Treason in dirty Chinese loans?

Treason in dirty Chinese loans?
Under Beijing gun, Gloria commits RP to Spratly deal
Malaya 2/23/2008
--------------------------------------------------------------------------------
PRESIDENT Arroyo and former Speaker Jose V. de Venecia may have committed treason if the Philippine government signs a so-called "Spratly Deal" with Beijing in exchange for loans attended by bribery and corruption.

Malaya publisher Amado Macasaet said he was told by a source that under the "Spratly Deal," China would be allowed to explore territorial waters of the Philippines.

"This is treason because the pact has the effect of giving away Philippine sovereignty to a foreign country. In return, Chinese-owned firms provide the Philippines with overpriced loans for numerous projects," he said.

He said the issue has not reached the attention of the Senate but "when it does, I am reasonably certain that the Upper House will insist that the agreement be considered a treaty which must be ratified by the Senate."

He said he was told that officials of the Philippine Navy and the Department of Foreign Affairs have raised the question of sovereignty. "My source told me that they were ignored without even explaining what the matter is all about or how the Philippines can benefit from it."

Macasaet said the Chinese are pressing for commitment on the deal. "It has not signed the North Rail agreement and insists that the Spratly deal be concluded simultaneously with the $500 million rail modernization project that covers 27 kilometers from Caloocan to Malolos, Bulacan."

He said Arroyo and De Venecia chose to ignore the fact that all minerals and marine resources are owned by the country whose domain extends 200 nautical miles from its nearest shoreline.

This, he said, is provided under the UN Conference on the Law of the Seas.

Since the project involves national sovereignty and patrimony, the "Spratly Deal" should be in the form of a treaty subject to the ratification by the Senate, he said.

Macasaet said someone who supports the deal told him that the mode should be a joint venture, not an executive agreement.

But then a lawyer claimed that a joint venture is a blatant mode of a circumventing the treaty ratification required by the Constitution.

The lawyer said a joint venture is not acceptable because it is a commercial transaction.

On the other hand, a treaty is a sovereign act that must be ratified by the Senate.

Under a treaty required by the Constitution, the Philippines partly or wholly cedes its sovereign rights.

The national broadband deal with Chinese firm ZTE Corporation and the North and South railway projects would be financed by loans from China. The Department of Trade has signed a memorandum of agreement with ZTE International for four projects that would cost around $4 billion.

The Department of Education and Culture has its Cyber-Ed, also to be financed with loans from China. There are talks of overprice in all these projects.

Macasaet said his source told him that behind all these loan accommodations from China is the motive that both Arroyo and De Venecia agreed to.

The Spratly deal also includes special and exclusive economic zones, already contained in the memorandum of agreement signed between DTI and ZTE International.

Sensing the threat to its claim to the same group of islands, Taiwan President Chen Shui-bian visited the Spratlys last Feb. 2 over the objections of China, but with very few words of protest from the Philippines.

DIRTY PROJECTS

Said to be potentially rich in gas and oil deposits, the Spratlys are claimed as a whole by China, Taiwan and Vietnam, while parts of it are claimed by Malaysia and the Philippines.

As it now turns out, the real motive of China is to explore, under an agreement, internal waters of the Philippines. These waters are limited to Filipinos.

"We all talk about loans from China and the briberies that attend them. Unknown to many of us is the fact that China may not sign the final agreements for these dirty projects unless the Philippines signs a deal covering the Spratlys," Macasaet said.

"The Chinese obviously dangled anomalous loans in exchange for the Spratly deal. What is involved here is not just bribery. It’s something worse. Its high treason," he said.

Macasaet said that in this treaty which both countries cover with the word "deal," the Senate has been completely ignored.

FAT BRIBES

In sum, Macasaet said, the accommodations in the form of billions of dollars of loans, overprice not included, are carrots dangled by the government of China, to get back a bigger payoff – the exploration of internal waters which belong exclusively to the Filipinos.

"How soon or how late the Chinese government will sign the final agreement for the loans and the projects is an indication of how we have plunged ourselves into an abyss that is nothing but high treason," he said.

Macasaet said his source in Malacañang intimated that the agreements for the North and South Rail may be not be finally signed until Arroyo and De Venecia make good their word that the Philippines will allow China to explore its internal waters.

