[Senate Hearing 107-20]
[From the U.S. Government Publishing Office]
S. Hrg. 107-20
THE PHILIPPINES: PRESENT POLITICAL STATUS AND ITS ROLE IN THE NEW ASIA
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON EAST ASIAN AND PACIFIC AFFAIRS
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
MARCH 6, 2001
__________
Printed for the use of the Committee on Foreign Relations
Available via the World Wide Web: http://www.access.gpo.gov/congress/
senate
__________
U.S. GOVERNMENT PRINTING OFFICE
71-542 WASHINGTON : 2001
COMMITTEE ON FOREIGN RELATIONS
JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana JOSEPH R. BIDEN, Jr., Delaware
CHUCK HAGEL, Nebraska PAUL S. SARBANES, Maryland
GORDON H. SMITH, Oregon CHRISTOPHER J. DODD, Connecticut
CRAIG THOMAS, Wyoming JOHN F. KERRY, Massachusetts
BILL FRIST, Tennessee RUSSELL D. FEINGOLD, Wisconsin
LINCOLN D. CHAFEE, Rhode Island PAUL D. WELLSTONE, Minnesota
GEORGE ALLEN, Virginia BARBARA BOXER, California
SAM BROWNBACK, Kansas ROBERT G. TORRICELLI, New Jersey
BILL NELSON, Florida
Stephen E. Biegun, Staff Director
Edwin K. Hall, Democratic Staff Director
------
SUBCOMMITTEE ON EAST ASIAN AND PACIFIC AFFAIRS
CRAIG THOMAS, Wyoming, Chairman
JESSE HELMS, North Carolina JOHN F. KERRY, Massachusetts
RICHARD D. LUGAR, Indiana ROBERT G. TORRICELLI, New Jersey
CHUCK HAGEL, Nebraska RUSSELL D. FEINGOLD, Wisconsin
JOSEPH R. BIDEN, Jr., Delaware
(ii)
C O N T E N T S
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Page
Clad, Dr. James C., professor, Southeast Asian Studies, School of
Foreign Service, Georgetown University, Washington, DC......... 15
Prepared statement........................................... 18
Fisher, Richard D., Jr., senior fellow, Jamestown Foundation,
Washington, DC................................................. 22
Prepared statement........................................... 24
Hubbard, Hon. Thomas, Acting Assistant Secretary of State for
East Asian and Pacific Affairs, Department of State,
Washington, DC................................................. 2
Prepared statement........................................... 5
(iii)
THE PHILIPPINES: PRESENT POLITICAL STATUS AND ITS ROLE IN THE NEW ASIA
----------
TUESDAY, MARCH 6, 2001
U.S. Senate,
Subcommittee on East Asian
and Pacific Affairs,
Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 2 p.m. in room
SD-419, Dirksen Senate Office Building, Hon. Craig Thomas
(chairman of the subcommittee) presiding.
Present: Senators Thomas, Lugar, and Kerry.
Senator Thomas. The committee will come to order. Good
afternoon. Today, the East Asian and Pacific Affairs
Subcommittee meets for the first time in the 107th Congress,
and it is a pleasure for me to be serving as chairman once
again. I look forward to working with the Senator from
Massachusetts, who may be here a little later, as the ranking
member. Today, we are going to examine the current status of
the Philippines. I will keep this brief so we can get on with
the folks who know something about that.
This is the subcommittee's first hearing, as a matter of
fact, on the Philippines for a good long time. It is clearly
overdue, it seems to me. It is an important part of Asia, an
important country, and many changes have taken place there
recently, and so we want to see if we cannot bring ourselves up
to date on that.
First, the Philippines is a working democracy in an area
not known for democratic traditions. We have seen evidence of
that in the recent and peaceful, for the most part, transition
in Manila. Second, the country plays a role in regional
security issues, in U.S. military planning for the region.
Third, the Philippines is poised to play a more high
profile position with ASEAN in the economics of the area. Those
efforts, however, seem to be slowed, if not stalled, so these
are three areas I would like to focus on today. First, the
status of the current government and its prospects for the
future, second, the status of U.S.-Philippines relations,
especially on the security front, where we are about to rebuild
our military relationship, and third, the current and future
role the Philippines may play in regional affairs, especially
ASEAN.
So that is sort of the purpose of our hearing today, and I
hope that our witnesses can focus somewhat on those issues.
We have three witnesses today. Our first panel is Hon.
Thomas Hubbard, Acting Assistant Secretary of State for East
Asian and Pacific Affairs. On panel 2 will be Mr. Richard
Fisher, Jr., senior fellow of the Jamestown Foundation,
Washington, DC, Dr. James Clads, professor, Southeast Asian
Studies, School of Foreign Service, Georgetown University, in
Washington, DC, so Assistant Secretary Hubbard, please. Welcome
to the committee.
STATEMENT OF HON. THOMAS HUBBARD, ACTING ASSISTANT SECRETARY OF
STATE FOR EAST ASIAN AND PACIFIC AFFAIRS, DEPARTMENT OF STATE,
WASHINGTON, DC
Ambassador Hubbard. Thank you very much, Mr. Chairman. I am
delighted to be here today. I am, of course, here in my current
capacity as the Acting Assistant Secretary of State for East
Asian and Pacific Affairs, but I might add that, until about 6
months ago, I was the U.S. Ambassador to the Philippines for 4
years, and that makes me particularly pleased to have the
opportunity to talk with you today about the important
developments that have taken place in the Philippines since I
left.
Mr. Chairman, we have a lot in common with the Philippines,
and one of them is that in both countries new administrations
took office on January 20, so this is a particularly good time
on both sides to talk about the Philippines.
I recall the statement that you made on January 26,
together with Senators Helms, Biden, and Kerry, in which you
applauded the people of the Philippines for addressing the
events of the last few months in a peaceful manner, and welcome
the opportunity to work with the new Philippine President,
Gloria Macapagal-Arroyo. I very gladly second those remarks.
President Macapagal-Arroyo has underscored her intention to
work to bolster U.S.-Philippine relations on all fronts, and we
intend to support her efforts in whatever way possible to
achieve her goal of bringing long-lasting peace and prosperity
to the Philippines. Even by Philippine standards these last 6
months have been remarkably eventful. I was last here at the
Senate with President Estrada when he paid an official visit to
Washington last July. That visit I think underscored his
important contribution to the U.S.-Philippine relationship,
that is, his active support for the 1999 U.S.-Philippines
Visiting Forces Agreement.
His domestic political difficulties, of course, deepened
only a few months later. Allegations of corruption led to his
impeachment by the Philippine House of Representatives, which
set the stage for an impeachment trial in the Senate, patterned
after U.S. Senate impeachment trial proceedings. This
unprecedented trial presented a parade of high profile
witnesses who testified to a range of corrupt activities that
the prosecution sought to link to former President Estrada.
However, the trial was abruptly suspended when the prosecution
team walked out in the aftermath of a controversial 11 to 10
Senate procedural vote which prevented the introduction of
certain banking records.
I think impeachment trials are difficult even in
established democracies, and I think in the case of the
Philippines this impeachment process simply broke down. This
led to and contributed to widespread anti-Estrada
demonstrations in Manila and elsewhere.
Now, throughout this turbulent period, the United States
made clear that it would not take sides. Unlike President
Marcos, who showed little respect for democratic processes in
the latter stages of his regime, to say the least, Mr. Estrada
had a democratic mandate, having obtained a larger plurality in
the field of six candidates in the May 1998 Presidential
election.
As you pointed out in your January 26 statement, Mr.
Chairman, the United States and the Philippines share a common
commitment to democratic values. Therefore, our primary
interest at the time was for the Philippines to work through
this crisis with full adherence to a peaceful democratic
process and in accordance with its constitutional framework.
Both Mrs. Macapagal-Arroyo and Mr. Estrada assured us they
were fully committed to doing just that, but as public
demonstrations crested and key government defections
multiplied, the Philippine Supreme Court on January 20
unanimously decided, ``to take judicial notice of the vacancy
in the position of the Philippine president.''
The Supreme Court a few hours later swore in Mrs.
Macapagal-Arroyo as President, and shortly thereafter the
United States, followed by a number of other countries,
recognized Mrs. Macapagal-Arroyo's peaceful assumption of the
Presidency, and we promised to work with the new President to
strengthen U.S.-Philippine ties.
Now, as we know, Mr. Estrada did not sign a formal letter
of resignation, although he did vacate the Presidential palace,
and it was clear that the defection of much of his
administration political support, the military establishment,
and the police, had effectively removed his ability to govern.
I would add here that while the military and police leadership
withdrew their support from President Estrada, at no time was
overt force employed to cause his ouster.
Mr. Estrada did appeal his removal to the Supreme Court,
but a few days ago, on March 2, the court ruled unanimously
that Mr. Estrada had, ``effectively resigned by his acts and
statement,'' and a clear majority of justices ruled separately
that Mr. Estrada had lost his Presidential immunity from suits.
Now, although Mr. Estrada apparently has a right to appeal
the Supreme Court ruling, it is now immutably clear that Mrs.
Macapagal-Arroyo is the President of the Philippines, and even
before the March 2 Supreme Court ruling, Philippine polls
indicated that an overwhelming majority of the Philippine
public in all socioeconomic classes had fully accepted the fact
of the new President.
President Macapagal-Arroyo has already assembled a capable
administration prepared to move on her top priorities. Her
agenda is an impressive one but a challenging one. That is, to
alleviate poverty, accelerate economic reform, combat
corruption, enhance transparency and good governance, and
promote peaceful national reconciliation. She has promised
leadership by example, vowing to work seriously and diligently
to develop a resilient nation capable of adapting to the
demands of an increasingly globalized world.
One immediate priority for the new Philippine President is
achieving a peaceful resolution of the ongoing conflict in
Mindanao, and at the same time her administration has announced
its intention to accelerate economic development efforts in
Mindanao, whose Muslim majority provinces are the poorest in
the Philippines. The United States applauds this comprehensive,
peaceful approach to resolving the Mindanao insurgency,
particularly the emphasis on addressing the root economic and
social causes of this long-running conflict.
Since the early 1990's, Mindanao has been a key focus of
U.S. development aid to the Philippines, and I am pleased to
note that State and USAID are working together to ensure
continued funding for these programs this year and in future
years.
I should note here, Mr. Chairman, that another group of
insurgents, those affiliated with Abu Sayyaf Group, which the
State Department has designated as a terrorist group, continues
to operate in the southern and western areas of Mindanao, and
still holds a handful of hostages, including a U.S. citizen.
We are cooperating closely with the Philippine Government
as the lead on this matter, and we continue to call for the
safe and unconditional release of the hostages. Separately, we
are providing the Philippines long-term counterterrorism
training to upgrade Philippine capabilities to handle hostage-
taking and other terrorist incidents such as those generated by
the Abu Sayyaf Group in Mindanao.
Mr. Chairman, President Macapagal-Arroyo has underscored
her interest in enhancing United States-Philippine ties, which
we warmly welcome. Economic trade and investment issues, as you
suggested, are increasingly central to our relations. The
United States is the Philippines' largest trading partner and
top export market, and we are the Philippines' largest foreign
investor, with an estimated 25 percent share of the
Philippines' foreign direct investment stock, so the United
States is following with great interest the new
administration's economic reform efforts.
As a Senator, Mrs. Macapagal-Arroyo offered some 55 laws on
social and economic reform, many of which helped the
Philippines qualify for WTO membership and meet its
multilateral trade commitments. Further steps to liberalize the
Philippine economy will spur more investment, including from
U.S. businesses, which highly value the Philippines' educated
and English-speaking work force.
President Macapagal-Arroyo's experienced economic team has
been moving quickly to address economic problems that the last
several months of political turmoil had exacerbated, and
alongside these moves is her effort to fight corruption, an
issue which the impeachment trial of President Estrada
certainly brought to the public forefront.
The Department of State and USAID are working together to
provide assistance to the Philippines in this area, pooling
resources to support a USAID program that encourages reforms
that reduce corruption and increase transparency and probity in
economic governance.
Mr. Chairman, one clear fact has undergirded and sustained
the vibrant economic relationship. That is, the United States
and the Philippines are treaty allies. Following the 1992
withdrawal of U.S. military bases in the Philippines, our
security relations rebounded with the 1999 ratification of the
Visiting Forces Agreement, which has allowed us to resume
normal military-to-military contacts, including regular ship
visits and periodic joint exercises.
I should mention that neither side seeks a return to past
levels of military interaction, including permanent bases, but
the Visiting Forces Agreement does give us a framework to
develop an effective program of activities that best meet the
requirements in the Philippines and, more broadly, in the
region.
The Philippines provided 750 troops to the international
force in East Timor, and supplied the first military commander
to the multinational peacekeeping force of the United Nations
transitional administration in East Timor. In this context,
accelerating Philippine military modernization is a key.
Philippine funding shortages have hampered past
modernization efforts, and this problem is certain to continue
in the Philippines' current constrained environment. President
Macapagal-Arroyo has nonetheless highlighted her
administration's strong desire to rationalize defense spending
and implement effective modernization.
During the Estrada administration, we established a defense
experts exchange and undertook a joint defense assessment to
catalog Philippine Armed Forces' capabilities and requirements.
We should continue to build on this. We are particularly
interested in enhancing Philippine Armed Forces operation and
maintenance capabilities, and the best way to build the right
capabilities is through continued funding of the Philippines'
FMF and IMET programs. The Philippines' FMF program level
funding for 2001 is $2 million.
Now, Mr. Chairman, in a broader sense, our interest in the
Philippines and the prospects for the new administration is
based not only on these extensive political and economic
security ties, but on the presence of over 2 million Americans
of Filipino descent in the United States and over 100,000
American citizens in the Philippines.
In addition to that, Filipinos and Americans continue to
mix freely, thanks to a constant flow of tourists, relatives,
scholars, veterans, artists, performers, and business people.
It is in this vibrant constituency that we owe our best efforts
to ensure that the ties between our nations remain strong and
mutually supportive.
Thank you very much for having me today.
[The prepared statement of Ambassador Hubbard follows:]
Prepared Statement of Hon. Thomas Hubbard
UNITED STATES-PHILIPPINE RELATIONS: OPPORTUNITIES TO ENHANCE OUR
ENDURING PARTNERSHIP
Mr. Chairman, thank you for the opportunity to testify before you
this afternoon. As both the United States and the Philippines ushered
in new governments on January 20, you have chosen an excellent time to
review the state of our relations and discuss opportunities to enhance
our historic and enduring partnership.
I recall the statement you made on January 26, together with
Senators Helms, Biden and Kerry, in which you applauded the people of
the Philippines for addressing the events of the last few months in a
peaceful manner and welcomed the opportunity to work with the new
Philippine President, Gloria Macapagal-Arroyo. I gladly second those
remarks. President Macapagal-Arroyo has underscored her intention to
bolster U.S.-Philippine relations on all fronts, and we intend to
support her efforts in whatever way possible to achieve her goal of
bringing long-lasting peace and prosperity to the Philippines.
Turbulent Times
Even by Philippine standards, the last six months have been
remarkably eventful. Only last July, then-President Joseph Estrada was
here in Washington, conducting a successful official working visit that
brought him to the White House as well as to Capitol Hill. As
President, Mr. Estrada was a proponent of strong U.S.-Philippine ties,
illustrated by his active support for the 1999 U.S.-Philippines
Visiting Forces Agreement.
