Books on The Philippines
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Update No: 019 - (01/08/05)
One maxim you learn to live by in the Philippines is to
"expect the unexpected." Last month we were cataloguing the
achievements of the Arroyo presidency one year into her second term. The
accomplishments we concluded were considerable and the Philippines were set to
make the leap to one of the emerging tigers.
In July it all fell apart.
End of the "dream team"
The mass resignation of key members of President Arroyo's economic team in early
July was an unexpected development and one that has plunged the country into a
deep political crisis. It has polarised the nation and has far-reaching
What prompted the resignation of key economic officials - what we had termed a
"dream team" - is still a matter of conjencture but three factors may
have been at work. Firstly, following the announcement by President Arroyo that
she was sending her controversial husband overseas (the First gentleman has been
rumoured for a long time to be peddling influence and a source of corruption in
government) it was widely expected that she would follow that up by removing
from public office the close friends of the First Gentleman who held their
office through political patronage and not on the basis of merit. That did not
happen. Secondly, Malacanang Palace was rumoured to have been involved in the
decision of the Supreme Court to delay the implementation of the Expanded Value
Added Tax Law (E-VAT), the cornerstone of the government's reform agenda,
because it was widely perceived to be an unpopular move and the president did
not want to see her popularity further eroded. Finally there was opposition from
many in Cabinet to a proposal by some of the president's key advisors to divert
scarce public funds into a media blitz extolling the virtues of the president
and her achievements. Which of these was the tipping point or whether it was a
combination of all three, we simply do not know.
In total 13 members of her Cabinet submitted irrevocable letters of resignation
and called on the president to resign. These included Finance Secretary Cesar
Purisima and Trade and Industry Secretary Juan B. Santos as well as Education
Secretary Florencio Abad, Budget Secretary Emilia Boncodin, Agrarian Reform
Secretary Rene Villa, Social Welfare Secretary Corazon Soliman, Presidential
Adviser for the Peace Process Teresita Deles, Customs Commissioner Alberto Lina,
Bureau of Internal Revenue Commissioner Guillermo Parayno, and National
Anti-Poverty Commission chief Imelda Nicolas.
"The longer the president stays in office under a cloud of doubt and
mistrust, and with her style of decision-making, the greater the damage on the
economy and the more vulnerable the fragile political situation becomes to
extremists seeking to undermine our democratic life," Secretary Purisima
"The President can be part of the solution to this crisis by making the
supreme sacrifice for God and country to voluntarily relinquish her office and
allow her constitutional successor, the vice-president to assume the
presidency," Purisima said. "Resignation is a legitimate
constitutional option for effecting leadership change. Given the crisis in the
presidency, this is the least destructive and least painful option that can
simply restore normalcy and eventually bring us prosperity."
At one point during the crisis week, it is believed that the president was close
to acceding to demands that she step down but she was saved at the 11th hour by
former President Fidel Ramos who encouraged her to stay on temporarily while the
legislature convenes as a constituent assembly and drafts a new constitution
that would bring about a federal parliamentary system of government with the
president reduced to a figurehead role.
Over the following weekend, the influential Catholic Bishops Conference of the
Philippines issued a statement that fell short of seeking a resignation from the
president, although it did not rule out that possibility. Rather, in commenting
on the president's apology for her lapse in judgement in telephoning
controversial Comelec commissioner Garcillano during the 2004 election, the
bishops noted that "beyond apology is accountability."
By contrast, the protestant National Council of Churches of the Philippines,
representing 13 million constituents, took a stronger stand and called for the
resignation of President Arroyo. The statement says that her admission [of the
phone call] does not allay people's doubts about the honesty and genuineness of
the election results, and that she will forever be hounded by questions about
her moral ascendancy and the legitimacy of her presidency.
Buoyed by the statement from former President Ramos and from the Catholic
bishops in particular, the president had a change of heart and chose to tough it
For many, the key issue is that of accountability, much of the focus of press
attention continues to be on the need to answer charges relating to election
rigging and the involvement of the First Family in accepting kickbacks from the
illegal numbers game "jueteng" (a form of lotto). In addition, should
it be confirmed that the president did indeed "get to" the Supreme
Court judges to scuttle her own economic policy in order to enhance her
popularity, then that would open up an entirely new dimension to the crisis.
Defining the future of the Arroyo presidency
President Arroyo started out as a controversial president and remains so until
this day. Former President Estrada, members of his family and close political
allies are believed by many to be using their influence and their money to
destabilise and discredit the current president at every opportunity. While they
appear to have given up on the notion that Mr. Estrada could be returned to
power, they certainly want the charges against him dropped so that he can enjoy
his retirement as a free man. They also want pay-back.