Manila’s Bungle in The South China Sea

Far Eastern Economic Review
January/February 2008
Manila’s Bungle in The South China Sea
by Barry Wain


When Vietnamese students gathered outside the Chinese Embassy in Hanoi last December to protest against China’s perceived bullying over disputed territory in the South China Sea, it signaled Hanoi’s intention to turn up the heat a bit.

And Beijing reacted in kind; instead of downplaying the incident, a foreign ministry spokesman complained, “China has indisputable sovereignty over the South China Sea islands.” The bluster on both sides, while just a blip in this long-running feud, is a timely reminder that the South China Sea remains one of the region’s flashpoints. What most observers don’t realize is that in the last few years, regional cooperative efforts to coax Beijing into a more measured stance have been set back by one of the rival claimants to the islands.

Philippine President Gloria Macapagal Arroyo’s hurried trip to China in late 2004 produced a major surprise. Among the raft of agreements ceremoniously signed by the two countries was one providing for their national oil companies to conduct a joint seismic study in the contentious South China Sea, a prospect that caused consternation in parts of Southeast Asia. Within six months, however, Vietnam, the harshest critic, dropped its objections and joined the venture, which went ahead on a tripartite basis and shrouded in secrecy.

In the absence of any progress towards solving complex territorial and jurisdictional disputes in the South China Sea, the concept of joint development is resonating stronger than ever. The idea is fairly simple: Shelve sovereignty claims temporarily and establish joint development zones to share the ocean’s fish, hydrocarbon and other resources. The agreement between China, the Philippines and Vietnam, three of the six governments that have conflicting claims, is seen as a step in the right direction and a possible model for the future.

But as details of the undertaking emerge, it is beginning to look like anything but the way to go. For a start, the Philippine government has broken ranks with the Association of Southeast Asian Nations, which was dealing with China as a bloc on the South China Sea issue. The Philippines also has made breathtaking concessions in agreeing to the area for study, including parts of its own continental shelf not even claimed by China and Vietnam. Through its actions, Manila has given a certain legitimacy to China’s legally spurious “historic claim” to most of the South China Sea.

Although the South China Sea has been relatively peaceful for the past decade, it remains one of East Asia’s potential flashpoints. The Paracel Islands in the northwest are claimed by China and Vietnam, while the Spratly Islands in the south are claimed in part or entirety by China, Taiwan, Vietnam, the Philippines, Malaysia and Brunei. All but Brunei, whose claim is limited to an exclusive economic zone and a continental shelf that overlap those of its neighbors, man military garrisons in the scattered islets, cays and rocks of the Spratlys.

After extensive Chinese structures were discovered in 1995 on Mischief Reef, on the Philippine continental shelf and well within the Philippine 200-nautical-mile exclusive economic zone, Asean persuaded Beijing to drop its resistance to the “internationalization” of the South China Sea issue. Instead of insisting on only bilateral discussions with claimant states, China agreed to deal with Asean as a group on the matter. Rodolfo Severino, a former secretary-general of Asean, has lauded “Asean solidarity and cooperation in a matter of vital security concern.”

Asean and China, however, failed in their attempt to negotiate a code of conduct. In the “Declaration on the Conduct of Parties in the South China Sea,” signed in 2002, they pledged to settle territorial disagreements peacefully and to exercise restraint in activities that could spark conflict. But the declaration is far from watertight. A political statement, not a legally binding treaty, it doesn’t specify the geographical scope and is, at best, an interim step.

Since the issuance of the declaration, a tenuous stability has descended on the South China Sea. With Asean countries benefiting from China’s booming economy, boosted by a free-trade agreement, Southeast Asian political leaders are happy to forget about this particular set of problems that once bedeviled their relations with Beijing. Yet none of the multifaceted disputes has been resolved, and no mechanism exists to prevent or manage conflicts. With no plans to discuss even the sovereignty of contested islands, claimants now accept that it will be decades, perhaps generations, before the tangled claims are reconciled.

Recent incidents and skirmishes are a sharp reminder of how dangerous the situation remains. In the middle of last year, Chinese naval vessels fired on Vietnamese fishing boats near the Paracels, killing one fisherman and wounding six others, while British giant BP halted work associated with a gas pipeline off the Vietnamese coast after a warning by the Chinese Foreign Ministry. In the past few months, Beijing and Hanoi have traded denunciations as the Chinese, in particular, maneuver to reinforce territorial claims. Vietnam protested when China conducted a large naval exercise around the Paracels in November.