His domestic political difficulties deepened only a few months
later. Allegations of corruption led to his impeachment by the
Philippine House of Representatives, which set the stage for an
impeachment trial in the Senate. Patterned after U.S. Senate
impeachment trial proceedings, this unprecedented trial attracted
extensive public and media attention in the Philippines and presented a
parade of high-profile witnesses who testified to a range of corrupt
activities that the prosecution sought to link to Mr. Estrada.
However, the trial was abruptly suspended when the prosecution
team, walked out in the aftermath of a controversial 11-10 Senate
procedural vote which prevented the introduction of certain banking
records. Widespread anti-Estrada demonstrations in Manila and elsewhere
in the Philippines ensued, with the nearly instant exchange of hundreds
of thousands of anti-Estrada cell phone text messages helping to fuel
public indignation--a uniquely Philippine twist. Soon to follow were
the dramatic events that culminated in Mrs. Macapagal-Arroyo's
installation and Mr. Estrada's departure, which are now popularly known
as ``EDSA II,'' drawing from the legacy of the 1986 popular uprising
that brought an end to the Marcos dictatorship.
Throughout this turbulent period, the United States made clear that
it would not take sides. Unlike Marcos, who showed little respect for
democratic processes in the latter years of his regime, Mr. Estrada had
a democratic mandate, having obtained a large plurality in a field of
six candidates in the May 1998 presidential election. As you pointed
out in your January 26 statement, Mr. Chairman, the United States and
the Philippines share a common commitment to democratic values.
Therefore, our primary interest at the time was for the Philippines to
work through this crisis with full adherence to a peaceful, democratic
process and in accordance with its constitutional framework. Both Mrs.
Macapagal-Arroyo and Mr. Estrada assured us that they were fully
committed to doing just that.
Transition of Power
As public demonstrations crested and key government defections
multiplied, the Philippine Supreme Court unanimously decided en banc on
January 20 ``to take judicial notice of the vacancy in the position of
the Philippine President.'' The Supreme Court Chief Justice swore in
Mrs. Macapagal-Arroyo as President a few hours later. Shortly
thereafter, the United States recognized Mrs. Macapagal-Arroyo's
peaceful assumption of the Presidency and promised to work with the new
President to strengthen U.S.-Philippine ties.
As we now know, Mr. Estrada did not sign a formal letter of
resignation, although he did vacate the presidential palace and it was
clear that the defection of much of his administration, political
support, the military establishment, and the police had effectively
removed his ability to govern. I would add here that while the military
and police leadership withdrew their support from President Estrada, at
no time was overt force employed to cause his ouster. Mr. Estrada did
appeal his removal to the Supreme Court. On March 2, the Court ruled
unanimously that Mr. Estrada had ``effectively resigned by his acts and
statement,'' and a clear majority of justices ruled separately that Mr.
Estrada had lost his Presidential immunity from suits. I would note
that the Chief Justice, as well as another Justice closely identified
with the Macapagal-Arroyo camp recused themselves from the case to
underscore the impartiality of the Court's decision.
The New Administration
Mr. Chairman, your interest in the legal and constitutional issues
surrounding the transfer of power is shared in another quarter--among
Filipinos themselves. I notice that the Philippine media and public
have been openly discussing these issues, with the vigor and zeal that
befit that nation's free press. As in our country, this debate will
help shine the spotlight on the democratic process, and we hope that,
in the long run, it will strengthen democracy in the Philippines.
In any event, it is now immutably clear that Mrs. Macapagal-Arroyo
is the President of the Philippines. Even before the March 2 Supreme
Court ruling, Philippine polls indicated that an overwhelming majority
of the Philippine public in all socio-economic classes had fully
accepted the fact of the new President. The Philippine body politic had
as well. The international community, including the United States,
recognized the transfer of power, and most countries did so within a
short period following Mrs. Macapagal-Arroyo's January 20 swearing in.
Therefore, it is in our interest to look to the future with
President Macapagal-Arroyo, not to the past, as she addresses the
multitude of tasks facing her nation. She has already assembled a
capable administration prepared to move forward on her top priorities.
At her January 20 oath-taking, she launched an ambitious agenda to put
the Philippines securely on the reform track. That agenda is impressive
but challenging: alleviating poverty, accelerating economic reform,
combating corruption, enhancing transparency and good governance and
promoting peaceful national reconciliation. She has promised leadership
by example, vowing to work seriously and diligently to develop a
resilient nation capable of adapting to the demands of an increasingly
globalized world.
Reconciliation in Mindanao
An immediate priority for President Macapagal-Arroyo is achieving a
peaceful resolution of the ongoing conflict in Mindanao. She has taken
steps to reestablish the framework that led to the Philippine
government's 1996 peace agreement with the Moro National Liberation
Front (MNLF). She has declared a suspension of military operations
against an MNLF offshoot, the Moro Islamic Liberation Front (MILF), and
proposed a resumption of peace talks. Concurrently, her administration
announced its intention to accelerate economic development efforts in
Mindanao, whose Muslim-majority provinces are the poorest in the
Philippines.
The United States applauds this comprehensive, peaceful approach to
resolving the Mindanao insurgency, particularly the emphasis on
addressing the root economic and social causes of this long-running
conflict. Since the early 1990s, Mindanao has been a key focus of U.S.
development aid to the Philippines. In support of the 1996 peace
agreement, USAID has been implementing several highly effective
programs that encourage former combatants to take up peaceful pursuits,
such as farming and small business. With the MILF still fighting and
the flow of displaced persons continuing, these programs remain equally
vital today to safeguard and strengthen hard-won areas of stability. I
am pleased to note that State and USAID are working together to ensure
continued funding for these programs this year and in future years.
I would note, Mr. Chairman, that insurgents with the Abu Sayyaf
Group (ASG), which the State Department has designated as a terrorist
group, continue to operate in southern and western areas of Mindanao
and still hold a handful of hostages, including a U.S. citizen. We are
cooperating closely with the Philippine government, which has the lead
on this matter, and we continue to call for the safe and unconditional
release of the hostages. Separately, we are providing the Philippines
long-term counter-terrorism training to upgrade Philippine capabilities
to handle hostage-taking and other terrorist incidents such as those
generated by the ASG in Mindanao.
United States-Philippine Ties
Mr. Chairman, President Macapagal-Arroyo has underscored her
interest in enhancing U.S.-Philippine ties, which we warmly welcome.
The character of our relationship has become considerably more
multifaceted since the United States withdrew from its military bases
in the Philippines in 1992. Economic, trade, and investment issues are
increasingly central to our relations. The United States is the
Philippines' largest trading partner and top export market. We take in
approximately one-third of all Philippine exports, and some 20% of all
Philippine imports--valued at over $8 billion--are from the United
States. The United States is the Philippines' largest foreign investor,
with an estimated 25% share of the Philippines' foreign direct
investment stock, worth over $3 billion.
Because of our burgeoning economic links, the United States is
following with great interest the Macapagal-Arroyo administration's
economic reform efforts. For more than a decade, the Philippines has
been moving forward on this front. As a Senator, Mrs. Macapagal-Arroyo
authored some 55 laws on social and economic reform, many of which
helped the Philippines qualify for WTO membership and meet its
multilateral trade commitments.
We hope that the Philippines will continue to pursue this reform
trend. Further steps to liberalize the Philippine economy will spur
more investment, including from U.S. businesses, which highly value the
Philippines' educated and English-speaking workforce. A more open
economy will generate significant new employment and sharpen Philippine
competitiveness. Other steps, such as accelerating reform in the power
sector, improving intellectual property rights enforcement,
implementing trade obligations in full and on time, strengthening the
banking sector, and combating money laundering, would also have far-
reaching positive benefits.
President Macapagal-Arroyo's experienced economic team has been
moving quickly to address economic problems that the last several
months of political turmoil had exacerbated. Her well-respected Finance
Minister, Alberto Romulo, has announced plans to curb spending and
improve tax collection to help lower a large budget deficit. Alongside
these moves is her effort to fight corruption. The Department of State
and USAID are working together to provide assistance to the Philippines
in this area, pooling resources to support a USAID program that
encourages reforms which reduce corruption and increase transparency
and probity in economic governance.
Security Ties
Mr. Chairman, one clear fact has undergirded and sustained the
vibrant economic relationship I have just been describing--the United
States and the Philippines are treaty allies, and we have been so for
over five decades. Following the 1992 withdrawal of U.S. military bases
in the Philippines, our security relations rebounded with the 1999
ratification of the Visiting Forces Agreement (VFA), which allows us to
resume normal military-to-military contacts, including regular ship
visits and periodic joint exercises. For example, in February 2000, the
Philippines hosted the ``Balikatan'' exercise, which involved over
4,000 U.S. and Philippine troops. The next ``Balikatan'' exercise takes
place this spring.
I would mention that, while neither side seeks a return to past
levels of military interaction, the VFA gives us the framework to
develop an effective program of activities that best meets the
requirements of current tasks in the Philippines and in the region. The
Philippines provided 750 troops to the International Force in East
Timor (INTERFET) and supplied the first military commander to the
multinational peacekeeping force of the United Nations Transitional
Administration in East Timor (UNTAET). Philippine interest in
participating in such peacekeeping operations is likely to continue,
and our cooperation under the VFA will help to build Philippine
capabilities to contribute more actively to regional security.
In this context, accelerating Philippine military modernization is
key. Philippine funding shortages have hampered past modernization
efforts, and this problem is certain to continue in the Philippines'
current constrained budget environment. Nevertheless, President
Macapaga-Arroyo has highlighted her administration's strong desire to
rationalize defense spending and implement effective modernization.
During the Estrada administration, we established a Defense Experts
Exchange and undertook a Joint Defense Assessment to catalogue
Philippine Armed Forces' capabilities and requirements. We should
continue to build on this. We are particularly interested in enhancing
the Philippine Armed Forces' operations and maintenance (O&M)
capabilities. While we have supplied Excess Defense Articles to the
Philippines in the past, the best way to address these vital O&M needs
and build the right capabilities is through continued funding of the
Philippines' FMF and IMET programs. The Philippines' FMF level for FY
2001 is $2 million.
Mr. Chairman, in a broader sense, our interest in the Philippines
and the prospects for the Macapagal-Arroyo administration is based not
only on these extensive political and economic ties. There are over two
million Americans of Philippine descent in the United States and over
100,000 American citizens living in the Philippines, forming a
comprehensive network of informal, people-to-people ties that further
enhances our long-standing partnership. Filipinos and Americans
continue to mix freely, thanks to a constant flow of tourists,
relatives, scholars, veterans, artists, performers, and
businesspersons. It is to this vibrant constituency that we owe our
best efforts to ensure that the bonds between our nations remain strong
and that both of our new administrations work together closely to help
our people meet the challenges of the new millennium.
Senator Thomas. Well, thank you, Ambassador Hubbard.
Interesting changes taking place. Just generally, what is your
impression of the stability of the Philippine Government at
this stage?
Ambassador Hubbard: Well, I think, Mr. Chairman, we had a
dramatic political change in the context of ongoing political
stability.
I think we should take some heart from the fact that a
President of the Philippines or a President of any country in
the developing world has been removed from office, basically
because of corruption. It is an issue that has been endemic in
the Philippines and a lot of other countries in Asia and
elsewhere, and I think it was very important that the public
has taken note of that.
I think it is important in the Philippines that the
designated successor, the Vice President, took over when the
President fell. I think it is important that the military,
while they played a role, were in no way involved in a military
sense. There were no tanks in the streets. There were no shots
fired. I think the will of the Philippine people has spoken,
and has brought about probably the best possible outcome in a
bad situation. I think this result will, in the long run,
strengthen the Philippine democracy.
Senator Thomas. This is not the first instability, however,
in the Philippine Government over the last 10 or 15 years, is
it?
Ambassador Hubbard. No, it is not. I guess I would call
what happened in the Philippines, it is more volatility than
instability. I think the Philippine constitution remains in
place. It has been fulfilled in the sense that the Supreme
Court has made the final decisions as to who is the duly chosen
leader. Again, I think the Filipinos are committed to a course
of democracy, committed to a course of constitutionalism. I
think they will continue to develop along that course.
Senator Thomas. What was the vote in the House on
impeachment?
Ambassador Hubbard. Mr. Chairman, I think I have forgotten
the exact numbers.
Senator Thomas. I do not think there was a vote, was there?
Ambassador Hubbard. It was done by acclamation, that is
correct. I think there is no question that the votes were
there. It was simply a decision by the Speaker to do it that
way. I think there is some question whether the votes were
there in the Senate. Again, I believe impeachment is a very
difficult task for a democracy, and proved particularly
difficult for the Philippines in this case.
Senator Thomas. What is the capability of the Philippines
to handle this insurrection in Mindanao, do you support, or
uneasiness, whatever it is.
Ambassador Hubbard. It is a terrible drain on their
military, on their national resources, and on their national
ingenuity. This is a conflict that is based first and foremost
on territorial considerations, second, on religion. It is a
conflict that has been there for more than a century, and it is
not going to be easy to put an end to it, but we are very
pleased, as I said earlier, that the new government has reduced
military activity.
They have reaffirmed the peace with the largest Muslim
group, the Moro National Liberation Front. They have called for
a cease-fire with the other group, the Moro Islamic Liberation
Front, which was not part of that original agreement. They are
putting an emphasis on economic development, on livelihood
improvements. These are all courses of action we are very happy
to support.
Senator Thomas. The status of the military security
agreements, I presume that those were set back some in terms of
U.S. involvement.
Ambassador Hubbard. Mr. Chairman, it has not really been
set back very much. What I said earlier is, what this Visiting
Forces Agreement allows first and foremost is joint exercises,
and interaction between our military officials, and naval ship
visits, and while, during the time of the height of the
political turmoil I think we probably had fewer ship visits to
the Philippines than we might otherwise have had, some of the
small-scale exercises continued, and we plan a full schedule in
the coming year.
Senator Thomas. Any activity in the Spratly Islands,
particularly?
Ambassador Hubbard. The Spratly situation has been quieter
over the past year or so than it had been earlier. There have
been some problems, some encounters between Philippine maritime
forces and Chinese fishermen in the area to the north around
Scarborough Shoal, but the situation around Mischief Reef and
others in the Spratlys have been largely quiet.
The Philippines have pushed within ASEAN and within the
ASEAN regional forum for a code of conduct for activities in
the Spratlys. Those talks are ongoing, and in the meantime both
the Chinese and the others seem to have shown more restraint.
Senator Thomas. Some years past, the later shift in ASEAN,
much of it came from the Philippines, I believe, which is not
now the case. Do you expect that to strengthen again? What is
going to be their involvement in the process there?
Ambassador Hubbard. Well, I think the Philippines remains
very committed to ASEAN as a group. ASEAN has experienced a
great deal of change in recent years. The character of the
organization has been changed by the admission of some less-
developed members, beginning with Vietnam, but including Laos,
Cambodia, and Burma, which is meant that the group is less
like-minded than it used to be, and that the stages of
development are less similar.
ASEAN has been changed by the political turmoil and
weakness that has occurred in Indonesia. Indonesia has long
been the quiet and by far the largest member nation in ASEAN,
and a quiet leader, and its capacity has been diminished a bit,
so there have been personnel changes.
I do not think the Philippine approach to ASEAN has fully
shaken itself out, but our charge just had a meeting with the
new Vice President, who is also secretary for foreign affairs.
