When the West Philippine Sea Enters Monetary Policy

When an economist raises the West Philippine Sea in a monetary policy forum, he is quietly reminding us that economics is not just about interest rates—it is also about risk.

In maritime language, it is not always the cannon that wins. Sometimes it is the current. (Photo: Philippine Coast Guard)

Former congressman Joey Salceda’s questions to Bangko Sentral Governor Eli Remolona were not confined to the traditional terrain of liquidity, lending, and investment.

They carried an added signal—subtle but unmistakable—that the perimeter of uncertainty has expanded.

That the nation’s economic conversation now includes the sea. And that the risk premium on Philippine growth is increasingly shaped not only by domestic fundamentals, but by strategic weather.

In earlier decades, central bankers could treat geopolitics as an “externality.” Today, it is part of the model. A maritime confrontation can disrupt trade routes, elevate energy and freight costs, trigger supply-chain hesitations, and inject anxiety into investment decisions.

In the modern world, the distance between a contested shoal and a domestic rate decision is no longer as far as we think.

Geopolitics now sits inside inflation. This is not poetry. It is portfolio logic.

Investors do not merely price earnings—they price uncertainty. And when the geopolitical horizon darkens, markets demand a higher premium for risk.

That premium appears quietly: delayed capital expenditure, a more cautious credit environment, a “wait-and-see” posture among entrepreneurs, and a subtle reluctance to commit long-term money.

When the sea becomes tense, capital becomes timid. This is why historical hindsight matters.

To comprehend today’s evolving crises—from Ukraine to Venezuela and other flashpoints in between—we must revisit the last great period when geopolitics and macroeconomics merged into one tense equation: the late Cold War, the missile build-up years, and the Perestroika era.

Back then, the world lived under a harsh realization: deterrence is necessary, but deterrence without guardrails is dangerous.

The Perestroika years remind us that the real danger is not conflict alone—but the shortening of decision time, when power is measured in minutes, not months.

It is tempting to view deterrence as a brute contest of strength. But the more sophisticated truth is this: deterrence can stabilize—yet it can also create a paradox.

When great powers avoid total war, they often shift toward smaller confrontations below the threshold, believing escalation will be contained.

This is how the world enters an age of gray-zone operations: coercion, intimidation, interdictions, and economic pressure—moves that rarely declare war, but steadily reshape reality.

In maritime language, it is not always the cannon that wins. Sometimes it is the current.

The troubling feature of our era is that coercion has diversified. It is not only about troops and missiles; it is also about sanctions, shipping routes, energy chokepoints, and the strategic use of economic pressure.

The battlespace is no longer confined to borders. It extends to ports, payments, procurement, and perception.

For a trading nation like the Philippines—dependent on stable flows of fuel, food inputs, and commerce—the greatest vulnerability is not always the loudest threat.

It is the creeping erosion of confidence. It is the slow buildup of uncertainty. It is the repeated testing of nerves.

And this is why the West Philippine Sea is not simply a foreign policy issue. It is not merely an emblem of sovereignty.

It is a generator of risk premium. It shapes how businesses forecast, how banks price, how investors position, and how entrepreneurs decide whether expansion is worth the leap.

In this context, the most important economic posture is not panic. It is preparedness.

A statesman’s approach is to recognize that the sea will not always be calm, so the ship must be built for rough water.

That means strengthening macroeconomic resilience: energy security and diversification so external shocks do not become domestic inflation waves; food logistics and agricultural modernization so volatility does not translate into social fragility; reliable infrastructure planning so confidence is reinforced; and maritime transparency and credible partnerships so deterrence is not emotional but structural.

This is not chest-thumping. This is risk management. In a time when geopolitics is weaponized into headlines, we must refuse the seduction of panic. The markets may twitch.

Commentators may roar. Social media may turn every ripple into a typhoon. But a statesman does not govern by echoing noise. He governs by building meaning.

Meaning is this: geopolitics is now an economic variable—shaping risk premiums, investor confidence, inflation expectations, and long-term capital formation.

Meaning is understanding that the West Philippine Sea is not merely a symbol on a map, but a pressure point on the national balance sheet.

Meaning is recognizing that deterrence works best not through bravado, but through guardrails, discipline, and resilient institutions.

If the world is becoming rougher water, then our national duty is clear: not to shout at the waves, but to strengthen the ship.

We do not need hysteria. We need coherence. Because in the end, the strongest countries are not those that make the loudest claims—but those that quietly build the capacity to endure.

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