Oct 242014
 

http://wikileaks.org/cable/2007/01/07MANILA4.html#

Reference ID Created Released Classification Origin
07MANILA4 2007-01-03 01:21 2011-08-30 01:44 CONFIDENTIAL Embassy Manila
VZCZCXRO7525
OO RUEHCHI RUEHDT RUEHHM
DE RUEHML #0004/01 0030121
ZNY CCCCC ZZH
O 030121Z JAN 07
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4418
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS IMMEDIATE
RHEHNSC/NSC WASHDC IMMEDIATE
RHHMUNA/CDRUSPACOM HONOLULU HI IMMEDIATE
RUEKJCS/JOINT STAFF WASHINGTON DC IMMEDIATE
RUEKJCS/SECDEF WASHINGTON DC IMMEDIATE
C O N F I D E N T I A L SECTION 01 OF 04 MANILA 000004

SIPDIS

SIPDIS

STATE FOR EAP, PM, AND EAP/MTS
USPACOM ALSO FOR FPA HUSO AND J5
SECDEF/OSD/ISA/AP (TOOLAN/BAILEY)
JOINT STAFF/J5 (WILKES/ROBINSON/CLEMMONS)

E.O. 12958: DECL: 10/26/2016
TAGS: PGOV PREL PTER ECON EAID MOPS PHUM RP
SUBJECT: THE PHILIPPINES: YEAR IN REVIEW 2006

REF: A. 06 MANILA 5109
¶B. 06 MANILA 5050
¶C. 06 MANILA 4809

Classified By: (U) Ambassador Kristie A. Kenney
for reasons 1.4(b) and (d).

¶1. (C) SUMMARY. President Arroyo has emerged in a stronger
position at the end of 2006, but faces challenges ahead in
preserving control of the House in the May 2007 bi-elections.
Arroyo has been helped by a buoyant economy in 2006, but the
country will have to deal with power privatization and
crumbling infrastructure and health and education systems to
sustain growth over the longer term. Counterterrorism is one
of the real bright spots in 2006 as Philippine troops have
demonstrated that, with U.S. help, they are capable of taking
on the Abu Sayyaf and Jemaah Islamiyah threat. The peace
process with the Moro Islamic Liberation Front remains on
track, but difficult issues will have to be resolved in 2007
to secure a deal. Defense and police reform appear fully
entrenched, and to have the buy-in of the rank-and-file.
Continued U.S. support and engagement are key to achieving
further gains in counterterrorism and economic, defense, and
police reform, and could help address the serious problem of
alleged extra-judicial killings. END SUMMARY.

A STRONGER PRESIDENT FACING A DIVIDED OPPOSITION
——————————————— —

¶2. (C) Bruised, battered, but unbowed, President Gloria
Macapagal Arroyo emerged at the end of 2006 in perhaps her
strongest position since assuming office after the deposition
of former President Estrada in 2001. Despite consistently
low popularity figures, President Arroyo faces no real threat
from a divided opposition that has consistently failed to
reignite the popular fervor that led to EDSA I and EDSA II.
She faced down a coup attempt in February by elements of the
Scout Rangers and Philippine Marine Corps, and turned back a
feeble impeachment attempt in August. Proven loyalists
General Hermogenes Esperon and distant relative Director
General Oscar Calderon respectively command the Armed Forces
and Philippine National Police. High-ranking coup plotters,
including the former commanders of the Scout Rangers and
Philippine Marine Corps, await trial by courts-martial.

¶3. (C) President Arroyo faces challenges ahead in 2007,
however. The upcoming bi-elections in May could upset the
Administration’s control over the Philippine House and add to
the number of Opposition members in the Senate, making it
more difficult to quash the inevitable effort to resuscitate
an impeachment complaint. President Arroyo, who has shown
herself adept at using the levers of power to dish out favors
and curry support, will use all her political wiles to ensure
she retains a majority.

