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Books on The Philippines
REPUBLICAN REFERENCE
Area (sq.km)
300,000
Population
84,619,974
Capital
Manila
Currency
Philippine peso (PHP)
President
Gloria
Macapagal-Arroyo
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Update No: 026 - (28/02/06)
The revolution that wasn't
President Arroyo, the president who was bought to power in 2001 in what was
a coup against former President Estrada in all but name, has once again shown
that she is has full mastery of the local political scene. Claiming that a range
of opposition forces were about to attempt to unseat her from power, it appears
that she has taken pre-emptive action. Deftly she has turned the tables on those
oppositionists who are seeking to destabilise government by effectively
destabilising the opposition instead.
The road not taken
"If you set out to be liked, you would be prepared to compromise on
anything at any time, and you would achieve nothing."
Margaret Thatcher
The Philippines is at present under a "state of emergency." How long
it will last is anybody's guess. Pundits claim it could last from days to
months. The emergency was declared by President Gloria Macapagal-Arroyo on the
morning of Friday 24th February, a day that was to have marked the culmination
of celebrations of the 20th anniversary of the EDSA 1 people's power movement
that led to the overthrow of martial law dictator, President Ferdinand Marcos.
In Proclamation No. 1017 declaring a State of National Emergency, the President
said that over the past months, certain elements of the political opposition
have formed a tactical alliance with the communist insurgents and military
adventurists in a "concerted and systematic conspiracy, over a broad front,
to bring down the duly-constituted Government elected in May 2004." She has
demanded obedience to "all decrees and orders promulgated by me
personally."
According to press reports the economic team within Cabinet, worried by the
international impact of the decree, are pushing to have it lifted almost
immediately but it is the presidential security contingent that appears to have
the ear of the president and they are urging her to keep it in place.
All schools in Metro Manila were closed temporarily and students told to stay at
home. These orders have now been lifted.
By this proclamation, the President claims the power to prohibit peaceful
assemblies, revoke rally permits issued ministerially by local mayors, order
warrantless arrests, and take over sections of the media that do not follow the
government line. Some sections of the media it was claimed "have recklessly
magnified the claims of alleged conspirators." The offices of one leftist
newspaper, the Daily Tribune, have already been taken over by the Philippine
National Police and the Police Chief has publicly warned that others would
follow "if they do not follow government standards."
Almost immediately the proclamation was issued, a number of prominent
personalities known to be critical of the Arroyo administration were arrested,
mostly without warrants but in one case at least on the basis of a warrant that
dated back to the 1980s.
Brigadier General Danilo Lim, founder of the now defunct Young Officers Union
has been relieved of command of the 1st Scout Rangers. Marine Commander Major
General Renato Miranda as well as Col. Ariel Querubin, of the 1st Marine Brigade
were likewise relieved; the latter after he and his restive troops went to the
defence of their former chief. Chief Superintendent Marcelino Franco of the
Philippine National Police's Special Action Force has also been relieved of his
post.
It is significant to note that all these are crack units and considered to be
among the elite of the military and para-military forces within the country. As
such, far from being "used by politicians" as has been claimed by some
pro-administration officials, these people are generally regarded as being among
the most professional in the country and above reproach. Reading between the
lines, it appears that they were not prepared to give their unqualified backing
to their commander in chief (the President) and to follow the chain of command
under all circumstances.
In declaring the state of emergency, did the President and her palace officials
truly believe that a coup was in the works - if so then there has been no
evidence of such presented? Or was it a case of wishing to nip in the bud any
further criticism of the present administration that could have come from the
expected celebration of the EDSA anniversary and associated rallies? Instead of
celebrating the event, the president for the most part remained in her palace
barricaded with container vans. The prevalent opinion is that the president used
the mere threat of dissent to demonstrate her degree of control and confound the
opposition.
As the chief beneficiary of the second People's Power protest action in February
2001, many would claim that the President has now turned her back on those
people who brought her to power in the hope that she would lead a reformist
government dedicated to eliminating (or at least significantly reducing)
corruption and rebuilding the shattered public institutions of government.
How does one comment on the events of the past few days with any measure of
objectivity? President Arroyo is believed to be an avowed Thatcherite and at one
level her "no compromise" approach has to be admired. The
dysfunctional political system of the Philippines whereby the only defeated
candidates are the ones who believe they were cheated is the root cause of much
of the current turmoil.
