Bretton Woods and multilateralism’s end

Eighty-two years ago, 44 Allied nations gathered at a hotel in Bretton Woods, New Hampshire, to iron out a new world order after World War II. Finance Secretary Andres Soriano Sr. headed the Philippine delegation. They established the International Monetary Fund and what became the World Bank Group. Currencies were pegged to the US dollar, which in turn was convertible into gold — a system that lasted until 1971. Our unique IMF-World Bank history deserves a separate piece.

History has never been kind to the vanquished. For millennia, the spoils of war belonged to the victor. Rome razed Carthage. Spain carted off the riches of the Americas and the wealth of our islands. As late as 1919, Versailles saddled Germany with crushing reparations — a humiliation that gave rise to Hitler and an even bloodier war.

Bretton Woods, for all its flaws, broke that cycle. For the first time, the victors sat down not to divide the loot but to rebuild — even the nations they had just defeated. Europe was restored through the Marshall Plan, and Japan rehabilitated under General MacArthur. Imperfect? Certainly. The rules were written in Washington, with the dollar at the center. It was a huge evolution for the human condition — peace anchored by shared prosperity rather than by plunder and pillage.

After Warsaw, Manila was among the most devastated Asian allied capitals. Help did come: some $620 million under the Rehabilitation Act of 1946, founding membership in the IMF and the World Bank, and a peso anchored at two to the dollar.

But help came with strings. War damage payments over $500 were released only if we accepted the Bell Trade Act. The peso’s exchange rate could not be changed without the US president’s consent. “Free trade” favored American goods over our infant industries. Parity rights, which let Americans exploit our natural resources, forced us to amend our own Constitution in 1947. That same year, the Military Bases Agreement gave the US bases for 99 years, until the Philippine Senate cut it short in 1991.

We were independent on paper but tethered to a supposedly benevolent Washington — a de facto vassal state. The irony is hard to miss: Japan, the defeated aggressor, was rebuilt into an industrial powerhouse, while the loyal brown brother that bled at Bataan was exploited for its minerals and produce — was never taught how to build. We cannot lose sight of this historical treatment.

Still, however lopsided, the order conceived at Bretton Woods tried to replace the law of the jungle. Today, the rise of populists and a volatile geopolitical climate herald its unraveling. And when rules give way to raw power, smaller nations like ours have the most to lose.

With its newfound heft and emboldened by the last administration, China brazenly encroaches on our borders, ready to influence the next elections. As we prepare to welcome the transactional Trump next month, we must aggressively secure not only concrete investments but an unequivocal reiteration of the “ironclad” Mutual Defense Treaty. We must soberly weigh America’s actions against its words when it comes to China.

With the erosion of civility, it’s foolhardy to rely on a single patron. It is imperative that we widen our net of bilateral treaty allies on both defense and economics. It’s high time for ASEAN to assert its regional footprint and realize that supporting each other’s sovereignty is the best deterrent to its giant neighbor’s adventurism.

Drone technology has shown how Ukraine and Iran held their own against more powerful invaders. There’s no reason we can’t do the same to put up a decent defense.

With friends like these…