Part of the Philippines’ political establishment is ringing the alarm bell about the strained relations between the government in Manila and the European Union, calling on outspoken President Rodrigo Duterte to mend fences with EU institutions and member countries.

The European bloc is both the largest foreign investor and leading foreign aid donor in the Philippines. Despite what Duterte may say, the Southeast Asian nation cannot afford to lose the EU’s economic and humanitarian support.

Edgardo Angara, Manila’s special envoy to the EU, said on June 16 that the restoration of the death penalty in his country might prompt the European grouping to repeal its trade facilitations for Philippine export products.

His remarks echo those of a group of Philippine senators that are embarking on a mission to Europe. The lawmakers are expected to visit France later this month in a bid to repair currently troubled ties with the EU – an initiative that is not officially backed by Duterte, however.

The reintroduction of the death penalty in the Philippines is a red line for the EU, far more than the imposition of martial law in Muslim Mindanao, according to Angara. In the former Philippine senator’s view, the EU is not in principle against martial law in the southern island, which the Duterte administration has imposed to fight Islamic State (IS)-linked militants barricaded in the city of Marawi, but against possible violations of human rights during Manila’s legitimate anti-terrorist operations there.

The EU’s GSP+ and Duterte’s war on drugs

The EU’s Generalized System of Preferences plus (GSP+) is granted to countries that ratify and enforce international conventions on human and labour rights, environment and good governance. The Philippines gained the EU’s enhanced trade preferential status in 2014. That means Manila now pays no duties on two-thirds of all products it exports to the EU – in sum, about 6,000 eligible items, the Philippine ABS-CBN News writes.

Commercial relations between the European bloc and Manila – which launched negotiations for a free trade agreement in 2015 – are on the rise. Their trade turnover reached US$13.7 billion in 2016, making the EU the Philippines’ fourth-largest trading partner, as the European bloc’s foreign direct investment in the Southeast Asian country totaled $6.8 billion in 2015, according to the EU Commission.

In January, EU leaders voiced concerns over Duterte’s bloody anti-drug campaign, marked by alleged extrajudicial killings, threatening to strip Manila of its trade privileges with the European grouping. Furthermore, the EU denounced Duterte’s muscular anti-drug policies before the United Nations Human Rights Council in March. And lastly, on June 9, at the 35th Session of the UN Human Rights Council, EU member states reiterated their deep apprehension about “the high number of killings associated with the so-called ‘war on drugs’ in the Philippines”.

Alleged EU interferences

The EU’s criticism of Duterte’s security policies has drawn a harsh reaction from the Philippines president. Last month, Duterte and his government accused the EU of interfering in the Philippines’ internal affairs, adding that Manila would no longer accept the EU’s humanitarian aid if they were to come with conditions.

Immediately after Duterte’s tirade, EU Ambassador to the Philippines Franz Jessen contended that the European development assistance was not related to human rights. It is worth noting that until now the Philippines has not yet formally communicated its intention to reject the EU’s humanitarian grants.

These aid packages are worth $279 million and are mostly intended for Muslim communities. They are part of an EU aid program for the Philippines that should start this year and end in 2020.

The EU has channeled into the Philippines $2.6 billion worth of aid since 1992, with a sizeable amount destined to fund projects in war-torn Mindanao, according to Philippine media. In particular, the EU has earmarked $362.7 million in aid to the Philippines for the 2014-2020 period, more than twice the assistance provided in 2007-2013, according to the EU Embassy to Manila.

Like China, the EU can leverage economic diplomacy to get its foreign agenda moving in Southeast Asia. Given the huge dimension of EU cooperation-development policy toward Manila, combined with growing trade and investment interactions between the two sides, Duterte and his administration should think twice before disparaging European help.

The Philippines president has yet to cross the EU’s red line. Reestablishment of the death penalty, coupled with the possible extension of martial law in Mindanao to the rest of the country, could change the EU’s current orientation.