Asia but was instead "digging in" to maintain a favorable regional balance of power. He called on US allies to shoulder greater responsibility for their own defense and explicitly situated the Philippines within US’s strategy of "deterrence by denial" along the First Island Chain stretching from Japan through Taiwan and the Philippines to Borneo.

The visit reinforced concerns that the Philippines is becoming an increasingly important frontline defense of US strategic interests in the Asia-Pacific. When the US subsequently redeployed some military assets from the Pacific to the Middle East, Philippine military officials nevertheless echoed that the US-Philippine defense relationship remained "ironclad" and that joint activities would not slow down. This was accompanied by continuing efforts to expand Philippine military capabilities and deepen interoperability with US forces.

Relations with China, meanwhile, remained tense, particularly in the West Philippine Sea. Chinese military activity around Scarborough Shoal continued to generate concern in Manila, following a series of confrontations and increasingly assertive Chinese efforts to reinforce its position around the disputed feature. The Philippines maintained that China's activities did not alter Manila's legal claims and continued to invoke the 2016 arbitral ruling rejecting the legal basis of China's expansive maritime claims.

At the same time, President Marcos sought to preserve channels for economic cooperation with China – the leading trade partner. In an August 14 interview, he said that joint Philippine-Chinese oil and gas exploration in the South China Sea was a "distinct possibility," citing the Philippines' need to strengthen energy security. He stressed that Manila was not pursuing a policy of distancing itself from China and maintained that the country had not surrendered any of its maritime rights. (The so-called joint exploration had been agreed upon in the late ‘80s between Philippine President Corazon Aquino and Chinese core leader Deng Xiaoping in a Beijing summit.)

This despite the often-acerbic tit-for-tat between the Chinese ambassador to the Philippines and the Philippine Defense Secretary, Gilbert Teodoro, playing out on social media. This month, tensions spilled beyond maritime disputes, with Teodoro sharply rejecting Chinese criticism of his policies, accusing Beijing of using a "classic squid tactic" to divert attention from issues raised by Manila. The exchange followed China's detention of more than 100 Filipinos for alleged immigration violations and Philippine accusations that Chinese embassy officials had interfered in domestic law-enforcement processes.

Meanwhile, as Asean chair, the Marcos administration has also faced the difficult task of balancing its increasingly confrontational bilateral relationship with China against its responsibility to maintain the regional association’s unity and advance regional diplomacy. The Philippines continued to push for progress on the long-delayed Asean-China Code of Conduct in the South China Sea, with Manila maintaining its goal of concluding negotiations within 2026. Yet the widening gap between diplomatic negotiations and the continuing confrontation at sea highlights the limits of the Asean process.

Conclusion

The developments of August saw political infighting and corruption controversies continuing to consume the Marcos government, while economic growth is slowing and households remain squeezed by high prices and inadequate wages. 

Rather than addressing these pressures through fundamental reforms, the administration has continued to promote foreign investment, corporate-led development, and closer strategic ties with the United States, while communities and organizations resisting destructive or exclusionary projects face increasing criminalization. The result is a widening gap between the government's claims of development and the lived realities of workers, farmers, indigenous peoples, and other marginalized sectors.

The key question moving forward is whether the administration can still address these structural problems or whether they will further deepen as the country approaches the 2028 elections. 

Economic recovery will remain unreachable without stronger domestic agriculture and manufacturing, higher real wages and greater protection from imported rice and energy shocks. Politically, the credibility of the anti-corruption drive will depend on whether accountability reaches powerful figures within the ruling Marcos clique, while continued repression risks expanding grassroots people’s resistance. 

In foreign policy, deeper US military and economic alignment amid intensifying rivalry with China will surely further undermine Philippine policy independence. Indeed, the next few months will probably still be rife with heightened political contestation and economic hardships for the majority. Meanwhile, grassroots resistance continues to grow, demanding genuine economic self-reliance, respect for democratic rights and national sovereignty. #