HELPED BY A GROWING ECONOMY
—————————

¶4. (SBU) President Arroyo has been helped by the Philippine
economy, which performed well in 2006 (ref b). Growth hit an
estimated 5.5 percent, while inflation slowed to only 4.7
percent. Both the stock market and the peso ended the year
at record highs. The economy was bolstered by a 15 percent
increase in remittances by overseas workers, a recovery in
exports, and sensible fiscal policies, which have brought the
budget deficit under control. In recognition of the
Philippine government’s progress in reducing public sector
debt, the World Bank announced December 22 that it had
approved a new $250 million development loan to support
further fiscal reform. The Philippine government also
announced December 29 that it intends to pay off early the
outstanding balance of its debt to the International Monetary
Fund, which will enable it to exit its post-program
monitoring arrangement with the Fund. Unfortunately, the
long-term prognosis is less rosy. Privatization of the power
sector has moved forward very slowly. Infrastructure and the
education and health systems have been allowed to crumble,
and corruption and inconsistent policies on the part of
administrations stretching back decades have kept investment
far below its potential.

¶5. (SBU) Our focus in 2007 will be on policy advocacy on the
key long-term issues facing the Philippine economy. We will
lobby for consistent policy, including resolution of the

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current debate over investment incentives and consistent and
effective protection of intellectual property rights. We
will also lobby for greater education and health spending,
targeting of infrastructure spending on key projects, and
rekindling the effort to privatize the power sector. The
Millennium Challenge Corporation’s Threshold Program is an
opportunity to combat corruption while improving the fiscal
situation. We will need to find other ways of combating
corruption, as well.

CHARTER CHANGE WILL REMAIN AN ISSUE IN 2007
——————————————-

¶6. (C) The effort to amend the Philippine Constitution,
despite the spectacular failure of the “people’s initiative”
and constituent assembly gambits, is likely to re-emerge in
2007, should President Arroyo and her ally, House Speaker
Jose de Venecia, succeed in maintaining control of the House.
De Venecia, who openly aspires to be prime minister, is
unlikely to give up his goal of moving the Philippines to a
uni-cameral parliamentary system through charter change.

COUNTERTERRORISM BRIGHT SPOT
—————————-

¶7. (C) Counterterrorism represents a real bright spots for
the Philippines in 2006. The House passed an anti-terrorism
bill and the Senate has made progress with its version, which
Senate President Villar has said he will make priority
legislation in 2007. Armed Forces of the Philippines (AFP)
troops on the island of Jolo have shown remarkable tenacity
in pursuing Abu Sayyaf Group (ASG) and Jemaah Islamiyah (JI)
leaders. Working extremely closely with U.S. Joint Special
Operations Task Force (JSOTF) counterparts, who are providing
support down to the battalion level, the AFP has forced the
ASG and JI out of their entrenched base camps and kept them
on the run. U.S.-trained light infantry battalion and Light
Reaction Company forces have been at the cutting-edge of the
effort, and U.S. intelligence, surveillance, and
reconnaissance support is fully integrated into AFP
operations. Civil-military operations, with JSOTF
assistance, have helped shape the battlefield and isolate the
terrorists from the population. These efforts complement
USAID’s development assistance in infrastructure, education,
health, and renewable energy in building communities that
have a stake in a peaceful Mindanao. 2007 should see further
improvements, as the AFP continues to internalize and put
into practice U.S. doctrine and advice, and a sustained
effort could turn the corner in the counterterrorism fight on
Jolo.

¶8. (SBU) Post’s in-country Anti-Terrorism Assistance Program
has helped professionalize the inter-agency Anti-Terrorism
Task Force (ATTF), which in 2006 arrested, captured, or
killed 88 suspected terrorists, and seized over 900 kilograms
of explosive materials. The ATTF will become
institutionalized once the House and Senate pass the pending
anti-terrorism legislation.

PEACE PROCESS STILL ON TRACK
—————————-

¶9. (C) Although momentarily stalled over the difficult issue
of ancestral domain, peace negotiations between the
Philippine government and Moro Islamic Liberation Front
(MILF) remained on track at the end of 2006, with informal
talks set to resume in 2007. The GRP’s generous
self-determination offer appears to have helped bridge the
gap between the two sides, but the devil remains in the
details, which may include a plebiscite to ratify any deal.
We will continue to encourage both the Philippine government
and MILF to stick with the peace process, and continue our
assistance to consolidate and expand peace and prosperity in
Mindanao whether or not peace talks succeed in 2007.