China’s decision in December to create an administrative center on Hainan to manage the Paracels, Spratlys and another archipelago, though symbolic, was regarded as particularly provocative by Hanoi. The Vietnamese authorities facilitated demonstrations outside the Chinese diplomatic missions in both Hanoi and Ho Chi Minh City to make known their displeasure.

Friction can be expected to increase as the demand for energy by China and dynamic Southeast Asian economies rises and they intensify the search for oil and gas. While hydrocarbon reserves in the South China Sea are unproven, the belief that huge deposits exist keeps interest intense. As world oil prices hit record levels, the discovery of commercially viable reserves would raise tensions and “transform security circumstances” in the Spratlys, according to Ralf Emmers, an associate professor at the S. Rajaratnam School of International Studies in Singapore.

President Arroyo’s agreement with China for a joint seismic study was controversial in several respects. By not consulting other Asean members beforehand, the Philippines abandoned the collective stance that was key to the group’s success with China over the South China Sea. Ironically, it was Manila that first sought a united front and rallied Asean to confront China over its intrusion into Mischief Reef a decade earlier. Sold the idea by politicians with business links who have other deals going with the Chinese, Ms. Arroyo did not seek the views of her foreign ministry, Philippines officials say. By the time the foreign ministry heard about it and objected, it was too late, the officials say.

Philippine diplomats might have been able to warn her that while joint development has been successfully implemented elsewhere, Beijing’s understanding of the concept is peculiarly Chinese. The only location that China is known to have nominated for joint development is a patch off the southern coast of Vietnam called Vanguard Bank, which is in Vietnamese waters where China has “no possibly valid claim,” as a study by a U.S. law firm put it. Beijing’s suggestion in the 1990s that it and Hanoi jointly develop Vanguard Bank was considered doubly outrageous because China insisted that it alone must retain sovereignty of the area. Also of no small consideration was the fact that such a bilateral deal would split Southeast Asia.

The hollowness of China’s policy of joint development, loudly proclaimed for nearly 20 years, was confirmed long ago by Hasjim Djalal, Indonesia’s foremost authority on maritime affairs, when he headed a series of workshops on the South China Sea. Mr. Hasjim set out to test the concept of joint development, taking several years to identify an area in which each country would both relinquish and gain something in terms of its claims. In 1996, he designated an area of some thousands of square kilometers, amounting to a small opening in the middle of the South China Sea, which cut across the Spratlys and went beyond them. Joint development, unspecified, was to take place in the “hole,” with no participant having to formally abandon its claims. Beijing alone refused to further explore the doughnut proposal, as it was dubbed, complaining that the intended zone was in the area China claimed. Of course it was, that being the essence of the plan, without which it was difficult to imagine having joint development.

China’s bottom line on joint development at that time: What is mine is mine and what is yours is ours.

Beijing and Manila did not make public the text of their “Agreement for Seismic Undertaking for Certain Areas in the South China Sea By and Between China National Offshore Oil Corporation and Philippine National Oil Company.” After the agreement was signed on Sept. 1, 2004, the Philippine government said the joint seismic study, lasting three years, would “gather and process data on stratigraphy, tectonics and structural fabric of the subsurface of the area.”

Although the government said the undertaking “has no reference to petroleum exploration and production,” it was obvious that the survey was intended precisely to gauge prospects for oil and gas exploration and production. Nobody could think of an alternative explanation for seismic work, especially in the wake of year-earlier press reports that CNOOC and PNOC had signed a letter of intent to begin the search for oil and gas.

Vietnam immediately voiced concern, declaring that the agreement, concluded without consultation, was not in keeping with the spirit of the 2002 Asean-China Declaration on the Conduct of Parties. Hanoi “requested” Beijing and Manila disclose what they had agreed and called on other Asean members to join Vietnam in “strictly implementing” the declaration. After what Hanoi National University law lecturer Nguyen Hong Thao calls “six months of Vietnamese active struggle, supported by other countries,” state-owned PetroVietnam joined the China-Philippine pact.