Certainly the entire episode of the illegal wiretap on conversations between the
president and one of her election commissioners during the 2004 elections is
mired in controversy and while most believe that given the chance, President
Arroyo would have fixed the election result, most also believe that the
opposition would have done the same had it the chance to do so. So when it comes
to the issue of election fixing, nobody comes out looking particularly
"clean" and honourable. The best means of resolving this particular
allegation is through a Truth Commission as has been proposed but if justice is
to be served, its mandate should be sufficiently wide to look at the total
picture of dagdag-bawas and how it can be finally stopped (by computerising the
process for a start).
Thus the refusal of President Arroyo to resign her post in the midst of the
current controversy has to be viewed, at least in part, in the context of the
personal power struggle (read: vendetta?) between two first families. Neither is
going to yield ground for the sake of the country. Both are seeking vindication.
However, there is a nagging feeling that the president wants to hold onto power
at any price.
Then there is the issue of the illegal jueteng numbers game itself. Jueteng has
been part of the fabric of local political life for at least the past century.
Back in 1930, Governor General Dwight F. Davis ordered IloIlo governor, Don
Mariano Arroyo, dismissed for corruption surrounding local jueteng operations.
Mariano Arroyo was the most powerful man in the province at the time. His
brother, Jose Arroyo y Pidal is the grand-father of the present First Gentleman.
So while, of course, history proves nothing, it does suggest that for many years
there has been a close association between the politically powerful regional
families and illegal gambling, the proceeds from which have been used to cement
their hold on power since it lined the pockets of so many local officials. In
fairness it should be added that in some cases at least, jueteng money was used
to augment the finances for local government programmes thereby serving a useful
Certainly, common sense would argue that jueteng should be legalised.
Detractors, however argue that to legalise the game would do nothing to solve
the problem since, by its very nature, it is the illegality that makes it so
attractive. The problem does not appear to have an easy solution except to point
out that much of the noise surrounding the current "clampdown" on
jueteng appears to be just that - noise, and that very little serious effort is
going into eradicating it from national life. One reason commonly adduced for
this state of affairs is the need to pay back political debts from the last
election - and how other can these debts be repaid if not from the local jueteng
President Arroyo therefore has a point when she says that it is very difficult
to be a politician in the Philippines and keep ones hands totally clean. That is
the sad fact of life and most people would feel some empathy with her
Then there is the third factor that the country has in President Arroyo, a
leader who is a professional economist and an acknowledged workaholic. Whatever
faults may have been levelled against her tendencies to micromanage, her
penchant for work was considered an admirable trait. While many people held
reservations about her style, such reservations were held in check while
President Arroyo was given the chance to prove that she could deliver on her
promises. After all, nobody is perfect.
Finally there is the church to consider or, more specifically, the Roman
Catholic Church. The statement last weekend from the Catholic Bishop's
Conference signalled that the Church under Pope Benedict XVI will stand aside
from the political fray. The failure of the Church to join the chorus of demands
for the president's resignation, proved to be the nail in that particular
Forget about the concept of "Liberation Theology" and political
involvement for the uplifting of the masses, growth of the Church in the future
will come from the countries of Asia and especially China and Vietnam - two
countries that take a rather stern view of any religious order meddling in
politics. If Rome is to cut any sway in Beijing, Hanoi - or other capitals, then
it will want to be seen to be taking a hands-off approach in matters concerning
the secular state. At last we may be seeing a true separation of church and
state here in the Philippines. Whether that is a positive development or not
depends on your political standpoint. From a long-term perspective though, it
has to be a good thing.
Certainly, Malacañang read into the bishop's statement, a vindication of the
decision to tough it out. While the spin doctors at the Palace would like to
think that their exercise in damage control has succeeded, they may well be
mistaken if they continue their present course.
The president moved quickly to replace the dream team with equally credible
people. Among them Finance Secretary Margarito Teves; Trade and Industry
Secretary Peter Favila; the officer-in-charge at the Bureau of Customs,
Alexander Arevalo and Bureau of Internal Revenue Commissioner Jose Mario Buñag.
But credible appointments alone will not be sufficient to turn the ship around.
Above all there is a need for bold moves to reassure international investor
confidence that indeed the government is committed to those principles that it
says it cares about.
Newton's 3rd Law - to every action there is an equal and opposite reaction -
applies as much in politics as it does in the physical world. And the reactions
have not been slow in coming. Four ratings agencies have threatened to downgrade
the Philippines once again and the peso has sunk to a new recent low.
Paradoxically, the lower peso may have something to do with the holding up of
the stock market as foreign funds take advantage of the bargain rates to prop up
Leaving aside the bourse, international investors as a species are becoming
disenchanted once more by the turn of events and the manner in which they are
being played out. A major investment conference planned for New York in
September and timed to coincide with President Arroyo's visit to the U.N.
General Assembly has been reportedly cancelled as sponsors have pulled out.