As a general proposition, in a democratic country a duly elected government
should be judged only at the end of its term of office and then by the
electorate voting in a fair and credible poll. Not before. The problem here is
that many within the political and commercial leadership class-even those who
were not candidates in the election of 2004-believe that the President was not
elected in a fair and credible poll. This has lead to widespread dissension
within the body politic.
This leads us naturally into a second proposition, that the moral right to
govern is lost when a government disregards democratic norms and acts out of
partisan self-interest rather than seeking the common good. We are reminded of
the famous epithet of Edmund Burke: "all that is necessary for the triumph
of evil is that good men do nothing."
Clearly, in the case of the present administration, there are some significant
questions both as to appointments to public positions that appear to be without
merit and the use (diversion?) of public funds to support sectional interests
and buy loyalty to the regime. Allegations of wrongdoing have not only gone
unanswered but the administration has gone to unusual lengths to avoid
confronting them. In the process the normal checks and balances of the system
are being undermined. There is a strong and widespread suspicion that government
is for the privileged few who are able to enjoy the perquisites of power without
being held accountable. In the process what remains of democratic institutions
have been compromised further by the transactional nature of the government.
In this sense the Philippines is confronted with a dilemma in which the
administration while continuing to function is in danger of losing its moral
right to govern. Or as Pope Benedict XVI reminded the world in his recent
encyclical (and quoting Saint Augustin) "a State which is not governed
according to justice would be just a bunch of thieves:" In such
circumstances, is the price of economic growth to be a diminution of the moral
or just basis of government? Some local commentators writing in the weekend
press see ominous parallels between the actions of the Arroyo administration and
those of President Marcos. "Is the Philippines veering towards a new
fascism supported by the military/commercial complex?" asked one.
President Arroyo has indeed been fortunate so far in that she has enjoyed the
support of most local government units, the military and the Catholic Church.
The general population, weary of the machinations of their politicians has grown
weary and apathetic. That is what government is counting on. But there are signs
that the basis of her support is not as firm as it has been. Cracks are now
starting to appear within the military high command - and over recent days have
become highly visible. Even the Catholic Bishops Conference is now hedging its
bets. With Manila Archbishop Cardinal Rosales elevated to become a prince of the
Church, will he follow in the footsteps of Cardinal Sin and start to be more
outspoken on the public stage?
Even Vice President Noli de Castro, who to this point has remained silent has
joined the protest against the media crackdown. Some take this as a first sign
that he is distancing himself from the Arroyo regime. The previous president,
Fidel Ramos, has gone on record as saying his support for the president is
"waning." "Waning" maybe, but it has not yet disappeared
entirely. It was President Ramos it may be remembered that saved the day for
President Arroyo in the middle of last year when her administration appeared all
but doomed. She has very deftly turned the tables on the Kingmaker.
Yes, the administration could yet unravel. The general belief it holds in its
own infallibility are already leading to policy misjudgements which at the very
least will constrain growth but which, if the path is maintained and further
misjudgements are made, could ignite further dissent and civil disobedience
within the general population that could lead to social disintegration. The
likely response from Malacañang however, will be to tighten the screws rather
than loosen them.
Already text messages are circulating which claim to originate from the Magdalo
Group (the group of young officers responsible for the Oakwood mutiny).
"Civilians are advised to stay away from any cellsite installations and
government buildings as a series of bombings may occur as part of the plan to
change the corrupt system of governance of Mrs. Arroyo." Is the message
genuine? Who knows? But it appears questionable and could have come from a range
of sources including an administration seeking to justify its action.
Nonetheless the advice contained in it is precautionary and worth heeding.
The international community while bemused by the current turn of events is
likely to stay on the sidelines. After all, if the Philippines is making headway
on the economic front and can repay its debts what is there to complain about?
The fact that the country is falling behind its Asean neighbours counts for very
little until such time as serious human rights abuses start to surface.
Firm government will allow the Philippines to continue to focus on economic
reform and the delivery of an expanding GDP. But firm government that erodes the
moral values of this conservative society will eventually fracture at some
point. At the very least it needs to be said that on the present path the growth
trajectory of the Philippines will be lower than it could have been had genuine
reform been undertaken which was the expectation emanating from both EDSA 1 and
EDSA 2.
Unlike Robert Frost who once stood at a fork in the road undecided what path to
take, President Arroyo has no illusions about her path - or her destiny. She is
taking a road well-trodden by those who seize power. Not everyone it seems,
wants to follow her.
Business as Usual?