Vietnam’s inclusion in the modified and renamed “Tripartite Agreement for Joint Marine Seismic Undertaking in the Agreement Area in the South China Sea,” signed on March 14, 2005, was scarcely a victory for consensus-building and voluntary restraint. The Philippines, militarily weak and lagging economically, had opted for Chinese favors at the expense of Asean political solidarity. In danger of being cut out, the Vietnamese joined, “seeking to make the best out of an unsatisfactory situation,” as Mr. Severino puts it. The transparency that Hanoi had demanded was still missing, with even the site of the proposed seismic study concealed.

Now that the location is known, the details having leaked into research circles, the reasons for wanting to keep it under wraps are apparent: “Some would say it was a sell-out on the part of the Philippines,” says Mark Valencia, an independent expert on the South China Sea. The designated zone, a vast swathe of ocean off Palawan in the southern Philippines, thrusts into the Spratlys and abuts Malampaya, a Philippine producing gas field. About one-sixth of the entire area, closest to the Philippine coastline, is outside the claims by China and Vietnam. Says Mr. Valencia: “Presumably for higher political purposes, the Philippines agreed to these joint surveys that include parts of its legal continental shelf that China and Vietnam don’t even claim.”

Worse, by agreeing to joint surveying, Manila implicitly considers the Chinese and Vietnamese claims to have a legitimate basis, he says. In the case of Beijing, this has serious implications, since the broken, U-shaped line on Chinese maps, claiming almost the entire South China Sea on “historic” grounds, is nonsensical in international law. (Theoretically, Beijing might stake an alternative claim based on an exclusive economic zone and continental shelf from nearby islets that it claims, but they would be restricted by similar claims by rivals.) Manila’s support for the Chinese “historic claim,” however indirect, weakens the positions of fellow Asean members Malaysia and Brunei, whose claimed areas are partly within the Chinese U-shaped line. It is a stunning about-face by Manila, which kicked up an international fuss in 1995 when the Chinese moved onto the submerged Mischief Reef on the same underlying “historic claim” to the area.

Some commentators have hailed the tripartite seismic survey as a landmark event, echoing the upbeat interpretation put on it by the Philippines and China. The parties insist it is a strictly commercial venture by their national oil companies that does not change the sovereignty claims of the three countries involved. Ms. Arroyo calls it an “historic diplomatic breakthrough for peace and security in the region.” But that assessment is, at the very least, premature.

Not only do the details of the three-way agreement remain unknown, but almost nothing has been disclosed about progress on the seismic study, which should be completed in the next few months. Much will depend on the results and what the parties do next. Already, according to regional officials, China has approached Malaysia and Brunei separately, suggesting similar joint ventures. If it is confirmed that China has split Asean and the Southeast Asian claimants and won the right to jointly develop areas of the South China Sea it covets only by virtue of its “historic claim,” Beijing will have scored a significant victory.


-----------------------------------------------------------
Mr. Wain, writer-in-residence at the Institute of Southeast Asian Studies in Singapore, is a former editor of The Wall Street Journal Asia.

The China Card

John Nerry and Manuel L. Quezon III
9/19/07

ON June 15, 2007, I wrote a blog entry titled “New Asian alliance,” pointing in turn, to an article by Brahma Chellaney, a professor of Strategic Studies at New Delhi University, titled Playing the new Great Game in Asia and beyond. The article said a new exploratory alliance, had emerged in our region:

A nifty new enterprise to discuss security dangers in the Asia-Pacific and evolve a coordinated approach — the Quadrilateral Initiative — has kicked off with an unpublicized first meeting. U.S., Japanese, Indian and Australian officials, at the rank of assistant secretary of state, quietly met recently on the sidelines of the ASEAN Regional Forum (ARF) gathering in Manila.

The emerging four-power alliance was aimed at China. Writing in the Asia Sentinel, Gavin Pao took a look at where that exploratory alliance is, at present: Strategic Chess: Do four-power military exercises and the Shanghai Cooperation Organization foreshadow a new sphere of conflict? In it, the author writes that a massive naval exercise took place at the same time as the APEC Summit. Participants in the exercise were members of the Quadrilateral Initiative -referred to in the article as the Quad Alliance- which has its own security focus, the Malacca Strait. That focus, in turn, represents a threat to Chinese interests:

All four Quad countries are keen to ensure that the Malacca Strait between Malaysia and Indonesia, the world’s busiest waterway, is kept free of threats. Roughly 30 percent of the world’s cargo trade passes through the strait and the need to ensure safe passage is certainly paramount. The strategic importance of the strait as a conduit for oil imports is sacrosanct to a number of countries, including China, Japan and South Korea.