Another major infrastructure investment conference planned for the Philippines
in November has been put on hold pending a more clear indication of the
direction in which the country is heading.
Despite assurances to the contrary, there is a fear that in the months ahead
economic reform will play third stage to other acts surrounding the survival of
the President. On stage 1 we have the possibility of an impeachment proceeding.
At the end of the day it is unlikely to prosper since the President still has
the numbers but it will divert scarce resources into an exercise in futility. On
Stage 2 we will have the (likely) congressional hearings into constitutional
change. Now taken together this mix could well produce the mother of all horse
trades. It is a frightening outlook to contemplate but not entirely
irretrievable. And to put the best possible gloss on it, at least we can see
that the constitutional processes are working and that people want them to work.
President's SONA disappoints many
As a result of the crisis, the president's annual State of the Nation address,
delivered on Monday 25th July, was far more about the state of the presidency
than the nation as a whole. Conspicuously absent from her address was any
mention of the issues that have undermined her presidency in recent weeks and
especially the allegations of electoral fraud and of family involvement in the
illegal numbers game of "jueteng" - the very issue that led to the
impeachment of former President Joseph Estrada and which she had vowed to
eradicate. That she attempted to put the best possible gloss on a very
unsatisfactory situation is possibly an understatement.
This was the president's fifth SONA since assuming office in January 2001 and
her shortest yet - only 4½ pages according to reports and delivered in English
rather than the vernacular. That she was greeted with a record number of
standing ovations during the course of her brief address had more to do with the
allegiances of those gathered than it did with the content of her message for
the nation as a whole.
By and large the political opposition absented itself from the assembly which
was packed with pro-GMA and Lakas-CMD (the majority ruling party) supporters and
her message was clearly meant for their ears rather than those of the country.
Her central message was not that she was pressing ahead with further economic
reforms, on further levelling the playing field to attract more foreign
investment or that she was using the occasion of the courtesy resignations of
the entire cabinet to revamp those government departments that are known hotbeds
of mulcting. Rather it was that the political class as a whole has to share
collective guilt for the sorry state of affairs and that, being all people of
good faith, the problem did not lie with individuals but rather with a system
that needed change.
That change meant a revision of the constitution - not by a Constitutional
Convention that would bring in fresh blood and a new breed of political forces
(and which had earlier been President Arroyo's preference), but by having the
present Congress sit as a constituent assembly. As we said in an earlier
commentary, the mother of all horse trades is about to begin. Those political
forces and vested interests responsible for the present mess are going to be
ones given the task of reorganisation. It is not difficult to predict what the
result will be.
Somewhat mischievously, the twin issues of federalism and parliamentary
government have been bundled into a single issue when of course they are quite
different. Australia is an example of a parliamentary federal system while the
United States is a presidential federal system. While the arguments that the
Philippines should have a federal system of government are persuasive,
especially to bring a lasting peace to Mindanao, the case for a parliamentary
government rests on tenuous grounds. Many analysts will argue with some credence
that placing all political power in the hands of a prime minister elected only
by his or her parliamentary colleagues will, in the context of Filipino
politics, only serve to entrench the present "trapo" system rather
than remove it.
Yet we doubt there will be a clear demarcation of the two issues in the
forthcoming debate, or indeed when it comes to a vote. People in Mindanao and
elsewhere in the provinces clearly want federalism and if the two are part of
the same "take-it-or-leave-it" package then those favouring the
parliamentary system are likely to get it by piggybacking on a federalist
When speaking to the theme in Congress, President Arroyo praised the
parliamentary systems of regional countries - presumably Malaysia came clearly
to mind, a country which changes its prime ministers once in a generation rather
than the European model where leaders come and go rather more quickly.
It was noticeable that during the SONA address, House Speaker and Lakas-CMD
president, Jose de Venecia was visibly delighted by the president's adoption of
his own model for political development (de Venecia is widely believed to want
the prime ministership for himself) while Senate President (and Liberal Party
leader) Franklin Drilon sat poker-faced and with his hands clasped throughout
Of course, the speech already had all the markings of a horse-trade. The
dominant Lakas-CMD party will continue to support President Arroyo and allow her
a dignified exit (and kill the impeachment bid at the same time) provided it
gets its own way for the future political roadmap of the country.
If the president and Lakas-CMD get their way it will be by default since the
opposition has so far singularly failed to rally people to their side despite
the general dissatisfaction that exists throughout the country. Malacañang is
quick to point out that it is only in Metro Manila where there is significant
opposition to the president and that elsewhere in the countryside President
Arroyo continues to enjoy widespread support. What they fail to mention is that
just possibly it is because the voters of the National Capital Region are a
little more astute and given more choice than those people in the provinces
where family fiefdoms continue to hold sway and under present proposals are
likely to become further entrenched. It is no wonder they support the moves.