Businesses will usually take the line of least resistance towards obtaining
the profits that keep them running and growing. No doubt they will adjust to the
present situation. But the declaration of Emergency Rule has just erected
another barrier to achieving a higher growth trajectory and will again focus
adverse international media attention on this country. If prolonged it could
further discourage new businesses from locating to the Philippines. For those
that are already here it will make them think twice before investing further.
Asset management will be the "watchword."
It is a great pity that the government, with Proclamation 1017, has managed to
undo much of the recent positive sentiment that has come from the increased flow
of FDI and a strengthening peso; the immediate result of which was manifest in
the recent actions by some of the leading global ratings agencies of upgrading
the Philippines outlook.
The echoes of Martial Law inherent in declaring a State of Emergency-especially
with threats of media censorship and warrantless arrests-are bound to spook
investors and local businesses alike. The more so because the outcome is likely
to be further instability rather than less. Declared 20 years to the very day
that Martial Law President Marcos made his own emergency declaration that led to
EDSA 1 and his own loss of power, the decree sent a chilling reminder of the
excesses of that era. Apparently many in the opposition and even those loyal to
President Gloria Macapagal-Arroyo appeared confused. Armed Forces Chief of Staff
Gen. Generoso Senga in his public statements twice cited the infamous Martial
Law "Proclamation 1081" when he meant "Proclamation 1017"!
However, what are the factors operating beneath the surface that led to the
declaration and what is the truth of the local situation? Despite a broad
coalition of forces linking arms against President Arroyo, the political
"left" has not got into bed with the "right" as has been
claimed. Even the Philippines, with its tradition of compromise, cannot have
such strange bed fellows. However, these two groupings do have a common agenda
on at least one point, unseating the president. But it is the leaders of the
Filipino Business community- obviously including the elite families that are now
talking behind closed doors about what is best for the Philippines-that will
decide the issue eventually. We understand that these discussions suggest that
even the prominent families are no longer happy with the direction the present
administration is taking. This is an exact parallel with what happened before
former President Estrada lost power in 2001. The truth behind People Power II
was that the elite decided he must go after he signed Republic Act 8762, better
know as The Retail Trade Liberalization Law, which allowed foreign retailers to
make sizable investments in the Philippines and to do so without Filipino
partners, thereby ending the retail monopolies.
Then of course we have President Fidel Ramos, viewed by many as King Maker, who
has now been openly critical of the president and who can be assumed to have
withdrawn unequivocal support. It is Mr. Ramos who is widely credited as helping
President Arroyo survive her crisis last year. At that time of course, the
compromise brokered was that President Arroyo would step aside in 2007 to make
way for a parliamentary form of government. That idea was trashed as soon as the
crisis had passed. Now, it seems, Mr. Ramos has been effectively sidelined.
The press is nervous and many are being very cautious in what they report. It is
clear that some sections of the military have lost faith in the administration,
including some generals but most discontent is below the surface and within the
junior ranked officers who have less to risk with "adventurism" and
more to gain. There is no sense of direction in present policy only twists and
turns to suit presidential expediency.
The Catholic Church has said "…there seems to be a paralysing gridlock in
the political sphere, as partisan interests prevail over the common good. Enough
of this destructive politics, we hear the people declare. In this situation of
widespread confusion, it is not surprising that apathy and cynicism with regard
to politics have taken hold of the minds and hearts of many Filipinos.
Tragically, many Filipinos have lost trust in political leaders from left,
right, and centre, and worse still, in the political institutions themselves
which are perceived by many to be corrupted." That hardly sounds like a
ringing endorsement of government.
The Inglesia ni Cristo, another powerful religious group is staying silent for
the moment while the Evangelical grouping, which prior to the election supported
Brother Eddie Villanueva then switched allegiance and strongly supported
President Arroyo after she won the election, have yet to comment on the latest
development. As for the poor, their voice by and large is the Catholic Church
which is right in saying they have "lost trust" and are apathetic.
Where does that leave the rest of us? Filipinos have a strong cultural dislike
of conflict and generally we see Peoples Power defiance emerging rather than
full blooded revolution or bloody coups. Normally in this country when a
situation demands change, pressure is applied until something gives. President
Arroyo is a shrewd political operator and has lasted longer than many had
predicted. You have to give her credit for surviving this far, first the conduct
of the 2004 elections itself, then the "Hello Garci" tapes that
appeared to prove presidential cheating, followed by the resignation of the
"Hyatt 10" and the impeachment attempt. But after each of these crises
you find that the president owing more political debt to those who stood by her
side; and as her support bases has shrunk many believe that she has found
herself digging deeper into the public pocket in order to pay her dept to the
loyalists.
