Trump’s attempt to recolonize a piece of the Philippines under the cover of an AI hub just ran into a wall

The Philippines has rejected a US proposal to build a large AI hub under Washington’s Pax Silica initiative. The planned project would have been set up as an economic security zone, but Philippine officials made clear it would remain under local laws, with no special arrangement for the US-backed project. This is a significant setback for Washington, which had wanted the zone to operate under US laws and diplomatic protections.

Joshua Bingcang, president and chief executive of the Bases Conversion and Development Authority, confirmed during a visit to the proposed site that US officials had asked for US jurisdiction over the zone. “We did not agree to that,” Bingcang said. The hub, which is part of the wider Luzon Economic Corridor, will instead be governed by the Special Economic Zone Act and the BCDA Law.

The Philippines is seen as an important location for the US as it looks to reduce its dependence on Chinese supply chains, particularly for critical technologies. According to the South China Morning Post, Washington wants to build a secure and resilient global technology supply chain by bringing together a group of partner countries.

The Philippines’ colonial history with the US makes extraterritorial legal arrangements nearly impossible to accept

Analysts say the dispute reflects a wider challenge of whether the Philippines can give investors enough certainty while dealing with these long-standing problems. Jeffrey Bean, a technology fellow at the Observer Research Foundation America, noted that there have been no public commitments yet from US investors, suggesting they are still assessing the project. 

Trump’s aggressive foreign policy moves have also been causing unexpected energy and economic ripple effects globally, adding more uncertainty for investors evaluating long-term projects. “Whether it is in semiconductor manufacturing or critical mineral refining and processing, ease of doing business and the regulatory environment do shape these capex-intensive decisions,” Bean said.

The hub could draw investments in AI centers, semiconductors, advanced manufacturing, and critical minerals supply-chain coordination, according to analysts. But investors are likely looking for stronger legal protections given concerns over political stability, infrastructure, and bureaucratic hurdles. 

Alvin Camba, a fellow at the Atlantic Council’s Indo-Pacific Security Initiative, said US jurisdiction would have made the project more financially viable and protected the technologies involved from changes in domestic leadership.

“The Philippines is probably one of the hardest places to invest in and put economic projects due to the numerous infrastructure, peace and security, and bureaucratic issues. It makes sense why they would ask for it,” Camba said. However, he acknowledged that granting the US special legal protections would face strong domestic opposition in the Philippines.

Bean agreed, saying that pushing for special extraterritorial treatment “is going to be a near no-go for just about any sovereign state, especially democracies like the Philippines that have a colonial legacy with the United States.” This colonial history makes it politically very difficult for any Filipino government to agree to such terms, regardless of the economic benefits on offer. 

The Pax Silica hub is also seen as Washington’s effort to secure its defense and security ties with Manila beyond the current administration of President Ferdinand Marcos Jr. But Mark Manantan, a research fellow for the Center for Global Security at La Trobe University, questioned whether US-backed economic projects could survive political changes in either country.

“The question is how these US commitments really translate into something long-term, not contingent on one administration, and that applies to both the US and the Philippines,” he said. Meanwhile, countries across Asia have not shied away from publicly mocking Trump’s foreign policy moves on social media, reflecting growing regional frustration with Washington’s approach.