He indicated he is going off to an important ASEAN meeting next
week, and indicated an expectation that the Philippines will
continue to play an active role.
Senator Thomas. It sounds like ASEAN is a little
discombobulated.
Ambassador Hubbard. ASEAN has been shaken by a lot of the
events in recent years, not the least of which was the general
Asian financial crisis, some of the problems of pollution that
have occurred in the region, but I think the Philippines and,
as nearly as I can tell, most other countries in the world
attach great importance to ASEAN cohesion, and we in the U.S.
Government do, too. We would like to see a strong ASEAN.
Senator Thomas. Welcome, Senator Kerry. We are glad you
could join us, sir. If you have any comments or questions,
please.
Senator Kerry. Mr. Chairman, thank you very much. I am
delighted that our subcommittee is looking at the issue of the
Philippines as our first sort of official look-see during the
course of this Congress. After years of overlooking the Marcos
regime's abuses during the course of the cold war, we finally
came to the point of supporting the efforts of the Philippine
people to instill and improve their democracy, and set them on
a sort of real democratic path.
I can remember sitting way down at that end of this dais,
and the first amendment that I offered as a United States
Senator on this committee was relative to the Philippines, and
that amendment changed our policy with respect to aid and the
Marcos regime, linking our policy to a set of expectations from
that regime.
I subsequently traveled to the Philippines a number of
times, many times, as a matter of fact, and met several times
with President Marcos and with Mrs. Marcos, and with Cory
Aquino, and Cardinal Sin, and many of the other players who
have had such an impact over the years, and I was the only
Democrat then appointed by President Reagan to serve as a
member of the observer group that went there, spending some of
my time in Mindanao and some in Manila.
I must say one of my most memorable moments in the Senate--
well, not in the Senate, as a Senator, was being called down to
the cathedral in Manila by a group of women who were deeply
upset by what they were perceiving in the computer count that
night, and meeting with them in the sacristy of the cathedral,
and learning from them what was happening, and then calling a
press conference to make known the information that they were
telling me, and summoning people like Bob Livingston, who was a
member of the group, and Mort Zuckerman and others, to come and
listen.
There we learned of the corruption at the center of the
election itself, and that was really the moment that everything
turned, and it sort of sounded the death knell for President
Marcos, if you will.
I have watched with some dismay the turn of events that saw
a change, a transition. We have had years of sort of a growing
sense of the democracy in the Philippines, but I think there
was a distinction between the people power movement that
created an election and brought Cory Aquino to power, and the
people power movement that met as a sort of mob in the
Philippines recently and removed the President from power,
notwithstanding his egregious abuse of power. I regret that.
I know the Supreme Court of the Philippines has ratified
this transition, and we move on, much as our own Supreme Court
ratified our transition, and we perhaps do not at this moment
in time have the cleanest of hands to be talking about some of
those issues, but nevertheless, I do think it is absolutely
critical that the new government, the Arroyo Government, move
in a way that does not embrace some of those who were a part of
the problem that brought this about in the first place, and I
have some questions about that. I have some concerns about
that.
Mr. Secretary, I would ask you, the Far Eastern Economic
Review reported that Luis Singson, who was the provincial
Governor who collected the illegal gambling pay-offs for
President Estrada, and he eventually triggered the impeachment
trial, I understand he had been offered a position of gambling
consultant to the government, and apparently turned the offer
down.
There is some concern that a number of ex-Estrada cronies
who caused mischief in the past are being embraced by the
current administration, and I wonder if you would address that
question, and perhaps any concerns you might have about the
manner of this transition itself.
Ambassador Hubbard. Thank you, Senator. As one who was
following Philippine affairs very closely during that time--as
a matter of fact, I was Philippine desk officer toward the end
of the Marcos administration. I must say how much I admire the
work that you and others did at that time to ensure that Marcos
got his due and that democratic government came in.
Perhaps I could go to your second question first and give
you a little of my own sense of what happened and what that
means for Philippine democracy. Estrada is quite different from
Marcos in my view. Marcos in his latter years was a dictator
who trampled on democratic rights, stole elections, took
political prisoners, and he was extremely corrupt. From the
allegations that have been made thus far about President
Estrada, whom I knew quite well as Ambassador there, President
Estrada was simply--has been accused of being very corrupt, and
therefore the manner and implications of his ouster I think are
quite different from what happened in the Marcos case.
To my mind, what happened, we had taken a position as the
U.S. Government that the changeover in power should be
peaceful, democratic, and constitutional, and I think there is
no question it was both peaceful and democratic. I think the
people wanted Estrada out, as manifested in demonstrations and
in almost every means that it could be manifest, except in a
vote by the Senate in the impeachment process.
I mentioned earlier that impeachment is difficult in any
democracy, and I think it is particularly difficult in a
developing democracy. The Philippine Senate is a very unusual
body. We speak of it as if it is like our Senate, but in fact
it consists of, in full quorum, 24 members, each of whom is
elected nation-wide. At the time of Estrada's impeachment
trial, I think they were down to 21 Senators, and the system
simply broke down, creating a situation in which Estrada had
lost his mandate to govern, but the impeachment process was no
longer available to make it happen, and so at that point the
Supreme Court stepped in.
I know when I saw those events developing on January 19, it
reminded me a bit of Florida, also where the U.S. Supreme Court
stepped in in a difficult situation in our democracy. Whether
they were right or not, I cannot say, but I do believe the
people's will has been carried out, and I particularly take
heart in the fact that the constitutional successor took
office, a successor as Vice President was elected by the
Congress in accordance with the constitution, that the military
is not in any positions, they are back in the barracks, and in
fact during the whole process there was not a shot fired or
tanks in the street.
Estrada may not have exactly resigned that evening,
although many of us thought he had, but he did voluntarily--or
at least, without overt force he left the Presidential palace
and indicated that he was no longer acting as President, and
finally the court judged. So I wish the constitutional part of
this had been neater, and I think all Filipinos would prefer
that the impeachment process had worked and brought about a
clear-cut conclusion, but unfortunately it broke down, and I
think the best outcome in a bad situation was achieved.
I think Philippine democracy will continue. The
constitution remains in place. They are about to have fully
free elections in May for all of their House of Representatives
and for half the Senate. I think that election will help
clarify the new President's mandate, and I do feel comfortable
with Philippine democracy.
As to the presence of certain cronies, I do not want to say
much about Mr. Singson. He played an unusual role in this
particular practice, but it looks as if he will not be the
government's consultant on gambling, and there are others who
were involved in the Estrada administration involved in this
government, but they were also involved in the Aquino
administration and all of that. I believe the result of all of
this will be a more honest government, able to carry out the
interest and desires of the Filipino people more than the
previous government did.
A final note, I think it is not at all a negative thing. I
think it is very positive that the Philippine people were not
willing to tolerate the levels of corruption that President
Estrada was allegedly involved in. I think this is a sign of
democracy, of a free press, of people being able to stand up
when they think they are being abused.
Senator Kerry. Well, that is a fair answer, and I
appreciate, obviously, the distinctions and the route here. No
doubt--I mean, this is one of those situations that obviously
brings exigent circumstances to the table, and it may not be as
you would like it to be, but in the sense I do not disagree
with you. Certainly the democratic intent was expressed here,
and that is a distinction.
With respect to the Moro Islamic struggle that has been
going on now for ages, and the unilateral cease-fire, what is
your sense of the potential for President Arroyo to bring a
different mix to that conflict, No. 1, and No. 2, how have we
attempted, if we have at all, to help us resolve that?
Ambassador Hubbard. First, I think President Macapagal-
Arroyo's approach is nearer to the approach adopted by
President Ramos when he was President. That is, he was able to
bring the larger Moro National Liberation Front, or MNLF, into
an agreement with government through peaceful negotiations and
a promise of some autonomy and a bigger voice in national
affairs. I think President Macapagal-Arroyo would like to do
the same thing with the remaining large group outside the
government framework, the Moro Islamic Liberation Front.
President Estrada had followed a more military approach. We
advised against that at the time. We had urged them to work
harder on reconciliation, on economic development, and we are
pleased to see the new President returning to that approach.
We have helped out in a modest way. Well, I had better say
we helped out in a major way in Mindanao generally. Since the
Aquino administration, we have concentrated much of our aid
effort in Mindanao through a variety of programs. After the
Ramos administration concluded the agreement with the MNLF and
brought them into the government framework, we were able to go
in through our regular aid programs and through the USAID
Office of Transition initiatives to go in with some livelihood
programs, putting some of the former combatants and their
families to work growing corn, raising seaweed, et cetera,
rather than fighting, and it has been very, very successful.
As Ambassador, I visited a number of those villages. They
were actually getting about, with USAID seeds were getting
about three times the normal yield of corn in Mindanao. It was
a moving thing to see these combatants out there working the
fields, and we have been widely praised for that.
We had indicated for some years that we would be prepared
to consider similar programs for the MILF at that time when
they reach an agreement with the government and have laid down
their arms, and we remain prepared to do that, but in general,
a big thrust of our aid program is in Mindanao. It supports
part of the Philippines. It is the part where there is the most
violence, and we hope to continue generous levels there.
Senator Kerry. Overall, a last question, if I may, Mr.
Chairman. The government faces some pretty tough choices with
respect to the budget deficit, the large unemployment, the
sluggish growth of the economy, and so forth, and in effect to
try to get control of that the President is going to have to
make some unpopular and difficult choices, given the base of
her support and some of the, just inherent intrinsic
difficulties within the structure of Philippine society.
Share with us, would you, your outlook for the economy, for
the economic stability for the long term here, for the country.
What are the prospects?
Ambassador Hubbard. Philippine growth overall has been
disappointing over the last 3 years or so. The Philippines was
not hit as hard by the Asian financial crisis, whereas
Thailand, I believe, declined by a substantial percentage, I
think as much as 15 percent. The Philippines stayed at zero.
They never went under zero, but since then the recovery has
been much less dramatic.
In fact, I think they grew by about 3.3 percent in 1999 and
maybe 3.8 percent in the past year, in 2000, and they were
deeply affected by the political turmoil, so it is going to
take a while to get back on track, so they need more economic
growth, they need foreign investment to get that, they need
economic reform.
I think probably the most difficult task ahead of the new
government is the one that has plagued all Philippine
Governments is, they need to collect taxes. They need to build
a revenue base that will enable them to spend the money on
infrastructure and other public needs that is required.
We have been generous through the years with the
Philippines. I think we perhaps have done too little for the
Philippine in recent years, partly because Indonesia seemed to
be much more threatened by political and economic decline and
instability. Our aid programs are important. Our aid programs
are important not only for the money that they provide, but for
the role they give us in advocating good policies, advocating
opening the economy, improving their financial management and,
very importantly, promoting good governance.
Senator Kerry. Well, I think, Mr. Chairman, I can recall
back a few years ago there was a lot more focus on the
Philippines, and it has been something that sort of slid from
attention to some degree. That may be a reflection, also, of
the loss of bases, and I think there has been some discussion
in the Philippines retrospectively about whether that was a
good thing for the Philippines, but we are where we are today.
I certainly think it bears this committee's continuing
involvement, and I look forward to examining that and sharing
that with you, Mr. Chairman.
Senator Thomas. Thank you very much, Senator. We have been
joined by Senator Lugar. Do you have any questions or comments,
sir?
Senator Lugar. No. I will listen some more.
Senator Thomas. Well, Ambassador Hubbard, I thank you so
much for your contribution, certainly your time in the
Philippines. Your knowledge there certainly is impressive, so
thank you very much.
Ambassador Hubbard. Thank you very much, Mr. Chairman.
Senator Thomas. Dr. Clad and Mr. Fisher, please would you
join us. Your statements will be placed in the record in full,
and if you care to summarize them for us, why, we would be
grateful.
STATEMENT OF DR. JAMES C. CLAD, PROFESSOR, SOUTHEAST ASIAN
STUDIES, SCHOOL OF FOREIGN SERVICE, GEORGETOWN UNIVERSITY,
WASHINGTON, DC
Dr. Clad. First of all, Mr. Chairman, thank you for the
initiative of having these hearings. You are joined by two
gentlemen who have consistently displayed a deep and effective
knowledge of the region.
Senator Kerry is involved with the Council on Foreign
Relations Working Group on Southesst Asia. I had the pleasure,
with Senator Lugar 15 years ago, of flying around in a rather
nifty little CODEL jet going down to Negros, and at the time I
was with the Far Eastern Economic Review in Manila, and have
stayed involved with that country.
We are currently in a more sedate life now, which includes
being on the Georgetown faculty and working with Cambridge
Energy Research Associates and, indeed Senator, one of the
things I would like to talk about today is reform prospects,
focus a bit on energy, in addition the prospects for Mrs.
Macapagal-Arroyo, and then also a little bit of thinking about
where the Philippines fits in Southeast Asia, and I will try to
condense that and make it short and useful for you gentlemen.
I think it is useful to look at the prospects for the new
President, first of all, if we can, and it is useful to also
remember that this is a country that has had no less than, by
one count, eight constitutions in the past century. It is a
country where, despite the most recent constitution, that of
1987, has a lot of important safeguards, I think the recent
events show that the institutional strength of the Philippines
remains rather weak.
It is reflective of a lack of State capacity, and I think
that the circumstances--I entirely agree with Senator Kerry--of
the change in power in this most recent time, in January, are
really markedly very different from that of 15 years ago, and
it is important to see how narrow the base was that prompted
this change, so we are looking at a country which is affirming
the habit, and let us hope it is not a compulsive one, of
looking to extraconstitutional means to change the leadership.
It is important to remember also that the people this time
who were involved were a comparatively narrow segment of the
Manila middle classes, professional and business classes, a
portion of the Roman Catholic church, and a military leadership
that decided at a crucial moment not to side with its
constitutional leader.
Now, that said, Mrs. Macapagal-Arroyo--by the way, a
distinguished Georgetown alumnus--begins power with a number of
advantages. She is a very respected economist. She was the
highest-drawing candidate in her country's senatorial elections
back in 1992, and most of all, she gives every indication of
wishing to do what she said she wanted to do in her inaugural
address, which was to transcend the politics of patronage,
personality, and patrimony, and move the country toward a
politics that is programmatically focused.
Her early announcements show promise, and I think when I
had the chance to see her 2 weeks ago, and also visited the
Vice President, they did show a degree of focus that was very
encouraging, prioritizing the Country's problems, looking at a
few important things that could be done, taking a strategic
view about what needs doing immediately and what could be put
aside.
But let us not be too encouraged. There are a number of
important impediments to her rule, and I would like to go
through those now, if I could. Initially, she confronts, albeit
on a much smaller scale, many of the same problems that
confronted Mrs. Aquino, Senator Lugar, you will remember, 15
years ago, wide, disparate coalition, united really by little
more than, frankly, at the end, opportunism, and at the
beginning a desire to have the country rid of a particularly
poorly performing President.
Moreover, they are focused intently on the coming May
congressional elections in the country, which does not really
auger well for the kind of programmatic politics that she would
like to display. After all, she has got to ensure that a
coalition favorable to her agenda comes in, so she is
necessarily constrained from taking too many positions which,
inevitably in politics, invite a countervailing response.