What about political safeguards? The current Ombudsman reportedly has close ties
to the First Gentleman. With suggestions that government funds have been
reportedly diverted illegally (or at least inappropriately) to the loyalists,
including the recovered Marcos money and certain agricultural funds, will the
Ombudsman act to protect the people's interests? Most think not.
Supreme Court Justices are now whispering about Senator Miriam Defensor-Santiago
wanting the Chief Justice job in return for her loyalty (and likely to get it).
If she is plucked from the Senate to head the Supreme Court, she will be there
for a long time. Other loyalists appear to be making similar political demands.
With the Senate being blocked by the House of Representatives, and vice versa
the future for good government and a level playing field does not look bright.
Yet all of this assumes that the president will survive and serve out her full
term. But what if she does not?
Some still cling to the view that the president's Achilles heel is her fear of
ending up suffering a similar fate to that of Mr. Estrada. The argument goes
that if she can be assured that she will not face investigation and will not be
detained she may well decide to step down if the right face-saving measures are
in place. Constitutionally this would have to be in favour of the Vice President
but some political commentators suggest that a way could be found for another
solution, possibly election or a power-sharing formula.
Should the situation deteriorate further and should she then decide to hand over
power to an individual or group, the ground may well be ripe for constitutional
amendment. With a broad coalition now united against the president, room is
provided for manoeuvring and at least members of the diverse opposition are
talking to each other. If President Arroyo can be persuaded to step down
gracefully then her forces will be looking to realign themselves. The
Philippines has little in the way of ideological ties outside the Left so
repositioning is a much easier and less traumatic matter than would normally be
expected.
That is one view. But the fear of many people however, is that President Arroyo
is positioning herself, not to step aside gracefully, but to remain in power
well beyond 2010 by one means or another. With control of the electoral process,
with a new constitution that is foisted on the people by fair means or foul and
with the Supreme Court controlled by her political allies, what has she got to
lose?
Of course, we have been here before and the local business community knows how
to survive and adapt. The political sideshow makes the Philippines no less
attractive to a shrewd investor as long as protesters do not block the streets
and the uncertainties are factored into the returns expected. Sadly, the
Philippines refuses to learn the lessons of its own history and correct the
mistakes of the past.
However, bottom line is that the country is still open for business. The problem
is that it is "business as usual".
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CREDIT RATINGS
Philippine debt outlook gets upgrade from S&P
Standard & Poor's Ratings Service raised its ratings outlook on Philippine
sovereign debt recently. The move is likely to reinforce bullish sentiment among
investors, who shrugged off news earlier in the day that Moody's Investors
Service had left its negative outlook unchanged, the Wall Street Journal
reported recently.
S&P also revised its outlook on Indonesia's sovereign credit rating, to
positive from stable, citing improved fiscal and monetary policies.
S&P said it changed the outlook on the Philippines' double-B minus sovereign
rating to stale from negative in the wake of better-than-expected 2005 fiscal
performance as well as implementation of an expanded value-added tax, the main
revenue measure aimed at balancing the budget by 2008.
Still, the rating on the Philippines, one of Asia's most prolific borrowers,
remains below investment grade.
Moody's said it was waiting for further improvement in fiscal performance and to
see that overhaul efforts won't be derailed by unresolved political issues.
Philippine officials, who had played down Moody's lack of action, welcomed the
step by S&P. "This is an express vote of confidence on what we've been
doing," National Treasurer, Omar Cruz, said.
Both rating concerns had changed their outlooks for Philippine credit to
negative from stable after the Supreme Court in July 2005 delayed implementation
of the expanded VAT and because of moves to unseat President, Gloria Macapagal
Arroyo. Ms Arroyo has since quashed efforts to impeach her, while the high
tribunal has allowed the implementation of the VAT - allowing Philippine
government bonds, stocks and the peso to rally in recent months.
Mr Cruz indicated ratings action, or lack of it, won't influence the borrowing
plan. "The timing of the access, as to when we will issue bonds, will be
determined by market forces," he said. The government still needs to borrow
about US$900 million from abroad this year to complete its borrowing program.
It remains to be seen what the third big ratings concern, Fitch Ratings, will
do.
James McCormack, head of Asia sovereign Ratings at Fitch, said concern remain
over the Philippines' revenue-to-gross domestic product ratio, although it is
improving. He declined to say when Fitch will release the result of its recent
review of the Philippines.
S&P said a change in Indonesia's rating itself - affirmed at single-B- plus
for long-term foreign currency - hinges on overhaul progress and reduction in
external debt.
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