FURTHER ENTRENCHMENT OF DEFENSE AND POLICE REFORM
——————————————— —-

¶10. (C) Former Secretary Cruz’s tenure at the Department of
National Defense (DND) saw the further entrenchment of
Philippine Defense Reform (PDR), with the drafting of a
National Defense Act now under consideration by the
legislature, and the approval of ten major plans of action
and milestones. Thirteen U.S. Subject Matter Experts are on

MANILA 00000004 003 OF 004

the ground and integrated into the DND and AFP Joint Staff.
Cruz’s premature departure in November 2006 over an internal
cabinet squabble about charter change is unlikely to derail
the reform program, which has been firmly embraced by Chief
of Staff General Esperon and the senior leadership of the
AFP. 2007 should see further advances, with implementation
of the Battalion Retraining Program and Combat Lifesaver
Training, which will translate PDR concepts into practical
benefits for the troops. Both House and Senate leaders have
said that they intend to make the National Defense Act
priority legislation in the New Year.

¶11. (C) The Philippine National Police has encouragingly
sought to emulate the AFP’s example in pursuing its own
transformation effort. A resident Embassy Senior Law
Enforcement Advisor will assist in moving this reform
initiative forward in 2007, with a program aimed at
developing model police stations.

UPHOLDING THE VISITING FORCES AGREEMENT
—————————————

¶12. (C) The creative legal strategy employed by the
Philippine Government in late December to justify returning
custody of Lance Corporal Smith to the U.S. Embassy (ref a)
despite a clear ruling from the Court of Appeals reflected
the Government’s commitment to the VFA and the priority it
places on our military/military relations. There will
undoubtedly be considerable political and public blowback,
but the Arroyo Administration is prepared to withstand this
criticism and legal scrutiny. Smith’s appeal of the guilty
verdict will be decided separately by the higher courts and
will take even longer. We will remain closely engaged
throughout the judicial process to ensure that his rights
under the VFA are respected.

EJKS – A CALL FOR ACTION
————————

¶13. (C) The question of arbitrary, unlawful, or
extra-judicial killings (EJKs) has been a prominent issue
throughout 2006. Responding to public demand for action, the
Department of Interior and Local Government in May directed
the Philippine National Police to form a special task force,
Task Force Usig, to investigate the killings. Usig has so
far filed 67 cases against the individuals allegedly
involved, including some members of the police and the
military, and is trying to determine how many of the killings
are politically motivated. In August, President Arroyo went
a step further to create a high-profile, independent
commission headed by former Supreme Court Justice Jose A.
Melo to investigate the alleged killings and to make policy
and legislative recommendations to help stop them. The Melo
Commission completed its work in December and is due to
present a report to President Arroyo sometime early 2007.
With politically motivated violence an ever-present component
of Filipino politics, President Arroyo is certain to face
pressure to take measures to stem the killings in the run-up
to the May 2007 elections. We hope, with Department support,
to implement in 2007 targeted training (ref c) to improve
police and prosecutor cooperation investigating and
prosecuting these killings.

ASEAN CHAIRMANSHIP
——————

¶14. (C) The Philippines’ chair of the Association of
Southeast Asian Nations (ASEAN) got off to a rocky start in
December when it was forced to cancel the December Cebu
Summits due to fears of a typhoon and potential terrorist
threats. Nonetheless, Department of Foreign Affairs
counterparts tell us they intend to pursue an ambitious
agenda at the rescheduled ASEAN-related Summits in January
and the ASEAN Regional Forum meetings later in the year,
focused in part on fostering productive cooperation on Burma
and North Korea.

COMMENT
——-

¶15. (C) The often-chaotic political environment in the
Philippines can seem daunting, and we face numerous

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challenges ahead in 2007. Nonetheless, as we have seen in
2006, concerted, sustained engagement with our Philippine
counterparts can make a difference in counterterrorism and
economic, defense, and police reform. Some of issues we will
be monitoring in 2007 include the possible capture of
Dulmatin, Umar Patek, or other senior terrorist leaders;
major government successes in the campaign against the
Communist Party of the Philippines/New People’s Army;
potential significant U.S. investment in the energy sector;
potential violence and fraud in the May 2007 elections; and,
inevitable pressure to renegotiate the VFA before a final
verdict in the Smith case.

Visit Embassy Manila’s Classified website:
http://www.state.sgov.gov/p/eap/manila/index. cfm
KENNEY

   

 

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