Luckily, she does not face some of the problems of 1986,
Senator Kerry. She does not face the problem of completely
restaffing the bureaucracy and then starting the firestorm of
indignation that that caused among people who were facing the
loss of their jobs. Moreover, I think that the quest for spoils
is therefore much more narrow, and she already shows, I think,
a pretty good hand at placating people who came aboard rather
early and then at a very, very late stage, and that includes
the Senate president, Mr. Pimental, who I think already may be
making life a little bit difficult for her.
Second, though, she faces a number of external
circumstances which may be difficult. The U.S. economic
downturn has already resulted in a drop in trade receipts right
across the region. If the U.S. economy's appetite for imports
declines further, I think we have got to expect, not only in
the Philippines, but also in the rest of Southeast Asia, the
reliance on two things, an export-led recovery, and public
sector spending does not have that much more energy left in
that recovery option, and I think there is a chance that she
could stare at right across the board decline in trade
receipts, which would make any politician's task, no matter how
skilled, difficult.
Let us not forget also that the government, just before Mr.
Estrada left, had had to go to Chase Bank to borrow at 7 points
above LIBOR money to meet the recurrent obligations to the
Philippine State public sector obligations, primarily those of
salaries, and many of those remain unpaid. She has an immediate
problem with revenue.
Third, she faces tough security problems--I am sure my
colleague, Mr. Fisher, will speak about these in a moment--that
are both external, with the attitude in the People's Republic
of China, which, despite their convenient--and we are fortunate
in the fact that they are internally distracted at the moment
with their own domestic agenda, has shown a willingness to
divide and rule, to mark the Philippines off for special
attention, and to seek divisions with ASEAN, which also has a
number of claims to these separate countries in the South China
Sea, as does China.
Internally, of course, as has been mentioned by Acting
Secretary Hubbard, the Moro Islamic Liberation Front issue. Too
often, we forget these are ethnically defined insurgencies
which have an Islamic gloss to them, but they remain serious,
and they have shown the ineptitude of the Philippine military
in the past, and some resolution needs to be required. I will
return to that shortly, but in my meetings with both the
President and Vice President I found them very focused on the
need for economic reform and on dealing with the southern
question, as they call it.
And sir, if I can suggest to you, the economic reform
agenda remains just as long and formidably intractable as it
did 16 years ago. The country's weaknesses have changed but
little, Senator Kerry and Senator Lugar, the issues now
highlighted in the recent World Bank report, which shows that
control of the largest businesses by the country's most
prominent families has actually increased in the last 15 years,
and we have a country of remarkably talented people in which
market entry and access internally remains just as closed as
always.
The country and we and all people in Southeast Asia should
be very grateful for the energies of the emigre Filipino
community, 4 to 5 million, Filipinos working abroad, keeping
the country's balance of payments in shape through their
remittances, but the problems, agricultural productivity, the
very lamentable state of infrastructure, and the decline and
spending in social capital and education is very poor.
That said, looking at economics quickly, the Philippines
particularly under the administration of President Ramos did
manage to capture the full export manufacturing direct foreign
investment bus, if I can say that. They did see rates of growth
increase but, as I suggested a moment ago, those remain
vulnerable to an across-the-board decline in our country's
appetite for imports, and elsewhere we see, of course, Japan
failing to ignite on the other side of the airplane. It is a
one-engine world economy, and it has been for a number of
years.
Closing off on energy, I want to just mention to you the
key issue in front of the Philippines now is the state of the
reform bill. Senator Thomas, I know you have a particular
interest in these issues, and my written testimony go into
these at greater length, but essentially, if there is one thing
that this administration did do, it would be to close on the
energy reform bill, but not attempt to do so many things,
liberalizing wholesale-retail generation of power, that they
run into the California problem, and that is plain it is a very
big issue, and as you can imagine, in Manila right now, so some
prospect for that bill before the end of June remains highly
likely.
Closing, on what the U.S. role can be, sir, I would suggest
as follows. Our role and our relationship with the Philippines
is now probably healthier than it was 10 or 15 years ago. I
think we have an opportunity to approach the Philippines in a
mature way, which anchors it in its own region. Philippine
diplomats have been doing a good job spreading their country's
interests and making those problems known in the region.
If we were to focus on two things, sir, I would suggest as
follows, that we consider helping the Philippine military
maintain its equipment. It is a small item. Second, helping
them with their Coast Guard and building up the possibility for
interdiction of foreign vessels, which does not always involve
a naval response to any incursion in the South Chine Sea.
In closing, I think we can help them through our vote and
weight in the multilateral lending institutions by assisting
them when it comes time to look for special resources in
dealing with the aid requirements of a comprehensive solution
in Mindanao.
I will stop there, gentlemen. Thank you very much for your
attention.
[The prepared statement of Dr. Clad follows:]
PREPARED STATEMENT OF DR. JAMES C. CLAD
I have been working in the Philippines and on Philippine affairs
since the mid-1980s. My first assignment in that country was as a
foreign correspondent covering the collapse of the Marcos dictatorship
in early 1986. I remained there for another two and a half years and
visit periodically. In my work on the Georgetown faculty and also with
Cambridge Energy Research Associates, I follow Philippine foreign
policy, domestic political development and the progress of economic
reform--particularly energy reform.
My comments today rest on three issues:
The prospects for the presidency of Mrs. Macapagal-Arroyo;
The prospects for Philippine reform--especially in energy
issues, and
The prospects for Philippine security within a Southeast
Asia that has become far weaker and less cohesive in recent
years.
THE NEW PRESIDENT
First, let us examine the prospects for President Macapagal-Arroyo.
While the departure of President Joseph Estrada should cause
nothing except relief--for both the Filipinos themselves and for their
ASEAN neighbors--the circumstances of this sorry leader's departure do
not reflect well on that country's institutional strengths. Nor do they
bode well for managing another crisis of governance in the future.
By one count, the Philippines has had no fewer than eight
constitutions since the then-Spanish colony's declaration of
independence against Madrid in 1898. The impact of the Second World
War, the irresponsibility of the ruling elite, and habits of dependency
on the U.S. built up over most of the post-independence period--all
these left the country with weak state capacity.
The most recent constitution, that of 1987, spells out many noble
procedural safeguards. But when President Estrada's impeachment finally
reached that country's Senate, the process showed itself as extremely
flawed. In the end, this grossly incompetent leader left office only
after exasperated and largely middle class sentiment took to the
streets, aided by the tacit connivance from the country's military--
sworn (lest we forget) to uphold the constitutional leader, which
Estrada remained. Since Estrada's late January departure, the country's
Supreme Court has approved the legitimacy of his ouster in a 13-0
decision; it also, by a margin of 9-4, removed his presidential
immunity.
But this is post facto rationalization, the circumstances of his
departure augur another display of impatience on Manila's broad
boulevards at some future time. The event has now happened twice in 15
years. And unlike President Marcos' ouster, the stage in the most
recent drama has held many fewer players--this time only the business
and professional middle classes, a portion of the Roman Catholic Church
hierarchy, and a military leadership took a stance. The rest of the
country watched passively.
These important caveats aside, President Macapagal-Arroyo begins
office with many advantages. This distinguished Georgetown alumnus is a
respected economist in her own right. She was the candidate drawing the
highest number of votes in the Philippines' 1992 Senate elections. Her
admirably brief inaugural address spoke--correctly--of persistent and
gross poverty being the country's most severe problem. She noted the
country's desperate need to transcend the politics of patronage,
personality and patrimony and attain instead a programmatic politics
focusing on issues. She counts governance, not stirring rhetoric, as
the record for which she hopes to be remembered.
The new president's early announcements--though placating the wide
but fragile coalition of interests combining to evict Estrada--still
show promise. In my talks to her two weeks ago she seemed determined to
take an approach that prioritizes the country's problems, and to take
strategic decisions do something concrete about a few pressing matters
while leaving longer term struggles for later.
There is a word in Pilipino--garapal. It connotes a sense of
behavior that is really out of bounds, even in a society far too
tolerant of malfeasance in government. In Estrada's case, his
involvement in various gambling operations, together with ethnic
Chinese business associates, fell into the garapal category. Though far
less efficient as a money-grabber than the Marcos period, Estrada and
his cronies pocketed a slice of the poor man's gambling habit known
asjueteng. His personal behavior dismayed the middle classes and
besmirched the country's reputation in ASEAN.
By contrast, the country has in its new president an exemplar in
both a personal and political sense. Early signs of ``normal''
behaviour by her family--even in such mundane matters as reports of her
husband and daughter queuing up with other departing passengers at
Manila's airport in their recent trips abroad--are positive and
encouraging.
But we should not overlook the impediments to her rule.
For starters, she confronts, albeit on a smaller scale, many of the
same problems confronting Mrs. Aquino when she took over the presidency
from Marcos fifteen years ago. A loose and quarrelsome coalition of
politicians brought her to power, just as the case for Mrs. Aquino
fifteen years earlier.
Fortunately, Mrs. Macapagal-Arroyo does not face the problem of
completing re-staffing the government administration--a battle that
promptly swung the Marcos-era bureaucracy against Mrs. Aquino and
wasted much valuable time. In 2001, the quest for spoils in the new
Administration is less consuming, and the venting of old grudges less
obvious. Yet segments of the old establishment that jumped ship in time
to be counted among the forces evicting Estrada are already playing a
tough game, obstructing the new president's choices for cabinet
positions before the ink on her presidential succession is barely dry.
Secondly, external circumstances do not favor an easy period of
settling into the presidential chair. The U.S. economic downturn has
already resulted in a drop in trade receipts for all Southeast Asian
countries whose post-1997 crisis upturn has rested on the U.S.
economy's strength and appetite for imports, and on an increase in
public spending. From Thailand to Malaysia to the Philippines, the
public sector deficit as a percentage of GDP has jumped since 1998. It
is already unsustainable in the Philippines, where a revenue crunch and
capital flight during the last of the Estrada period have resulted in
an inability to pay public sector salaries--an important problem in a
country where government employment means so much.
Thirdly, she faces tough security problems, both internal and
external. Externally, only a set of reform-related issues preoccupying
Beijing's leadership has prevented China from looming even larger as a
source of concern and territorial conflict to the Philippines. The two
countries dispute areas of the South China Sea; China seeks through
``sweet and sour'' diplomacy and latent use of force to divide Manila
from reaching common cause with other ASEAN countries also claiming
areas of the same sea along with China. Internally, the Estrada
government foundered on the protracted problem of pacifying the Moro
Islamic Liberation Front (MILF), which seeks an independent homeland
for parts of Mindanao. The MILF's more radical offshoots, such as Abu
Sayyaf (which has a penchant for kidnapping tourists in neighboring
Malaysia), depress domestic and foreign business sentiment in a
resource-rich island otherwise showing economic comeback since the late
1980s.
Despite these challenges, I found the new president as well as Vice
President Teofisto Guingona well focused on two issues when I saw them
in Manila two weeks ago. These are: (a) economic reform and (b) solving
the complex insurgencies afflicting the country's second largest
island, Mindanao.
ECONOMIC REFORM AND THE KEY ISSUE OF ENERGY REFORM
On economic reform, the country's weaknesses have changed but
little since the forced departure of another, far more corrupt
president just fifteen years ago. In some ways, they have intensified.
A very recent World Bank report focusing on achieving better
distribution of the gains of development makes the point that control
of the country's largest businesses by the same small set of prominent
families has actually increased since the so-called ``People's Power
Revolution'' of 1986 against Marcos. This World Bank report also
describes endemic problems afflicting governance--especially
corruption, an abysmally slow implementation of government programs and
a woeful lack of auditing of government spending--as all still
prevalent today.
To be sure, important improvements in national income have occurred
during the 1990s. These resulted from dramatic gains in the country's
for-export manufacturing sector, plants using local labor and largely
capitalized by direct foreign investment. Important gains have occurred
via ``backroom operation'' services in which the country's large
English-speaking population (the Philippines is now the world's third
largest English-speaking country) helps foreign corporations run
payroll, collect debt, and standardize business practice manuals--all
via the globalizing advantages that e-mail and the Web enable.
But other sectors--including most lamentably the rural agricultural
sector--remain starved of capital and show persistently poor
productivity. Without an estimated 4-5 million Filipinos working
abroad, the country's national receipts (and its social welfare
indices) would be in dire shape. And in the increasingly tough
competition for direct foreign investment, the Philippines had the bad
luck, just as during the 1980s, to throw up bad political risk at a
moment when better governance and better confidence would have netted
important gains.
By this I mean the experience of the mid-1980s, when a wash of
Japanese and Korean direct investment in manufacturing flowed into
Southeast Asia but almost entirely bypassed the Philippines--for
reasons of chronic political instability. Similarly, many foreign-owned
assembly firms began to relocate corporate headquarters to the
Philippines and seek new manufacturing locales there after the 1997
financial crisis. An IMF supervisory program left over from the Marcos
era had instilled important discipline and minimal capitalization rules
into the Philippine banking system. But, again, the moment was lost--
largely because of Mr. Estrada's baleful effect on confidence and the
devaluing peso.
In this environment, what should President Macapagal-Arroyo do? In
my meetings with her last month, she showed a firm grasp of priorities,
of which nothing matters more--to the country's infrastructural base
and to foreign and domestic investor sentiment--than reforming the
electricity sector.
The current electricity restructuring legislation in the
Philippines is called the ``Electric Power Industry Reform Act of
2001.'' Though I am grossly simplifying the complexity of this bill,
the reform legislation provides for the
unbundling electricity generation and transmission, as well
as for de-linking power distribution and supply;
dividing government-owned National Power Corporation, or
NPC, into generation and transmission operations.
Privatizing the NPC-owned seven power generation companies
(known as ``gencos'' in the energy business). A ``National
Transmission Company'' will be created but will become
privately owned as well.
In addition, the reform legislation contemplates a wholesale
electricity spot market and the total unbundling of both wholesale and
retail rates. Is this a realistic target? How can President Macapagal-
Arroyo preserve reform momentum and not blunder into repeating errors
that led--in similar and much-followed legislation in California--to
market-prompted power supply crises?
In light of the problems currently being faced in California, the
current Philippine legislation does raise significant concerns. The
changes in the present bill offer a complex reorganization in which
deregulation of both the wholesale and retail markets would occur
simultaneously. As California's experience shows, quick but complicated
reform and reorganization carries huge uncertainties. In the wrong
circumstances, they can lead to disastrous consequences.
That said, California's problems must not discourage the new
Philippine administration from moving to a competition-based power
market. The answer is to begin with deregulation of the wholesale
market now, while leaving other elements to a later day. This answers
the new president's need to show she is alert to the California
consequences and to legitimate concerns raised by the many non-
governmental organizations now prominent in Philippine political life.
Indeed, the new administration can point to experience in other
U.S. states and to other foreign countries that chose to phase-in
deregulation in a slower, more measured way. In Manila, the country's
legislators and some hopeful investors, often tied to foreign firms,
see reorganization of the electricity industry as yielding
greater foreign investment,
competition for various sectors of electricity customers,
and
a decrease in rates.
But various U.S. states and foreign countries have opted for
electricity reform on the basis of incremental steps. In my view,
privatization of the Philippine electricity sector should proceed with
privatizing the country's generating assets and with creating a
competitive, wholesale generation market. In this process, the
utilities and newly-formed gencos will need time to recover their
stranded costs and to complete transition to a competitive wholesale
marketplace. Foreign investors will enter the market in this controlled
way; outright deregulation across-the-board still poses too many risks,
of which political risk (i.e., the danger of political forces setting
aside or reversing government policy) remains high.
