Oct 272014

Reference ID Created Released Classification Origin
2008-06-18 09:24
2011-08-30 01:44
Embassy Manila

DE RUEHML #1461/01 1700924
O 180924Z JUN 08
C O N F I D E N T I A L SECTION 01 OF 03 MANILA 001461


E.O. 12958: DECL: 06/13/2018


Classified By: Ambassador Kristie A. Kenney, Reasons 1.4 (b) and (d)

¶1. (C) SUMMARY: President Gloria Macapagal Arroyo remains
one of our staunchest allies in southeast Asia. Despite
difficulties in creating effective governance and fighting
endemic corruption, President Arroyo has been a reliable
pro-democracy advocate, particularly in pressing for change
in Burma. She has been steadfast in her fight against
terrorism in the southern Philippines, where the Armed Forces
of the Philippines, working closely with the U.S. military,
have made impressive gains against the Abu Sayyaf Group,
Jemaah Islamiyah, and other extremist elements. While
President Arroyo cannot run again for chief executive, this
visit in Washington with President Bush can have an important
impact on the course of her final two years in office.

¶2. (C) Her Oval Office discussions can help cement continued
cooperation on terrorism, military partnership, and our
shared democracy agenda in Asia, while encouraging renewed
commitment to the Mindanao peace process and economic
development in the Philippines’ poorest — and most
conflict-prone — regions. Her Cabinet-level discussions in
Washington can help push forward additional key U.S. policy
goals, including increased attention to human rights, greater
progress in improving governance and fighting corruption, and
more rapid reform of the Philippine military. END SUMMARY.

Staunch Counterterrorism Ally

¶3. (C) With strong support from top levels of the security
services, a firm grip on the House of Representatives, and
solid support of provincial governors and local mayors,
President Arroyo seems likely to fulfill her presidential
term, set to end in 2010. As President Arroyo faces growing
distractions from rising fuel and food prices that
disproportionately affect impoverished Filipinos, this Oval
Office visit presents an opportunity to reenergize her
commitment to shared regional and global goals. First and
foremost, she remains a staunch supporter in the fight on
terrorism. Since August 2006, Philippine military and law
enforcement forces have captured or killed eight terrorist
leaders and over 200 other terrorism suspects, including the
deaths of Abu Sayyaf Group leaders Khadaffy Janjalani and Abu

¶4. (C) In addition to these successes with “hard” military
power, it is equally important that we press President Arroyo
to move more rapidly to find a workable solution to the
problems of Muslim Mindanao. Real success for the Philippine
people in countering Muslim insurgencies will come not
through military action, but through strengthening civil
government and the judiciary so people have faith in the rule
of law. Resolving the root causes that lead to terrorism and
insurgency requires that the Philippine government enhance
its efforts to improve infrastructure and living conditions
and provide viable livelihood alternatives to insurgency and

Striking a Peace Deal

¶5. (C) While the Arroyo Administration frequently reiterates
its commitment to the peace process, and a ceasefire seems to
be holding in most conflict-affected areas, negotiations have
been stalled since December for an agreement on territory,
governance, and resources. Muslim insurgents in the southern
Philippines will not consider demobilizing and disarming
until a permanent peace agreement is in place. Lack of
progress in the peace process has implications for U.S.
counterterrorism strategy in the region, which focuses on
separating the small numbers of terrorists primarily
associated with the Abu Sayyaf Group and Jemaah Islamiyah
from thousands of Muslim insurgents in the southern
Philippines who seek only autonomy from Manila. In recent
days we have seen signs of progress in the talks. We should
impress upon her that this is her opportunity to show
resolve, strike a durable peace deal, and mark a crowning
achievement for her administration.

Shared Democracy Agenda

¶6. (C) More broadly, this is an opportunity to reinforce her
natural inclination to push our shared agenda in the region.
President Arroyo remains a strong voice for democratic
change. She continues to speak forcefully on the need for
more rapid economic development and a clear commitment to

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democratic development throughout ASEAN, particularly in
Burma, even though her public announcements have not always
been well-received by ASEAN partners. President Arroyo also
shares our view that China is an important trade and economic
partner that can play a constructive and responsible role in
Southeast Asia. President Arroyo will welcome our views on
how she can best balance China’s new status as a growing
economic power.

Governance and Human Rights

¶7. (C) The visit also presents an excellent opportunity for
us to press in her meetings with U.S. cabinet members for
more rapid improvements in other areas, such as governance,
human rights, corruption, and poverty alleviation. The USG
continues to devote significant resources to strengthen the
capacity of the judicial system to convict criminals through
police training, prosecutorial assistance, and justice sector
reform. But the Philippines continues to suffer from feeble
governance and a weak rule of law that has resulted in human
rights violations.

¶8. (C) We should urge President Arroyo to address with
finality the issue of extrajudicial killings and
disappearances. She has forcefully spoken out against the
killings, has invited the UN and other observers to
investigate, and has initiated a number of important measures
to confront the problem. These actions, along with the glare
of international attention, have had an impact: the number of
reported killings and disappearances has by all measures
decreased since 2006. However, to fully resolve this issue
and put to rest persistent claims of military and police
impunity, the Philippines will have to identify, prosecute,
and convict perpetrators.

Continued Defense Partnership

¶9. (C) The Philippines and U.S. continue in a robust security
cooperation relationship; U.S. Special Forces advisors
embedded with the Philippine armed forces in Mindanao and the
Sulu Archipelago have assisted in pushing terrorist elements
into the remotest areas of the southern islands. Annual
bilateral humanitarian military exercises receive favorable
media coverage, as do more traditional bilateral
interoperability exercises. Improved coordination of such
bilateral military activities with local authorities has
yielded tangible results in public support from elected
Muslim officials in the southern Philippines.

¶10. (C) The Philippine government will spend USD $100
million annually of their own funds through 2012 to fund
defense-reform initiatives and has already achieved positive
results, including improved operational readiness and greater
transparency in the procurement process. But the potential
for setbacks is never far below the surface, particularly as
a small but vociferous minority of anti-military advocates
will pounce on any missteps. While lauding President
Arroyo’s defense program to date, we should strongly
encourage her to stay the course and pledge U.S. continued
assistance to make it possible.

Fiscal Policy and Foreign Investment

¶11. (C) Though her impoverished nation faces spiraling costs
for energy and food, President Arroyo has so far withstood
pressure to relax her administration’s fiscal restraint,
which could reverse important economic reforms she instituted
during her term. Last year’s excellent economic growth
(7.2%), the best in three decades, was clearly the result of
President Arroyo’s establishment of a sound macroeconomic
foundation. Foreign investors are very interested in the
Philippines, but are sometimes discouraged by the many
constitutional and legal barriers to their investing.

¶12. (C) President Arroyo should be encouraged to help remove
some of those barriers to allow more investment and job
growth. In March 2008, the Millennium Challenge Corporation
(MCC) declared the Philippines eligible for a Compact
agreement, a major policy achievement. The Philippines must
now design a project for submission to the MCC Board focused
on reducing poverty through economic growth. To sustain
growth, Arroyo needs to do more to improve the business
environment, including removing trade and investment
restrictions, privatizing the electric power sector, and
building infrastructure. The task will be challenging, but
she remains steadfast and sees continued economic growth as
one of the lasting legacies of her tenure.

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