However, with the Quad exercises being conducted with a heavy arsenal that included aircraft and submarines, it is clear that potential threats posed unconventional forces, like terrorists or pirates, have hardly been accorded first priority. Moreover, effective patrolling of the strait can be enforced primarily through close coordination between Malaysian, Singaporean, American and Indonesian intelligence agencies, without any need for substantial Indian or Japanese involvement.

The irony regarding the argument for protecting the Malacca Strait is that controlling it through a forum in which China is not involved effectively hangs a psychological noose over China’s head. Roughly 60 percent of China’s foreign trade and 75 percent of its oil imports also pass through the Malacca Strait, and it explains why China has been so aggressive in creating new transport outlets for itself away from the coast.

The story goes on to discuss how the various members of the Quad Alliance are responding to China, with Australia cozying it up with Beijing and other countries being more ambivalent. And how Beijing sees its prospects:

China, meanwhile, remains confident in its backyard, with much of the region under its sway. While ASEAN countries still look to the US as the region’s ultimate guarantor of security, Beijing has played a skillful diplomatic game in Southeast Asia, according the region top priority during a time when the United States has tended to take ASEAN for granted, as symbolized by Condoleeza Rice skipping several key ASEAN summits. Philippine President Gloria Arroyo even referred to China as a “big brother” at an ASEAN summit this year.

In contrast, if you look at my July 26, 2007 entry on the debate on where American commitment to Philippine security really stood, Filipino officials, like their Asean counterparts, get mixed and usually not very encouraging messages from the USA. American think tanks, on the other hand, are quite aware of the ebb and flow of American prestige vis-a-vis China in the Philippines, and have tried to influence official policy. But they’ve failed.

A reason may be that the Bush administration has nailed America’s future to Iraq: the American historian (and blogger) David Kaiser says the US faces a Turning Point so significant it represents the fourth great crisis of American national life:

The fourth great crisis of our national life is upon us. The first (1774-1794) created our republic; the second (1857-68, or 1857-72 in the South) preserved it; and the third (1929-45) made us a leading world power. Ever since Strauss and Howe published The Fourth Turning at the end of 1996, their readers have been speculating about when the crisis would come, and what it would be about. President Bush’s speech last Thursday, in my opinion, answered those questions. We now know the issue that the next ten years will decide: the nature of the United States’ role in the world in general and the Middle East in particular. We shall either emerge, for good or ill, as the world’s remaining imperial power living in a long-term garrison state, or we shall step back and begin to allow the world to take care of itself again.

There seems little place in this American crisis, for South East Asia. Which brings us to the Philippines and the administration’s “China card.”

Back in October, 2005, I’d pointed out in my blog (see IV, 2) that one political card the administration was playing, was the “China card.” This was most obviously played on July 8, 2005 when both Secretary Romulo and Speaker de Venecia (de Venecia, particularly insistently) said China supported the President.

This was at a time when the United States seemed ambivalent, at best, about the administration and was even suspected of maneuvering to kick the President out. China maintained an official posture of enthusiastic support for the President, and began giving token aid to the AFP, which traditionally, has been totally dependent on American assistance and thus, susceptible to American pressure. That assistance remains small, but China continues to increase it, little by little, as well as aggressively pursuing commercial contacts and official assistance, as demonstrated by the ZTE deal.

The President hasn’t been shy about singing the praises of China, just as China sees potential in Philippine investments to help supply raw materials. And of course it may be as simple as this: it’s easier, more pleasant, even more dignified, to do business with the Chinese than say, Europeans and Americans with their rhetoric about “transparency” and “honesty,” which the targets of Western preachiness tend to view as sanctimonious pap.

Our country and government is neither China’s biggest market or even a very large factor in the Chinese scheme of things. But influence is gained one small and big government at a time; what makes us important, in a sense, is if the UK and Japan served as super carriers for the projection of American power in Europe and Asia, the Philippines served as an escort carrier (when the bases existed) or escort destroyer (today) for the projection of American influence. In turn, Philippine governments tried to extract concessions from the US with varying levels of success.