One thing is for sure: the lack of reliable power has become a very
serious bottleneck to the country's continued growth. Only after
wholesale market stability has been established should the Philippines
implement the next steps--transitioning to competitive retail sales of
power and the unrestrained marketing of electricity. In this respect,
but this respect only, the ``cause-oriented groups,'' as Philippine
NGOs are known, have a valid worry about the electricity reform bill as
it now stands.
At present the power reform bill had emerged from a bicameral
Philippine congressional committee before the legislators went into
recess in February. President Macapaga/Arroyo has asked the two
committees on energy in the Philippine Congress to meet
environmentalists and consumer groups as well as business firms. She
wants them to iron out problems in the current Power Industry
Restructuring Bill which attempts--as I've noted, to try too much too
soon and which could imperil all reform by colliding with the
``California problem.''
how much cross-ownership should be allowed between the
generation and distribution sectors? (Philippine experience
amply justifies concern lest existing local power industry
players simply broaden their monopoly positions.);
whether private utilities should be barred from recovering
their stranded costs?
The NPC's existing losses, which approach 200 billion pesos
(over $3.5 billion). Which prospective bidders for the
privatized NPC are going to want to absorb these losses?
The cross ownership issue may be addressed in new the anti-trust
safeguards, such as the imposition of market caps if certain genco
capacity reaches certain limits within a five-year period. With regard
to the NPC's losses, the most likely outcome is for the taxpayers,
rather than the consumers, to absorb the losses--a politically
expedient result, given the looming May congressional elections--which
President Macapagal-Arroyo's administration does not want to become a
campaign issue.
Once the elections are past, the administration hopes the bill will
pass in a special congressional session convened before the writ of the
existing (11th) Congress expires on June 30, 2001. Everyone in the
investing and financial community is looking at the new president's
resolve on this issue: This includes the multilateral lending banks,
primarily the World Bank and the Asian Development Bank. The president
told me she has also promised a June passage of the reform bill to the
IMF. One clear incentive for passage of reform legislation lies in the
NPC's desperate need for nearly $1 billion, primarily from the ADB, to
finance the NPC's transmission and preparatory projects for its
privatization.
Can she keep her promise? She probably has the numbers to ensure
passage of the existing, overly ambitious bill, in the country's House
of Representatives. In the Senate, the outlook is far less benign.
the philippines in southeast asia and the role of the united states
Since the departure of U.S. forces ten years ago after the
Philippine Senate rejected an extension of the treaty enabling American
bases on Luzon, the country has sought a more assertive place in
Southeast Asia. This period of effective regional diplomacy coincided
with the administration of former president Fidel Ramos. Since then,
the region-wide economic crisis and president Estrada's problems have
distracted Manila from this important task.
The United States now has a much healthier relationship with the
Philippines than before. As part of the ASEAN region, the U.S. has new
opportunities to engage its former colony in a forward looking and
regionally focused way, developing relationships that ``fit'' into
broader American interests in East Asia.
In this regard, American support for the Philippines' efforts to
solve the Mindanao insurgencies should count for a lot. U.S. support in
multilateral lending institutions for specially targeted programs in
the south of the country will strengthen the hands of the new president
and vice president (Mr. Guingona also serves as foreign secretary).
The same approach should inform our efforts in re-engaging the
Philippine military. Important and low-cost solutions for the country's
maintenance of its existing military equipment exist--and should not be
obstructed. Similarly, American help in building up the country's coast
guard would also be a boon--interdiction of foreign fishing vessels by
coast guard ships makes confrontational possibilities with China less
likely; at present the encounters in the South China Sea involves
elements of the regular Philippine military, army and navy.
CONCLUSION
The priorities of the new Philippine administration are clear:
peace and poverty alleviation at home, security in the regional
environment, and victory in some important reform efforts, most notably
in electricity generation and delivery. In a newly mature relationship
with the Philippines, the United States can help--from a distance but
with understanding that this former colony's success is an important
element in shoring up Southeast Asia's coherence in the face of great
change and challenge. Thank you.
STATEMENT OF MR. RICHARD D. FISHER, JR., SENIOR FELLOW,
JAMESTOWN FOUNDATION, WASHINGTON, DC
Mr. Fisher. Mr. Chairman, I would also commend your
decision today to hold this hearing on a country that is dear
to many of us, most of us here, and I thank you for your
opportunity to offer testimony today. As anyone in the
Philippine policy business knows well, the Senate Foreign
Relations Committee has a stellar record of leadership
regarding our policy toward the Philippines. I can remember
well being in the Philippines in 1986, when you were there,
Senator Lugar, and Senator Kerry. We actually shared a day on
election day in that very dramatic month.
Mr. Chairman, Philippine democracy I believe has surmounted
another great test, having seen through a peaceful, though
democratic transition that saw President Joseph Estrada leave
his office on January 20 to be succeeded by President Gloria
Macapagal-Arroyo. As in 1986, I believe that the most recent
transition occurred and was based in a quest for justice and
truth, a contest between those wanting, hungering for rule of
law and those preferring rule of men.
As I would also note, in contrast in 1986 this most recent
transition did not require any active American role or support.
Filipinos did this by themselves, and whether one views this as
a fully constitutional process, I do agree with Ambassador
Hubbard that the transition does reflect the popular will, and
that it is a good thing for the Philippines. It speaks well to
their democratic progress.
Former President Estrada really has only himself to blame
for his political downfall. He was elected in 1998 by the
largest margin ever for a Philippine President. He was widely
admired. However, the seeds of his self-destruction were sowed
early, when it was clear that he was intent on favoring chosen
friends and cronies with special economic privileges that would
lead to their enrichment.
By his second anniversary in office, Estrada was surrounded
with rumors of corruption. His political ship began to sink
last October, when the Governor of Iloco-Sur, fearing he was
being cut of illegal proceeds from gambling, turned over actual
records of pay-offs to the President from his profits. This
began a cascade of further revelations which led to Senate
investigation and then impeachment proceedings in the House.
The final straw came in mid-January, when the Philippine
Senate, by a margin of one vote, refused to reveal further
damning evidence against the President.
Amid massive demonstrations in response, the military
simply withdrew its support for Estrada, leading to the
transition on January 20.
Further, President Estrada has tried to escape, tried to
leave the country, and he now faces charges of plunder, graft,
and malversation.
President Macapagal-Arroyo is a study in contrasts to her
predecessor, sober, efficient, principled. She garnered 3
million more votes than Estrada in 1998. Educated at Georgetown
University, she earned her doctorate in economics from the
University of the Philippines. The fact that she was the
daughter of a former President leads one to conclude easily
that she was born to lead her country, and she is a strong
leader for this right time in Philippine history.
Mr. Chairman, President Macapagal-Arroyo and her nation
face enormous challenges. The Philippine economy, having
weathered the recent Asian financial crisis better than others,
still requires reform in many sectors to guarantee adequate
transparency and greater opportunity for Filipinos, and in
addition, as others have pointed out today, the Philippines
remains burdened by a revival of old insurgent conflicts.
In the last year, the Estrada Government waged a not-so-
small war against the Moro Islamic Liberation Front, which many
Filipinos fear, right or wrong, that the MILF is seeking to
create a separate State in Mindanao. To this is added the
challenge of terrorism that continues from a very old Communist
Party that fell to pieces in relative inaction by the early
1990's, but in the last few years has unfortunately shown some
signs of revival and is attacking the government again, and to
this is added the Islamic group, the Abu Sayyaf, which is
thought by many Filipinos to be influenced by far more radical
Islamic elements than in the Middle East and Afghanistan.
In addition to all these problems, Mr. Chairman, the
Philippines is trying to contend with Chinese military
encroachment on Philippine economic zones. In late 1994 and
early 1995, Chinese naval forces occupied Mischief Reef, which
is only 150 miles from the Philippine island of Palawan, but
over 800 miles from the Chinese mainland. China's oft-stated
territorial claims to most of the South China Sea would be
comparable to the United States claiming most of the Caribbean
Basin as its own. Manila feels threatened by this, and by
China's ongoing military buildup that is extending its reach
into the South China Sea.
The Philippines and other Southeast Asian states have long
tried to find a diplomatic solution to the conflicting claims
to the region, but it has to be said that to date Beijing is
more interested in asserting its claims than in finding a real
political solution.
Mr. Chairman, it is with this background that I think it is
time for us to consider the past and the future of the
Philippine-American alliance. This alliance has seen enormous
shared sacrifice and, while a military bases relationship ended
in 1991 and 1992 that left anger and bitterness on both sides,
I think now that a decade has passed there is very encouraging
new willingness on the part of Manila to reach out and try to
build a sustainable long-term military relationship.
The passage of the Visiting Forces Agreement, the ongoing
dialog between the Pentagon and the Philippine military, the
revival of exercises to include a second ``Balikatan'' multi-
service exercise to take place in April are all encouraging
signs, to which I would add the Philippines' willingness to
participate in peacekeeping operations in Cambodia, Haiti and,
most recently, East Timor.
I agree entirely with Dr. Clad that it is time for us to
focus on this alliance and to do what is financially possible
to help our Philippine ally in terms of offering excess
equipment that would help their ability to maintain systems
that they have. Helicopter spare parts is a particular need,
but the need of the Philippine Armed Forces is enormous. They
do not have an air force or a navy that can offer a deterrent
effect to China, and if there is some way in the future that we
can help them with this, it would be deeply appreciated.
In conclusion, Mr. Chairman, I would simply note that the
Philippines is our ally. It is one of the few countries that we
can include in the family of democracies. Our history of shared
sacrifice is enormous. Today, the Philippines needs our help
and, as family, I think we should respond.
Thank you.
[The prepared statement of Mr. Fisher follows:]
PREPARED STATEMENT OF RICHARD D. FISHER, JR.
THE FUTURE OF U.S.-PHILIPPINE RELATIONS
Summary of Full Statement
The January 19-20 transition that saw the resignation of President
Joseph Estrada, and the succession of President Gloria Macapagal-
Arroyo, the many challenges she now faces, growing internal and
external threats to the Philippines, and the chance for improving
Philippine-American relations all provide ample issues for review by
this Subcommittee.
President Macapagal-Arroyo's rise is similar to the Philippine
military backed uprising in 1986 that saw the exit of former President
Ferdinand Marcos in that both transitions were propelled by a quest for
justice and truth. Gloria Macapagal-Arroyo comes to the office of the
President with very impressive credentials and political record of
proven devotion to her nation. Her record of sober leadership stands in
contrast to that of Estrada, who treated politics as a stage,
reflecting his long acting career. In the end Estrada can blame only
himself for his political downfall, which was caused primarily by his
determination to enrich his friends, his family and himself.
Macapagal-Arroyo now faces the daunting challenges of promoting
economic growth while quelling Muslim and Communist rebel groups, and
trying to modernize the Armed Forces of the Philippines to face a
growing threat from China. The Moro Islamic Liberation Front (MILF) may
be trying to create an independent state in Mindanao which led to
substantial fighting last year. The Communist Party of the Philippines
(CPP) has regained strength and has resumed violent attacks on the
government, while the radical Islamic Abu Sayyaf group undertakes
kidnapping and terrorist attacks. At the same time, China presses its
territorial claims to most of the South China Sea and continues to
occupy Philippine claimed areas close to the Philippine island of
Palawan.
It is now time for Washington and Manila to fashion a new strategic
partnership that obtains the full benefits of our 1951 Mutual Defense
Treaty. It is time to put aside the hurt of the failed military bases
relationship and recognize our shared interest in defending our
democratic way of life. In the context of renewed U.S.-Philippine
strategic cooperation, the U.S. should offer to help the Philippines
meet some limited defensive needs. Both Filipinos and Americans have a
record of a century of shared sacrifice in defense of freedom. It is
now time to invest anew in this friendship.
Full Statement
Mr. Chairman, distinguished Members of this Subcommittee:
I welcome this opportunity to offer testimony for this hearing on
America's relationship with our longstanding allies and friends in
Asia, the people and the government of the Republic of the Philippines.
This Committee has a distinguished record in both highlighting and
deepening America's friendship with the Philippines, and its renewed
attention today is both timely and necessary.
On January 19 to 20 of this year, Philippine People Power propelled
a governmental transition that began as a quest for justice and truth.
On January 20, President Joseph Estrada resigned in disgrace and was
succeeded by Vice President Gloria Macapagal-Arroyo. The reasons for
this dramatic though democratic transition, the many challenges facing
President Macapagal-Arroyo, and the opportunity to help our ally, all
provide background for this hearing. But it is also necessary to
consider the transcendent aspects of the long Philippine-American
friendship.
Mr. Chairman, there are few countries that America can truly regard
as ``family.'' The Philippines is one of them. As members of a greater
democratic family, the United States and the Philippines have in the
last century shared almost the entire range of national experiences,
from colonialism, to nation building, struggle for independence, to
being allies in wars of aggression, and to meeting successive threats
to Philippine democracy. Filipinos have striven for the last century to
build a democratic and prosperous society. They have been leaders in
developing Asian democracy, with a tradition of elections and a
freewheeling press. While their economic and political divisions have
prevented the realization of prosperity comparable to many of their
neighbors, Filipinos are leaders in democratic development.
American friendship has been constant over this last century. Our
history of shared sacrifice is humbling, from World War II, and through
the Cold War. Our countries have sustained a Mutual Defense Treaty
since 1951. American economic aid, and at times, military assistance,
consistently strong commercial ties, plus generations of personal
family ties, have all contributed to one of the strongest bi-lateral
relationships the United States has in Asia. This relationship has seen
both Filipinos and Americans make mistakes, painful mistakes, but both
countries have demonstrated the capacity to learn and build anew.
Manila and Washington are now in the midst of another important
turn in their relationship. The new administrations in Manila and
Washington now have the opportunity to depart from the past decade,
characterized largely by mutual indifference in the wake of the failed
military bases relationship, and to construct a sustainable defense
relationship based on mutual benefit and respect. The Philippines could
dearly use America's help, and as we look at a troubling security
environment in Asia, America could surely use the Philippines' help. As
we seek to rebuild this relationship, Mr. Chairman, I believe that we
will have steadfast partner in President Macapagal-Arroyo.
A BORN LEADER: GLORIA MACAPAGAL-ARROYO
Gloria Macapagal-Arroyo did not need the benefit of last January's
People Power inspired transition to become President of the
Philippines. In 1998 she was elected Vice President--a separate ticket
in the Philippines--by 13 million votes, the largest ever mandate for a
Philippine Vice President, and three million more than President Joseph
Estrada. While born into high politics, her father was former President
Diosdados Macapagal, in her political career Macapagal-Arroyo has
earned a reputation for principled leadership and devotion to her
nation. Educated at Georgetown University, she went on to earn a Ph.D.
in Economics from the University of the Philippines. Her career has
spanned academia, the Philippine Department of Trade and Industry, and
the Philippine Senate from 1992 to 1998.
The January 19-20 transition deserves comparison to the dramatic
``EDSA'' rebellion early 1986, when a military-assisted popular revolt
chased former President Ferdinand Marcos into exile, and installed
Corazon Aquino as President. One key difference with ``EDSA II'' in
2001 is that Filipinos did not wait 20 years to demand better
leadership. Since the fear and excesses of the Marcos reign, and the
chaos of the Aquino years, Filipinos have learned to demand good
government. Good governance under former President Fidel Ramos enabled
the Philippines to weather the recent Asian economic crisis. Another
key difference is that EDSA II occurred with no help from the United
States, which played an active behind-the-scenes role in helping
democrats prevail over Marcos.
