Oct 282014

Reference ID Created Released Classification Origin
2009-10-16 08:19
2011-08-30 01:44
Embassy Manila


DE RUEHML #2182/01 2890819
O 160819Z OCT 09



E.O. 12958: N/A


¶1. (SBU) Welcome to the Philippines. Following closely after two
natural disasters that have affected millions of lives and damaged
agricultural production, your visit holds special significance for
the Embassy as well as for the Filipino people and government. Your
visit will attract significant media attention and many Filipinos
will study the content of your public remarks for indications of
support for the bilateral relationship. The United States and the
Philippines have a longstanding and deep relationship based on
nearly 50 years of direct American administration, a Philippine
government modeled on the U.S. government, broad economic ties, and
an extensive interchange of people. The more than four million
Filipino-Americans now constitute the largest Asian ethnicity in the
United States, while some 250,000 U.S. citizens reside in the
Philippines. Reflecting this important relationship, the U.S.
Embassy here is one of the largest in the world.

¶2. (SBU) You are coming at an interesting and challenging time.
The destruction caused by devastating back-to-back storms in the
last month has strained government resources and will likely
increase the incidence of poverty. Your visit presents an
opportunity to build on the goodwill and gratitude stemming from the
USG’s fast and energetic response to these crises, and highlight the
very positive U.S. relationship with the Philippines. Your emphasis
on agriculture and the role of international trade will be
especially timely and welcomed by President Gloria Macapagal-Arroyo,
who has repeatedly called for the government, private sector, and
development partners to work together to alleviate poverty,
contribute to economic development, and promote peace.

Activities in a Nutshell

¶3. (U) During your visit, you will be briefed by the Mission
Country Team; be the guest of honor at a dinner hosted by Philippine
Secretary of Agriculture Arthur Yap; and participate in media
events. You will also visit the International Rice Research
Institute, view the American cemetery, and visit a modern flour mill
that uses U.S. wheat.

The Economy in Brief

¶4. (U) The United States is the Philippines’ largest trading
partner, with over $18 billion in two-way merchandise trade in 2008.
Major U.S. exports include electronics and agricultural products.
The U.S. is also one of the largest investors here, with over $6.6
billion in equity. The Philippine economy grew by 7.3% in 2007, the
fastest pace of growth in over three decades, but slowed to 4.3% in
2008, and will likely be in the 1-2% range for 2009. However, a
resilient service sector (particularly a booming business process
outsourcing industry) and strong overseas workers remittances
(expected to increase to more than $17 billion in 2009, more than
10% of Philippine GDP) have helped Qe Philippines through this
period of global economic slowdown.

¶5. (U) There has been limited progress over the past decade in
reducing poverty and addressing the inequitable distribution of
incomes. Almost half of the population here lives on $2/day or
less. Socio-economic development in the Philippines is uneven with
wide disparities across regions and populations. Poverty is
especially severe in rural areas. Most of the lagging regions and
provinces are in Mindanao, at the southern end of the country, while
Manila and neighboring areas represent the country’s most developed
region. While Mindanao features some of the country’s more
progressive cities and municipalities, human development indices of
some of Mindanao’s most depressed provinces approximate those of the
world’s poorest countries.

The Political Situation

¶6. (SBU) President Gloria Macapagal Arroyo assumed the Presidency
in 2001 after a “people power” protest movement swept out her
predecessor. An economist by trade, she is a tenacious leader who
has faced a series of challenges to her rule, including unsuccessful
impeachment efforts and low-level military coup attempts.

¶7. (SBU) Presidential elections set for May 2010 are already
reshaping the political landscape as candidates begin aggressively
campaigning. Notable candidates include Senator Benigno “Noynoy”
Aquino III, a popular leader who decided to run for President
following the death in July of his mother, former President Cory
Aquino, one of the most cherished figures in Philippine politics.
Another serious contender could be former President Joseph Estrada,
who was ousted by popular discontent in 2001. In 2007, Estrada was

convicted of corruption and then pardoned by President Arroyo.
Secretary of Agriculture Yap is rumored to be considering a run for
the Senate. The U.S. could sustain a healthy bilateral relationship
with the Philippines under any of these leaders, although we would
expect an Estrada presidency to be plagued by controversy. These
will be the first nationwide elections featuring computerized vote
tabulation; the automation holds the promise of more accurate and
rapid vote-counting, but many in the Philippines are anxious about
the shift to a new and unfamiliar system.

¶8. (SBU) Although peace talks with separatist Moro Islamic
Liberation Front (MILF) insurgents stalled after intense fighting
broke out in Mindanao in 2008, government and MILF negotiators have
since recommitted themselves to peaceful resolution of the conflict
with a new ceasefire. Last month, the parties made another
significant step forward by agreeing to create an International
Contact Group for interested countries to observe and support the
peace negotiations. While a new round of formal talks is not yet
scheduled, observers are hopeful that the parties will continue to
make progress in their informal discussions, leading to a formal
resumption of negotiations. Even during her last few months in
office, President Arroyo has publicly committed to advancing peace
talks, aware that a robust peace process between the Philippine
government and the MILF would encourage stability in the region and
enhance economic development.

Human Rights

¶9. (SBU) President Arroyo has consistently expressed her commitment
to resolving the complex problem of extra-judicial killings and has
takenQveral steps in this direction. While many of these deaths
and disappearances are more likely attributable to local disputes
than to military or police action, it is clear that the government
needs to do more to ensure that these crimes are fully investigated
and that responsible parties — whether or not they are connected to
the military or police — are brought to justice. The problem is
closely related to a judicial system which is inefficient and
strained beyond its capacity. Problems such as violence against
women, abuse of children, child prostitution, child labor,
trafficking in persons, and ineffective enforcement of worker rights
are also common.

Development Challenges

¶10. (U) Economic development is a key U.S. objective in the
Philippines. Accelerating development involves key, cross-cutting
issues, principally: opening the economic system to more
competition; curbing high population growth; improving agricultural
productivity; basic education and health reforms; building
infrastructure; harnessing fiscal resources; strengthening the
capacity of local government units; effective law enforcement;
improving the investment climate; promoting transparency and
accountability; and addressing peace and security issues. President
Arroyo has called repeatedly for unity and strong partnerships as
the country grapples with global economic challenges and domestic
political concerns with limited resources. Your visit to the
Philippines provides a timely opportunity to reiterate continued
U.S. government support for development and the still crucial role
of international trade and investment.




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