What is now certain is that President Arroyo is going to remain president for
the foreseeable future. Attempts to remove her have come to naught. Street
demonstrations organised in recent weeks by opposition leaders intent on
building momentum towards a further people power uprising to force her from
Malacañang have fizzled. It is not that people are unconcerned at the issues
facing the country; rather it is in their recognition that the opposition is
being equally self-serving in calling people on to the streets. So far, the
opposition has failed to unify around any issue other than the ousting of the
president and has certainly not come up with a credible alternative agenda for
the country. Perhaps now there may be the makings of one.
In fact, and as many commentators have pointed out, the failure of the
Philippines is largely due to the failure of its political class to rise above
self-serving interests. Both under President Estrada and under the present
administration, many of the technocrats who have been called to service have
been world-class. That more has not been achieved can, in large measure, be
tracked to the pillage of politicians. Whether we will see more or less of this
in the future remains an open question.
Where does the country go from here?
At a recent meeting of the Manila Overseas Press Club, the members present were
privileged to have at the one head table the movers and shakers of the new
economic team including Finance Secretary Margarito Teves; Trade and Industry
Secretary Peter Favila; the officer-in-charge at the Bureau of Customs,
Alexander Arevalo and Bureau of Internal Revenue Commissioner Jose Mario Buñag.
The new team is impressive and has vowed to continue the reform programmes of
their predecessors. (Interestingly, they collectively undertook to resign their
positions if they came under pressure in their portfolios from Malacañang
officials). So as far as the government's economic reform programme goes,
everything appears to be still on track - or is it?
Already there are rumblings in the daily press that suggest some backsliding:
The Bureau of Internal Revenue appears to have lost interest in pursuing the
case of tax evasion against Rep. Ignacio "Iggy" Arroyo, the brother of
First Gentleman, Jose Miguel Arroyo. According to reports, the Department of
Finance and the Bureau of Internal Revenue completed their evidence gathering
week's ago and were set to file charges with the Department of Justice when
former finance secretary Cesar Purisima and former BIR commissioner Guillermo
Parayno Jr. resigned their posts. Since then nothing has happened. Over at the
Bureau of Customs there are reports that importers are again being charged
"facilitation fees" of more than P10,000 per container by local port
The real problem in the Philippines lies in the issue of governance and it is a
critical one. In defending her decision President Arroyo has made much of the
fact that despite her unpopularity in Metro Manila, she remains extremely
popular in the provinces. This is true to a point. The people who run the
provinces certainly appear to be giving her widespread support - but since she
controls the purse strings there is a certain self-serving quality about such
gestures, especially since for the most part they come from the dynastic clans
who control politics at the provincial level. Go beyond the political class and
that support is much less secure - or why else would Malacañang be spending so
lavishly on a press campaign lauding the achievements of the Arroyo presidency?
In a sense the present crisis has proved to be the defining moment of the Arroyo
presidency. We no longer have to ask whether the president will truly pursue
reforms designed to change the political landscape of the country. She will not.
While at the economic level, her team will continue to chant the mantra of
economic growth - "2004 was the best in 15 years" - we cannot expect
to see any shaking of the political foundations.
Traditional politics will continue to hold sway. Why else would we have Ramon
Durano as head of Tourism - someone totally clueless about his portfolio (and
who replaced Obet Pagdanganan who was widely regarded as a professional). We
also have Ramon Revilla, a 78-year old former movie actor who remains in charge
of the Public Estates Authority and an-ex police official Leandro Mendoza at the
helm of the Department of Transport and Communications. Mr. Mendoza may know a
lot about issuing traffic tickets but chances are he knows very little about the
impact of the information superhighway on the Philippines business environment.
The list continues; this is but a small sampling. Any expectation that we would
see the rise of a meritocracy throughout government has vanished for the
A little over a month ago, we all thought that the President had had her
epiphany and was about to make sweeping reforms in ridding national politics of
the "trapo" element - how wrong we all were. In fact, given the
present level of presidential insecurity, political patronage is now more secure
than ever. Not only that, constitutional reform is now back at the top of the
agenda - but a reform where the parameters will be debated by those who have a
vested interest in ensuring their own self-preservation. There will be no
opportunity for a new political class to emerge from the process.
We have no doubt that in many areas President Arroyo wants the best for the
country. So did all presidents, even Mr. Marcos. We are sure that when she says
she wants no child to go hungry, she hopes this can be achieved. Yet at the same
time and in spite of the hours she puts into the job she has not shown that she
is prepared to go beyond "wish list" politics in her goal of creating
a society whereby wealth is more equitably shared or at least the poor have the
resources to acquire wealth (asides from selling their labour overseas). The
power of prayer can only take you only so far. At some point, her faith has to
be matched by her actions. We doubt there will be any.
For the moment, investors are likely to sit on the sidelines.