It is a simple and sad truth that Joseph Estrada has only himself
to blame for his downfall. In 1998 Estrada was elected by a margin 10
million votes--the largest for any Philippine president. He benefited
from deep public admiration, due in no small part to his long movie
acting career in which he reigned as the everyman hero. He campaigned
for president championing the cause of the poor, but left office as one
who sought to use government to enrich himself, his family and his
friends on a massive scale. Two years into his six-year term, Estrada
was already beset by a swirl of scandals. Most notably, Estrada
protected a crony with connections to Chinese criminal networks,
accused of illegal stock manipulations.
Last summer saw a growing din focus on Estrada's personal behavior,
which stressed night carousing with cronies over performing his day
job. The beginning of the end came in early October, when former Iloco-
Sur Governor Luis Singson revealed his role in giving Estrada $2.6
million from his state's illegal gambling proceeds. By mid-October
Catholic Church leader Cardinal Jaime Sin was calling for Estrada's
resignation and Vice President Macapagal-Arroyo had resigned her
Cabinet position. Estrada's political ship was then sinking fast as
Senators and Congressmen fled his ruling coalition and formal
impeachment proceedings began in the House of Representatives on
November 13. The late November disappearance of public relations maven
``Bubby'' Dacer after a meeting with Estrada raised fears that he would
use the military crack down on his opponents.
By the fourth quarter of 2000 a fairly clear broad-based movement
of Filipinos that united classes, political persuasions and religions,
was coalescing to demand the ouster of Estrada. The Philippine
military, while subject to the same rising emotions remained at the
sidelines until the end. It took the combination of an act of political
cowardice by a slight majority of Senators on January 16, in not voting
to reveal damning evidence against Estrada, plus resulting mass
demonstrations in Manila, and then the January 19 public withdrawal of
support by both civilian and uniformed military leaders, to force
Estrada to resign the next day.
New President Macapagal-Arroyo now faces daunting challenges. She
must seek to restore public trust in government. She must also
invigorate confidence in the economy by avoiding the kind of
intervention as the behest of favored ``cronies'' that increasingly
characterized the policies of her predecessor. There are early
indications that she will avoid such intervention. She will have to
reinvigorate an economic reform process started by President Ramos, but
which fell by the wayside under Estrada. Thanks to Ramos-led reforms of
the Philippine financial sector, the Philippines was able to avoid most
of the effects of the Asian financial crisis of the mid-1990s. However,
projected economic growth for this year of 3-4 percent GDP is not
sufficient to meet national development demands. And while facing new
security challenges from the People's Republic of China, the new
President must seek to convince powerful insurgent forces, both Muslim
and Communist, that greater economic and social justice is possible,
while war against democracy will not be acceptable.
CONTINUED INTERNAL THREATS
New President Macapagal-Arroyo is currently experiencing a
``honeymoon'' of sorts with a lull in the violence as she gathers her
administration and determines initial policy directions. But 1999 and
2000 saw a sharp rise in violence, mainly in Mindanao, and terrorist
attacks in Manila. The main challengers to the government have been the
large Muslim Moro Islamic Liberation Front (MILF) faction in Mindanao,
which seeks independence from Manila, and the extreme Islamic
fundamentalist Abu Sayyaf group, responsible for numerous kidnappings
and acts of terror, and the Communist Party of the Philippines (CCP).
While these groups do not pose a dire threat to Philippine democracy,
they do threaten the Philippine economy by deterring potential
investors.
Muslim Groups. After nearly a decade of relative calm, the southern
Philippine island of Mindanao again dominates Manila headlines, be it
for the renewed fighting between the government and the MILF or the
high-profile kidnappings by guerrillas of the Abu Sayyaf terrorist
group. According to one Philippine military estimate, in the last year,
about 300,000 Filipinos were affected by the violence in Mindanao. This
is but the latest chapter in a history of tension and conflict between
the government in Manila and Mindanao that extends back to the 1500s.
More recently, in the late 1970s, President Marcos fought a costly war
against the Moro National Liberation Front (MNLF) led by Nur Misuari.
Battlefield victories and dividing the MNLF leadership allowed Marcos
to quell their challenge. But in defeat the MNLF split to yield the
MILF. Today Misuari has joined the government and is now the governor
of an autonomous region in Mindanao. While it is organized, the MNLF
does not pose a threat to the government.
However, the desire for separatism remains strong with the Moro
Islamic Liberation Front. Assessments of its objectives range from
achieving self-governing autonomy, or a federal arrangement, which the
government might accept, to that of creating an Islamic state separate
from Manila. The MILF has spent the last twenty years building a
political and military infrastructure that balances its two major
ethnic groups, gathering weapons, and forging ties to the larger
fundamentalist Islamic world. Many MILF leaders are said to have had
experience either fighting in Afghanistan or have had training in
Pakistan. Estimates of its strength range from 15,000 fighters to
40,000, up to MILF claims of 120,000--the majority of which are
reservists.
The fighting that started in late 1999 is explained by some as the
outcome of a contest for territorial advantage to give leverage in
peace negotiations. A 1995 peace agreement with the MILF saw Manila
acknowledge MILF ``camps'' or areas in which they are in control. Since
1995 these negotiations have led to subnegotiations over specific
political and economic issues. Assessments of the growing strength of
the MILF provide impetus for those in the Estrada Administration who
favored a military solution. But these same assessments also prompt
many to advise the former government to place primary emphasis on
seeking a negotiated settlement. President Macapagal-Arroyo has stated
that she prefers end the war policies of her predecessor.
Economic Impact of the Violence. The new government has plenty of
economic incentives to seek a peaceful solution to the Mindanao
violence. There is one estimate that the fighting in Mindanao was
costing Filipinos over $20 million a month. Another report indicated
the government would devote $.5 billion to military and economic
projects in Mindanao in 2000. This expenditure forced the Estrada
government to exceed its budget spending limits, leading to larger
budget deficits. There is also a negative impact on economic growth and
the investment climate. Mid-2000 saw economic growth estimates decline
by a percentage point due to lower confidence.
A long-term solution to Mindanao's political challenges lies
predominantly in promoting successful economic development and social
justice. Peace, of course, is necessary for development to succeed, but
Mindanao has a long history of grievance that it has been ignored by a
central government dominated by interests from Luzon and the central
Visayas. That provinces are taxed by Manila but have little say in how
taxes are spent has spurred long-standing interest in federalist style
political reforms that would devolve more economic-political power to
the provinces. The previous Ramos Administration had made great strides
in helping Mindanao develop by allowing for freer trade, enabling its
provinces to forge better economic ties with Malaysia and Indonesia.
This ``Southern'' focus was in contrast to decades of ``Northern''
focus imposed by Manila.
Abu Sayyaf. The terrorist group that received the most attention in
early 2000 was the Abu Sayyaf, which has commanded headlines in the
press over its taking of hostages from Malaysia, on April 23 last year.
Said to have been inspired by the 1970s visits of Iranian missionaries
loyal to the Ayatollah Kohmeini, the Abu Sayyaf emerged in 1991 as a
radical fundamentalist sect violently opposed to Mindanao's Christian
majority. It is responsible for many brutal attacks on Christians and
against the government. Estimates of its strength range from 1,000
followers to only 120 to 200 actual fighters. Their brutality has
tended to alienate other Islamic groups in Mindanao and even foreign
Muslim leaders. Last April 19, President Estrada's birthday, the Abu
Sayyaf beheaded two of its hostages. They still hold two hostages,
including an American.
Bombings. For first five months of last year, there were 80
bombings, with 69 deaths in the Philippines. About 66 or 82 percent
were in Mindanao, and about 12 blasts in Manila. Nuisance bomb threats
create even more confusion. The inability of the authorities to stop
the bombings or capture the terrorists has created public exasperation.
The police have captured and accused Muslim extremists from Mindanao
that it links to the MILF. This has not yet been proven. While the
Mindanao bombings are linked to the unrest there, the Manila attacks
could come from a number of disaffected groups with an interest in
destabilizing the Estrada government. Such ``pile-on'' attacks have
happened in the past, such as in the late 1980s, when the CPP and
military rebels played off each other to destabilize the Aquino
government. There are some in the Philippine government who fear that a
series of bombs in Manila set off last December 30, killing 18 people,
may have been a cooperative effort on the part of Muslim extremists and
the Communists.
Communists. In the last three years the Communist Party of the
Philippines (CPP) has started to increase its activities against the
government. Since its founding in 1968 the CPP has been committed to
the violent destruction of Philippine democracy. Over the last year
they have been accused of leading many attacks against government and
military targets. A 1999 AFP estimate noted the CPP may have 6,000
members, and have a presence in 900 out of 40,000 barangays, or
government districts--double their estimated 1995 presence. While
capable of terrorism and banditry, the CPP does not approach the threat
they posed to democratic society in the early to mid 1980s. At that
time the CPP could count on 25,000 or more guerrilla fighters in its
New People's Army or other activists in its large structure of
political organization nominally led by the National Democratic Front
(NDF), which also gathered support from a large network of foreign
leftists. By the late 1980s, the weight of their own failings of
strategy, brutal purges that was alienating the masses they were
seeking to enlist, plus the combination of far more effective AFP
counter-insurgency operations and a growing economy, all combined to
cut their strength to the low thousands. Their recent growth and
increased activity can be attributed to a remaining dogged leadership
that refuses to abandon its Communist faith, the effects of the recent
Asian economic crisis, and the persistence of inequities in Philippine
society that can all be exploited by the CPP to attract new members.
The Communists, for the first time since the mid-1980s, have
decided to take advantage of the political opening caused by the broad
public opposition to former President Estrada, and try to win elective
office in general elections scheduled for this May. Under the Bayan
Muna, or ``Nation First'' party, several veteran Communist activists
are running for office. Unlike their last open political effort, this
time the Communists are focusing their resources on races they may be
able to win. Philippine politics is crowded with university-era
radicals who are now accepted democratic leaders. It remains to be seen
whether life-long radicals associated with the CPP can grow beyond
their anti-democratic goals.
CHINA'S LOOMING CHALLENGE
As she seeks to quell internal insurgencies, President Macapagal-
Arroyo must also contend with a growing threat to the Philippines from
China. The Philippine government in early 1995 was shocked by its
almost accidental discovery of four PRC buildings in an atoll called
Mischief Reef. At the east-end of the Spratly Island group, Mischief
Reef is about 150 miles away from the Philippine Island of Palawan,
well within Manila's 200-mile Economic Exclusion Zone, but over 800
miles away from the Chinese mainland. In 1999 the Philippine Navy on
several occasions intercepted, and on occasion, by ``accident'' sunk
PRC fishing boats operating in the Scarborough Shoal area off of the
northern Philippine islands of Luzon. There were Philippine-Chinese
confrontations in this area in 2000 and in early 2001, and Manila fears
Beijing may build facilities in Scarborough Shoal. The PRC claims all
of the Spratly Islands and the region of Scarborough Shoal as its
territory.
The vigorous Philippine reactions to PRC incursions in Scarborough
Shoal are perhaps to compensate for its inability to do anything about
the PRC presence in Mischief Reef. Despite repeated protests from the
Philippines as well as most other Southeast Asian countries, China has
refused to leave Mischief Reef. Instead, in November 1998, the PRC
started a new round of construction in Mischief Reef, completing
permanent concrete structures there in early 1999.
Mischief Reef can give shelter to several People's Liberation Army
(PLA) Navy ships and is located astride the Palawan Trench, a critical
sea-lane for the commerce of Asia. The structures in Mischief Reef have
evolved from four temporary shelters on metal stilts to two concrete
buildings on concrete platforms that could serve as docks for ships.
One of the structures could accommodate a helicopter, potentially
giving the facilities an independent combat capability. It appears that
these structures will be expanded, as the reef has been dredged to
allow several warships to enter and remain. Chinese concrete
``fortresses'' now exist on Johnston Reef, Chigua, Subi, and Fiery
Cross. The latter is almost two acres in area, and has a space that
could hold a helicopter. It is the headquarters for China's activities
in the Spratlys.
China's construction of these facilities in the disputed Spratly
Island area serve to highlight a long-simmering conflict over the
territory and resource rights to the South China Sea. Malaysia, the
Philippines, and Vietnam claim pieces of the area, while China and
Taiwan claim most of the South China Sea. All of these countries
maintain one or more outposts in the disputed region. Underlying these
claims is a competition for possible petroleum resources. Modest
amounts of oil have been found near the Philippines and Vietnam, but
expectations of large reserves have yet to be fulfilled as exploration
continues. Anticipation of future expanding energy needs, particularly
China's, serve to drive continued assertions of claims.
Long-running diplomatic and legal attempts to settle conflicting
claims so far have been unsuccessful. The United Nations Law of the Sea
Treaty, ratified by all claimants, guarantees each a 200-hundred mile
maritime economic exclusion zone. Within the Association of Southeast
Asian Nations (ASEAN), Indonesia has long led unofficial and official
diplomatic efforts to foster negotiations. Most recent efforts have
focused on getting Beijing to agree to an informal ``Code of Conduct''
that would defuse potential conflicts over the disputed areas. After
first refusing in November 1999, in March 2000 Beijing agreed to
consider adhering to such a code. While this is a positive development,
it should be viewed in the context of the PRC's past conduct.
China's approach toward the disputed South China Sea region has
long been described as ``grab and talk,'' referring to periods of
territorial expansion followed by diplomatic activity. In 1974, China
exploited U.S. and South Vietnamese preoccupation with the war against
North Vietnam, to chase South Vietnamese troops off of a few islands in
the Paracel Group. Then in March 1988, China established a foothold in
the southern Spratly group by fighting pitched battles with Vietnamese
troops and evicting them from several islets.\1\ Then followed a period
of diplomatic conciliation. In 1991, Chinese Premier Li Peng proposed
joint development for the area, setting aside the question of
sovereignty, and China joined a declaration made in Indonesia that the
claimants seek a peaceful settlement of their claims. But in 1992 China
passed a law that formalized its claims to territorial and maritime
jurisdiction of the Paracel and Spratly Islands and authorized the use
of military force.
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\1\ In the battle for Johnston Reef over 70 Vietnamese were killed.
These battles led to China's occupation of reefs at Chigua, Fiery
Cross, and Subi.
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China's growing power. A critical element that will drive China's
approach to the South China Sea is its ongoing military modernization,
that is now improving China's ability to dominate potential military
conflicts, and could spur China's leaders to increasingly assert their
claims in the South China Sea. In the early 1990s, on Woody Island in
the Paracel group, China built a 7,000-foot airstrip--long enough to
accommodate jet fighters and bombers--and recently added fuel storage
facilities to this base. This island is essentially a stationary
aircraft carrier. It could serve as a base for modern strike fighters
like the Chinese Xian JH-7 or the Russian Sukhoi Su-3OMKK attack
fighter, that are now being delivered to China. These attack fighters
could be guided by radar warning and control aircraft like the Chinese
Y-8 transports now being outfitted with 200-mile-range British radar
purchased in 1996, or the Russian Beriev A-50 AWACS that China is also
slated to purchase.
China has relative naval superiority over many of its neighbors and
its ships are becoming increasing more capable. The South Seas Fleet,
which has responsibility for the Paracel and Spratly areas, received
the first Luhai class destroyer, the most modern naval ship built in
the PRC. This 6,000-ton ship carries 16 modern C-802 cruise missiles,
two helicopters and a range of modern electronic systems. China's East
Sea Fleet now has two Russian-built Sovremenniy class missile
destroyers armed with the supersonic Sunburn anti-ship missile. In the
late 1990s the South Sea Fleet received six new and upgraded Ming-class
conventional submarines. These are not the most modern submarines in
the region, but in combination with the South Sea Fleet's many other
missile-armed ships and attack aircraft, they give Beijing a clear
superiority over the Philippine Navy and Air Force.
In the future China's missile and space systems will further expand
its superiority over the Armed Forces of the Philippines. China still
maintains intermediate range nuclear missiles, DF-21s and possibly DF-
3s, at its Lianxiwang Launch Complex. Originally these were targeted at
U.S. military forces in the Philippines, but China's missiles have
remained pointed at Filipinos long after the departure of U.S. forces.
China is also developing new long-range land attack cruise missiles
that can be launched from sea and air platforms. Both ballistic and
cruise missile will soon be targeted by a Chinese satellite network
that will include new electro-optical and radar satellites, and new
navigation satellites.
Philippines Outclassed. The Philippines has no defense against
Chinese missiles. Furthermore, the Philippine Air Force and Navy are
outclassed by those of China. Current Philippine air defenses consists
of only 8 to 12 F-5A fighters, a type that first entered Philippine
service in 1965. These fighters lack sophisticated combat systems and
are lacking ground-based radar coverage. The most modern ships in the
Philippine Navy are three small British-made gunboats purchased from
Hong Kong in 1997. No Philippine Navy ships are equipped with modern
anti-ship missiles. A World War Il-vintage tank-landing ship that was
used in mid-1995 to ferry journalists to Mischief Reef broke down and
had to be towed back to Palawan. In late 1996, the Philippine Congress
approved a $3.3 billion military re-equipment program. The 1997 Asian
financial crisis, however, has made it difficult for the government to
appropriate the funds needed to carry out this program. Nevertheless,
the Armed Forces of the Philippines (AFP) have an urgent requirement
for capable fighters, maritime patrol aircraft and combat ships. The
failure to date of the Philippine government to implement its
modernization program indicates a need to become much more serious
about their external defense. However, the revival of old internal
security threats may only further delay the AFP's modernization.
AN OLD ALLIANCE FADES AND REVIVES
China very likely decided to build its Mischief Reef facilities in
part to take advantage of the regional power vacuum created by the
breakdown in U.S.-Philippine military cooperation and the parlous state
of the Philippine Air Force and Navy. While the U.S.-Philippine
alliance has begun to improve since 1998, this alliance has also
weathered recent strains as it has seen supreme sacrifice. For most of
this century, Filipinos and Americans have cooperated to defend freedom
in Asia. Filipinos and Americans fought to resist Japan's 1941 invasion
of the Philippines, and after defeat, cooperated in guerrilla
resistance. Some 300,000 Americans returned to help liberate the
islands in October 1944. All told, the war in the Philippines cost the
lives of 1 million Filipinos, over 17,000 Americans and about 350,000
Japanese.\2\ Philippine Army units fought with U.S., South Korean, and
allied forces in the United Nations effort to repel North Korea's 1950
invasion of South Korea. And from 1965 to 1968, Filipino civil action
teams worked with U.S. forces in South Vietnam.
---------------------------------------------------------------------------
\2\ The Manila American Cemetery contains the remains of 17,206
American servicemen, the largest American military cemetery outside the
United States.
---------------------------------------------------------------------------
For nearly a century from 1898 to 1992, American military forces
were based in the Philippines. From the beginning, when U.S. forces
suppressed Filipino independence fighters in a bloody 10-year war and
made the Philippines a U.S. colony, their presence was resented by many
Filipinos. After the Philippines gained independence in 1946, a large
U.S. military presence continued, generating great debate among
Filipinos. On the positive side, American advice and military material
aid was instrumental in helping Philippine President Ramon Magsaysay to
defeat the Philippine communist ``Huk'' guerrilla movement in the
1950s. In the 1980s, large-scale U.S. economic and military material
assistance allowed the weak government of President Corazon Aquino to
pursue economic development and combat a more powerful indigenous
insurgency led by a new Communist Party of the Philippines. And while
the Armed Forces of the Philippines (AFP) was occupied fighting
communists, U.S. aircraft at Clark Air Base and navy ships in Subic
Naval Base helped deter formidable Soviet forces in Northeast Asia and
in Vietnam.
Political estrangement. The new generation of leaders that came to
power with President Corazon Aquino in 1986 did not fully support
larger U.S. strategic goals, even though most Filipinos favored the
U.S. military presence and close ties with America. The new leaders
were more concerned with righting long-ago wrongs, such as U.S. support
for the dictatorship of former President Ferdinand Marcos, while
ensuring that generous U.S. economic and military aid continued. There
was Philippine disappointment when promised aid was not delivered, and
American disappointment when Manila was slow to support the U.S., as it
was during the Persian Gulf War. Philippine Foreign Minister Raul
Manglapus and U.S. Ambassador Richard Armitage completed a new Bases
Treaty in August 1991 that provided for $200 million in aid for 10
years. Only then did Aquino campaign to support the U.S. presence. But
it was too late. On September 16, 1991, the treaty failed in Philippine
Senate by one vote.
During the 1980s the Philippine Armed Forces also grew increasingly
estranged from their U.S. counterparts. In the late 1950s and early
1960s, Philippine air and naval forces exercised with U.S. and other
friendly Asian militaries under the old Southeast Asia Treaty
Organization (SEATO). By the 1970s such cooperation became infrequent
as the AFP air and naval forces fell into obsolescence and disrepair,
and as funding priorities shifted to emphasize fighting communist
guerrillas. The United States encouraged this shift as there was no
alternative, but also to promote political reform in the AFP, which was
becoming a tool of repression for Marcos. At this time military rebel
factions began to grow, and would later try to overthrow Aquino.
Unfortunately, the counter-insurgency and counter-rebel focus led to
greater unfamiliarity among Philippine military leaders with role of
the U.S. military presence in sustaining regional peace. By the end of
the 1980s the AFP was not eager to support the U.S. military presence.
By this time Washington was losing patience with Manila due to
constant tensions caused by fractious politics and requests for
assistance. In 1986 a consensus emerged in Washington to give a large
amount of assistance to Aquino to help her fragile government
strengthen democracy. Despite generous U.S. aid--over $3.4 billion
during Aquino's term--her government did not stabilize quickly. When
the Mt. Pinatubo volcano erupted in June 1991, causing great damage to
Clark Air Base and Subic Naval Base, the United States withdrew from
Clark, and lost much of its desire to remain at Subic. When attempts to
negotiate a shorter-term access agreement failed in the wake of the
Philippine Senate vote, the United States accepted a Philippine notice
to leave, and the remaining U.S. forces departed Subic in August 1992.
Cooperation fades. From 1992 to 1999 officials in both Washington
and Manila have repeatedly reaffirmed the 1951 Mutual Defense Treaty,
but were not able to fashion a new and mutually acceptable defense
relationship. Although Aquino's successor, President Fidel Ramos, was
personally popular in Washington, the top priority of his
Administration was promoting free-market economic reforms and economic
growth. Ramos was not eager to expend political capital on a still
controversial military relationship with Washington. Exercises on
Philippine territory were suspended after December 1996, when the
Philippine Supreme Court rejected the Ramos Administration's extensions
of a pre-existing Status of Forces Agreement (SOFA). Such an agreement
was needed to establish the legal status of U.S. forces when in the
Philippines. For most countries a SOFA is merely an executive
agreement, but the Philippine Constitution requires that it be approved
by the Senate like a treaty. A new SOFA, since renamed the Visiting
Forces Agreement (VFA), was completed in January 1998.
REVIVAL OF THE U.S.-PHILIPPINE ALLIANCE
Former President Estrada and his Defense Secretary, Orlando
Mercado, both voted against the 1991 bases treaty as Senators. However,
after Estrada won the 1998 election, both led the campaign to achieve
Senate approval for the Visiting Forces Agreement in the face of
considerable political opposition. The Philippine Senate approved the
VFA in May 1999. The Estrada Administration pushed for the resumption
of alliance cooperation with the U.S. and for greater involvement in
the security of Southeast Asia. This change in Philippine attitudes is
due in large part to China, and to the realization by Philippine
leaders that a strong U.S.-Pbilippine alliance has in the past kept the
peace, and can do so in the future.
To its credit, the Clinton Administration has responded positively
to this new Philippine attitude. Following former Secretary of Defense
William Cohen's visit to Manila in early October 1999, Washington and
Manila have resumed substantive military exercises and have begun to
assess the future of U.S.-Philippine military relations. In February
last year, over 2,000 U.S. soldiers participated in the series of joint
U.S.-Philippine exercises known as Balikatan (meaning ``shouldering the
burden''). This past Balikatan featured small exercises on the island
of Palawan, which is closest to the PRC occupied Mischief Reef. The
next Balikatan exercise is scheduled for this April.
Since the passage of the VFA, many U.S. Navy ships have visited
Philippine ports. This helped to sustain the U.S. military presence in
that region at a time when the PRC denied access to Hong Kong for the
U.S. Navy. The Estrada Administration further signaled its interest in
assisting regional stability by sending 750 troops to join the
International Force In East Timor (INTERFET) and the associated United
Nations Transitional Authority for East Timor (UNTEAT). The U.S. gave
the Philippines aid in the form of trucks to help it accomplish its
East Timor mission. The Philippines has also joined the U.S. in
criticism of the recent abuses of political and human rights in
Cambodia, Malaysia and Myanmar.
In her initial statements President Macapagal-Arroyo has expressed
her willingness to improve all aspects of the Philippines' relationship
with the United States. This has been a long-standing view of hers. It
can be safely expected that President Macapagal-Arroyo will also seek
to continue the ongoing improvement in U.S.-Philippine military
cooperation.
After Cohen's 1999 visit the U.S. and the Philippines started a
Defense Experts Exchange that has produced a broad assessment of
Philippine defense requirements. This process will serve to give the
U.S. a better understanding of Philippine defense needs, should the
U.S. decide to better help the Armed Forces of the Philippines meet its
pressing needs. This would also be a logical next step in the U.S.-
Philippine strategic relationship.
Strategic importance. The strategic importance of the Philippines
remains constant for the United States. In May 1995, almost four months
after PRC structures were discovered on Mischief Reef, the Clinton
Administration issued a statement that affirmed U.S. neutrality, but
also emphasized that ``Maintaining freedom on navigation is a
fundamental interest of the United States.'' This can hardly be
exaggerated: Up to 70 percent of Japan's oil transits the sea-lane
between Mischief Reef and Palawan. This sea lane is critical to the
economies of Japan, South Korea, and Taiwan, which in turn propel Asian
economic activity that allows the sales of enough U.S. goods to
generate jobs for about 4 million Americans. While the U.S. has had a
traditional position of neutrality regarding the conflicting claims to
the South China Sea, the relative inaction of the Administration after
the 1995 Mischief Reef incident did not seem consistent with U.S.
interests. It certainly was cause for disappointment by Filipinos.
However, the Clinton Administration started to make up for this by
moving to revive military cooperation with Manila during its last two
years.
A TIME TO HELP OUR FRIEND
In President Macapagal-Arroyo the Philippine people have a leader
who understands the burden of her office, the enormous demands on her
leadership, and the necessity of defending the freedom of Filipinos.
Her victory was a victory for the rule of law and for Philippine
democracy. As the Philippines' historic and main ally, Washington
should consider how it could help Filipinos.
There is cause for the U.S. to consider how it can better focus
existing U.S. economic assistance on developing Mindanao, especially
the Muslim areas. This need not necessarily be expensive project
assistance, but can also take the form of advice and consultants to
help Manila tackle local problems. Any assistance that the U.S. can
provide to help Filipinos remove barriers to trade will also be in the
interest of both countries. In 1999 the Philippines rose from the 19th
to the 16th largest U.S. trading partner, as the U.S. has long been the
first or second major trading partner for the Philippines.
As the Clinton Administration started, with the former Estrada
Administration, to rebuild the U.S.-Philippine strategic relationship,
it behooves the two new governments of Presidents George W. Bush and
Gloria Macapagal-Arroyo to continue on this path. However, it is
important to be mindful of lessons from the recent past. Both countries
should not forget that a strong alliance has and can continue to
contribute to security of the other. The Philippines retains its
strategic position near critical sea-lanes, and near potential
flashpoints that could engage U.S. forces, like the Taiwan Strait. In
the past, strong U.S.-Philippine cooperation has deterred potential
aggressors. When cooperation has lapsed, as it did in the 1990s, China
took advantage and occupied Mischief Reef.
It is also critical, as both Manila and Washington look to the
future, to be sure that respective strategic goals do not diverge.
There was clear divergence in the 1970s and 1980s that served to
undermine political support for the alliance in both countries. Future
cooperation must be grounded on a mutual understanding of threats and
security needs. For example, the PRC challenge is specific for Manila,
but also regional for Washington. Manila clearly needs help sustaining
and modernizing its armed forces. The U.S. will require access to
Philippine bases in the context of military cooperation that will
support Philippine and regional security. Given the increasing
political pressures on the U.S. military presence in South Korea and
Japan, it is logical for Washington to again seek useful, but not
permanent access to Philippine bases. By the same measure, the U.S.
should encourage and help facilitate greater Philippine involvement in
the region's security.
Finally, it is critical that both avoid unnecessary dependency.
Philippine dependency on U.S. economic and military aid in the past,
though necessary, also bred resentments. Today the U.S. has a range of
used but effective military equipment that it could offer to Manila for
bargain prices, but this should be done in the context of an effective
modernization program that is largely funded by the Philippines. That
said, it does remain in the U.S. interest that the Philippines acquires
an effective defense capability that can deter potential aggressors,
like the PRC, and enable greater Philippine participation in bi-lateral
and regional security cooperation. It is also in the U.S. interest that
the Philippines be able to resist terrorism and the illegal drug
trade--a real threat today in the Philippines. For this fiscal year, it
would be appropriate to consider how the U.S. could make available to
the Philippines spare parts for their helicopter fleet, and other
sorely needed items like long-range radar, that the U.S. would have in
excess storage.
In closing, Mr. Chairman, I would like to mention some Philippine
heroes who have for me personified the Philippine-American alliance.
From an older generation I would mention General Luis Villa Real, who
served in the American forces in World War II, and Ambassador Alex
Melchor, a graduate of the U.S. Naval Academy. Both have led exemplar
lives of public service, building their nation and defending its
freedom from all internal threats. When I first met them in the mid-
1980s they were both leading efforts to oppose Ferdinand Marcos, and
both went on to serve the Aquino government. Both Melchor and Villa
Real have been constant allies of the United States, and despite their
age, remain inspirational crusaders for freedom and honest government.
From this same generation, I would like to mention my uncle, John
Brush, who spent over three years as a civilian prisoner of the
Japanese Army in the Philippines during World War II. He and his late
wife owed their survival to friendship of Filipinos who sustained them.
His respect for the Philippines has informed my own.
From my generation, I would like to remember Eddie Federico, who I
first met in a Bocolod City jail in 1988. He had just been captured as
a key leader in the CPP movement in Negros Island. Over the next two
years, Eddie changed his heart, renounced his Communist faith, embraced
democracy and worked with the government to bring his colleagues out of
the hills. He was effective and fearless in seeking to right his
wrongs. But this was to cost him his life in early 1991 when he was
assassinated in Manila by the CPP.
To know the Philippine-American alliance is to know many such
heroes. To me, these friends symbolize the willingness of the Filipino
to defend their freedom, in a democracy like our own, which aspires to
a more perfect union. The Philippines is a proud nation, it faces
daunting challenges, but it is also our ally. America must invest in
this friendship, not just because it is in our interest, but because it
affirms our own democratic values, which were long ago embraced by the
Philippines.
Senator Thomas. Thank you, sir.
Senator Lugar.
Senator Lugar. Thank you, Mr. Chairman. I appreciate your
holding this hearing, and the responses of the witnesses. It
seems to me, as I have listened to your testimony, there are
certain paradoxes in the situation that I want to discuss with
you for a minute.
You have pointed out that the base for the change in
government is narrow, that it is the middle class and the
upper-middle class. At the same time, the Philippines still is
riven with corruption, although clearly the basis for the
change in government was a reaction to the corruption that was
felt by most of the people in whatever class they were in. As a
result, the Presidency there that may be narrowly based, but is
probably generally trusted to be well-motivated even by a
system that is still corrupt and narrowly based in terms of
ownership. Having terminated relations with the United States
in terms of the military bases, as you suggested, they are on
the threshold of trying to think through new security
arrangements which you both advise we should help.
Now, given all of that, I am curious as to what kind of
effective economic strategy could be devised by the new
President and the government. Given the lack of activity, or
rather the lack of prosperity for the moment in Japan or
elsewhere, our country really is probably the only source of
significant capital and business partnership. Thinking outside
the box for a moment, is this a time for a major breakthrough
in our thinking? We frequently use the term, Marshall Plan,
because it fit another continent or another time.
Should we be trying to think through the infrastructure
needs of the country, as well as the institution-building, so
you would have less narrow ownership and a broader popular
base? Some thinking that makes certain that the change reaches
far into the population, so there are some roots for an
economic revolution. Some thinking with the Philippine
leadership on the fact that the Philippines, as well as Japan,
Singapore, the ASEAN nations, take for granted that should
there be aggression against any nation in the area, the United
States is a defender.
But the logistic possibilities of that defense are pretty
small. As Secretary Perry discussed 3 or 4 years ago when there
was the potential for invasion by North Korea of the South,
getting 200, 300, 400,000 people to the area, as were
contemplated for the rescue, requires bases, some place for
people to regroup, for boats to alight, or for supplies to come
in. The question is relevant even if the political will in the
United States or Asia existed, and people wanted this kind of
support.
At some point, people have to think about these. The
Japanese, to their credit, resisted attempts to expel American
troops from Okinawa, the last vestige, aside from South Korea,
of significant troops in the region. These are strategic
questions that are important for the future of the Philippines,
as well as for the area, if the Philippines were to take off in
a partnership combining Philippine ingenuity and American
capital.
Otherwise, it seems to me that we are fated to wish the
Philippines well, to indicate that we maintain a sentimental
relationship, and that we hope they will work it out, but we do
not want to interfere or feel they do not want us to interfere.
We keep observing that the political culture is corrupt, that
it is narrowly based, that there are many, many poor people
that are staying poor, and that it is still a dangerous area in
which there is no overall American strategy for changing that.
This is almost too much to react to in one question, but do
you react to any of these ideas, or is this analysis so far off
that we ought to go back to ground zero and think up another
one?
Dr. Clad. No, sir. You raise a lot of things, though, and
what I want to do is walk through them quickly but try to touch
on each point as I take them down.
The first thing I have written down for your note-taker is
the word, In Tagalog, in Filipino called garapal. It is a
useful word for understanding why the Philippine middle classes
found Mr. Estrada so offensive. It is not that the scale of
greed exceeded Marcos. Far from it. It was quite small by
comparison. It was the way in which it offended sensibilities,
and I think it is a very useful way to do it. There is
something about it, the brazen nature of it, the involvement of
a lot of--it is style, involvement of ethnic Chinese business
characters from Macao, those sort of things hit hard. That is
one thing.
I think it is a country of contradictions. I think, for
example, it is a mistake to give it--and I would never use the
word myself, as a, ``basket case.'' There are areas, for
example, back-room operations of American and other foreign
corporations where the Philippines, which has now the world's
third largest number of English speakers in any country, is
taking a very interesting role in servicing large,
multinational, whether it is payroll, whether it is production
of business manuals, a number of things. This is a very
exciting area in the Philippines and plays to its strength.
Third, the professionalization of the business middle
classes in Manila is a fact, and it was enhanced rather than
hampered by the administration of President Ramos, and we are
hoping to see a resumption of this. There are many things that
are on track.
As far as direct foreign investment is concerned, sadly,
the Philippines, just as, sir, we out there for the first time
in the mid-eighties, missed out, then, on the wave of direct
foreign investment coming out of Japan and Korea because of
their chronic political instability, and now, after the
financial crisis of 1997, medium-sized foreign firms are
looking to relocate their offices or corporate headquarters,
and then you get this political risk overhang again, so it has
not been all that neatly done.
As far as a kind of Marshall Plan idea, sir, you will
recall there was something of a multilateral aid initiative,
the MAI, which, given our constrained circumstances, but also
the cold war environment, we could contribute to, I think it
would be hard to fashion a constituency that would be hard to
go in now considerably, given, I think, especially the way in
which the Philippines was no longer on the screen the way it
was when we were in the bases in the cold war and the World War
II generation was correspondingly younger.
As far as what we can do to help logistically, Senator
Lugar and Senator Thomas, you will remember the approach of the
time Carl Ford, when he was in the Reagan administration,
looking at places, not bases, and I think that approach has
been a success.
I am hopeful, and I think the tenor of my remarks and that
of Mr. Fisher, that we can get back to a normal, quote-unquote,
relationship with the Philippines as a country anchored in
Southeast Asia so that we can do things with them
multilaterally, and it is not just in this bilateral and
sometimes rather touchy relationship in which the military
establishments of both sides remember the events of 1991 and
our eviction from Subic and so on, and so I think the healthy
relationship is there.
And I would return to my final remarks that if we are
focused and look at things in the maintaining the military
equipment, we aim to work with the Philippines in an ASEAN
multilateral way and then assist, perhaps, with encouraging the
type of energy reform we have seen, I think the focus will help
as much as large numbers of dollars.
Senator Lugar. Already I know a lot of work is done, and
you touched upon this with regard to software and electronic
aids and what-have-you. Is the Philippines a country in which
something such as what has occurred in India might occur?
Dr. Clad. Yes, sir. I believe it is already happening. That
kind of infotech dynamism is there. The creative side of it
needs to be fashioned, but already there are very encouraging
signs. If you look at personnel hired by firms outside of the
Philippines there are some intersecting signs, but some of the
office software now is being written in Manila, so I think
things are part of a complicated picture.
Senator Lugar. Because we heard testimony, when the Irish
Foreign Minister was here last week, that a revolution has
occurred in Ireland with young people, and he claimed more
software is being exported from Ireland than any other country,
maybe, other than the United States. That sounds like a bit of
blarney.
Well, you know, 4 million people in a small country, that
is a lot of software, but it occurs to me this is clearly a
market where the United States firms have relations, because a
huge amount of software work and electronic work occurs there.
And now in India, quite apart from Indians who come to the
United States. The ebb and flow back and forth with these
nationals is interesting.
Dr. Clad. Senator, if you and I are both right, we now have
in Macagalong Palace a President who is completely alert to
those possibilities, so I hope we are right.
Senator Thomas. What we are really interested in is kind of
your views of where we go from here. Would you respond to
Senator Lugar?
Mr. Fisher. I would simply add that, apropos of the
comments of the Philippine information technology dynamism, the
transition that we saw was just enabled by the widespread use
of digital cell phones and the ability to send small mobilizing
messages. It has had an impact on their democracy as well.
Dr. Clad. The parity of the volume of text messages in
metro Manila exceeds the whole rest of the world in
combination.
Mr. Fisher. But Mr. Chairman, in terms of where we go, I
agree with Dr. Clad, I do not think that a Marshall Plan
approach is really suitable or necessary at this time. Usual
American honest, friendly advice is, indeed, something that we
should offer where we think appropriate, and any encouragement
that we can give to the new government to proceed with resuming
the path of reform that was started by President Ramos was
suspended under Estrada's administration, but reforms that
strengthen the financial sector, improve transparency, increase
opportunity, lower subsidies, improve access to capital by all
classes, especially the lower classes, all of this will
contribute to the Philippines' economic strengthening and
economic growth.
As regards to our alliance relations, Senator Lugar, I am
one of those who believes that there is a place for the
Philippine-American alliance in the larger American construct
of alliance relationships in Asia. I think that if we value our
alliance with the Philippines, we should talk to our allies
about the future, about a part that they may play in a larger
role, and also how they benefit from the wider strategic
investment that we make in peace in Asia.
I agree with Dr. Clad that our relationship will probably
never approach that where it was in the 1980's, 1970's, but I
would also add that there were several disparities in that
relationship that helped contribute to basically the suspension
of military cooperation in the early to mid-1990's. We did not
share a common set of defense goals. We did not share an
understanding, a mutual understanding on regional security, and
the Filipinos focused on their internal insurgencies, did not--
or felt that they were being shortsighted, in the American
view, on our focus on external defense issues, whereas our main
concern were the insurgencies and such.
All of this has now passed. Enough water has gone under the
bridge, and I think that it is time for us to begin a new and
long-term and far-reaching and far-looking conversation with
our Philippine allies about roles that they may play, ways in
which they may assist us, as you suggest, in terms of logistic
support, how we might include them in a higher level of
involvement and peacekeeping activities, or try to find ways to
enable their participation, even at the level of observers, in
our bilateral or multilateral alliance exercises in Asia.
I think there is a lot we can do to contribute to help
promote a greater awareness of our strategic investment in Asia
and why we do that, and I also think that over time we can
convince them to play a larger role, and that we will all
benefit from that.
Senator Thomas. If you came into this conversation and just
had read a little of the background, you would assume that we
have not had a relationship with the Philippines, is that the
case?
Dr. Clad. If the question is, it would sound as if you are
talking about just another country----
Senator Thomas. Well, we have to renew, we have to change,
we have to strengthen. Have we not changed substantially from
what our relationship has been in the past?
Dr. Clad. My view is, we have.
Mr. Fisher. This process is underway, but I point out that
for most of the 1990's we were more or less indifferent of each
other, and I would also submit that it was this indifference to
our alliance relationship, which I believe emboldened the
Chinese to move into Mischief Reef in late 1994, early 1995.
I think that should serve as a lesson to us, when we do not
pay attention to our alliances we invite trouble. This
estrangement has as much to do with the Philippines and the
choices that they made, and their indifference toward us, but I
also believe that our indifference in the early to mid-nineties
toward Manila helped to invite that trouble.
Senator Thomas. Do you think their indifference toward us
has changed? What do you predict to be the position of the new
administration there?
Dr. Clad. Sir, just, if I can, to underscore something Rick
just said a moment ago, when I teach international relations at
Georgetown and East Asia, one thing I tell the students is,
remember, of all the countries in Southeast Asia, only the
Philippines was stuck, quote-unquote, with a rising ascending
power, and all the rest of them saw the Western powers
disappear.
The American-Filipino relationship is extraordinarily
complicated, and characterized by a great deal of dependency,
which is reinforced during the cold war by expectations, the
way Marcos played us for extra money, and I think it became
very unhealthy.
When I said it is a healthy relationship, I did not mean to
suggest that we were better positioned, for the reasons that
Senator Lugar partly alluded to, but I believe that we are
beginning to deal with one another as a major Asian country and
the greatest of great powers, and I think that is healthy,
particularly if it is anchored, as Mr. Fisher and others
suggested, within a regional focus.
As far as the new administration there, I believe we really
do have the kind of people who see the world as it really is.
We have an attitude that wants to include Filipinos into market
dynamism, wants to be programmatic about politics, wants to
focus the new foreign secretaries, also the Vice President. He
realizes he had a southern issue to deal with. He wants to do
that regionally, and the way the Indonesians were so helpful
with assisting before the fall of Suharto and their own
distractions.
So I think we have in place a competent and realistic
government in Manila, and I also believe that the new
administration here sees that devoid of these old colonial
relationships in a way that I think is very healthy for the
future.
Mr. Fisher. I would agree. Congressman Rohrabacher just led
a delegation to Manila. He focused a great deal on security
issues, bilateral and specific to the Philippines.
My review of what he was able to learn, and from my
conversations with friends who were with him, leads me to
concur with Jim that a new administration is effused of
straight-seeing and clear-headed people who do want to build a
better alliance relationship. They want to continue what was
started by the Clinton administration and President Ramos, the
dialog, the resumption of exercises, and they do want to talk
about the future.
Dr. Clad. And if I may say, sir, I believe they also want
to see us helping them in a regional context as well. They are
no longer anxious to play the old bilateral game, which I think
led us into so many traps and sensitivities. I think they hope
that we will best help them in a way that is also assisting a
regional cohesion, so I think it is a win-win there.
Senator Thomas. Any further comments, sir?
Senator Lugar. Well, I am encouraged by the council you
have given us, because you are long-time students of the
country. I echo the chairman's thought that it still is a very
special relationship. In other words, this is not a situation
of just taking antiseptically a view of another country in
Southeast Asia.
I remember a celebration here in Washington--time goes by
rapidly--it was the 100th anniversary of Philippine
independence. It was being celebrated by Filipinos. One of the
extraordinary things about this was that the Filipino-Americans
came from all over the country, with talent, professions, and
some idea really of the Philippine presence in this country.
You mentioned remittances back to the Philippines. Even
more than that, it appears to me that there is probably a
reservoir not only of goodwill, but ultimately of some money,
of some catalyst for capital development.
I appreciate your mentioning the multilateral assistance
initiative, because that really did come out of the election of
1986, and the feeling about 4 years later that we are not doing
very much about helping the new democracy. So there was a
resurgence, and some of that assistance went to Mindanao, as
you remember. That sort of disappeared from the scene. Perhaps
there is not the same feeling today but, on the other hand, I
am inclined to think there may be more there than meets the
eye.
The new Presidency, how it came about, and the ties that
the President has with the United States are considerable. This
remains to be seen. Perhaps we should move, as you suggested,
with the work and the military equipment and begin to talk
about the strategic importance place of the country. It appears
to me that for the breakthrough to occur, the economic growth
has to be there. There has to be some production, and it has to
be more broadly based. How these institutional changes occur is
up to the Filipinos. It could be influenced, it seems to me, by
our institutions, by the way we do things. We have failed
altogether in similar instances in Russia, for example, but
done much better in Poland, so there are some wins and losses
in this, but the Philippine relationship is such that it seems
to me that there is more of a chance for a win there.
Thank you again, Mr. Chairman.
Senator Thomas. Thank you, gentlemen. I think it is
appropriate for us to talk about this issue. I think it is one
that is out there, and it is very important to us in terms of
Asia, and so I thank you, and we will keep the record open for
any questions we might have.
Thank you all for your participation. The subcommittee is
adjourned.
[Whereupon, at 3:25 p.m., the subcommittee adjourned.]