Geopolitics is also domestic politics. China wants to be a Superpower, America wants to remain the only one, the Philippines, like Japan and indeed, also the rest of Asean, likes cozying up to America to counteract China, but China proves more attentive and generous than America… Domestically, the President has used China as a foil to America, and America seems to have resigned itself to realizing it needs the President, for now…

But think of this. The ZTE deal triggered a protest from the US Ambassador. The same deal has also reminded Filipino businessmen that contrary to their belief, up to this point, that the virtue of the President was she played politics ruthlessly, but unlike Estrada (and of course, Marcos) she intended to keep her hands off business, and in particular, big business. But the ZTE deal has intruded into the turf of big local players (PLDT and Globe, for one, the telecoms giants who could have profited from a national broad band scheme), as well as American business interests. So their hackles have been raised.

The easiest thing to do would be for the President to scrap the deal. But the Chinese have invested; if testimony is to be believed, money has exchanged hands. It becomes, then, a question of face. Face is something that is priceless; and if face is lost, the consequences go beyond dollars and cents.

This, then, is the dilemma of the government. Just as it’s begun to enjoy its cozy relationship with China, domestic politics has taken on an international dimension.

China moves to expand its reach

By Antoaneta Bezlova
Southeast Asia
Jan 29, 2008


BEIJING - Even as it expands economic cooperation with its wary Southeast Asian neighbors, China's thirst for energy is compelling it to resurrect territorial claims to resources-rich spots in the region that have lain dormant for years.

China's decision in late 2007 to create a new city administration responsible for the archipelagos of the Paracels and Spratlys islands in the South China Sea may not have made waves at home, but it sparked tensions in the region and focused neighboring countries' attention on the disputed territories.

Vietnam's two main cities of Hanoi and Ho Chi Minh saw unprecedented street demonstrations in December with several



hundred young people marching round the Chinese Embassy and consulate with banners proclaiming "Down with China!" and "Long live Vietnam!".

In early January, a reported conflict between Chinese and Vietnamese fishing vessels in the international waters of the Gulf of Tonkin drew protests from the Chinese side. Chinese state media accused Vietnamese boats of firing and attacking the Chinese fishermen.

And even before the waters of the South China Sea calmed down, Taiwan announced that President Chen Shui-bian plans to visit the Spratlys islands, reinforcing Taiwan's claim to these disputed territories.

The island chains of Spratlys and Paracels have long been flashpoints. While the oil-rich Spratlys are claimed in full or part by China, Vietnam, the Philippines, Malaysia, Brunei and Taiwan, the Paracels are claimed by China, Vietnam and Taiwan.

The 1980s and early 1990s marked a period of intense rivalry among Southeast Asian countries as they began building airstrips, fishing ports, lighthouses and sightseeing spots on the clusters of islands and reefs. They also began developing petroleum and gas resources in cooperation with foreign oil companies.

China prides itself for taking the lead in stabilizing this regional corner by engaging in a policy of "befriending and benefiting" its neighbors. In an effort to strengthen ties with the 10-member Association of Southeast Asian Nations (ASEAN), Beijing has refrained from emphasizing territorial claims, insisting instead that the region should be developed together.

A 2002 breakthrough agreement between China and ASEAN committed all sides to resolving disputes in the South China Sea peacefully. Two years later, China and the Philippines agreed to exploit the oil and gas riches of the region together and in 2005 the two countries were joined by Vietnam in conducting a survey of the South China Sea to probe its reserves.

"China has always seen the resolution of disputes in the South China Sea as a process," says He Sheng, researcher with the China Institute for International Relations. "We need to start with objectives that are achievable and work gradually towards resolving the more difficult points. To achieve the goal of joint exploration and joint development of the sea resources we need more perseverance and trust."

The period of relative calm came to an abrupt end though in December when nationalistic street demonstrations, said to have been green-lighted by the government, erupted in Vietnam's main cities. Vietnam has been historically wary of its big neighbor and in 1979 the two countries fought a brief border war.

The protests followed reports of China's legislature ratifying plans for a huge new city administration called Sansha with headquarters in Hainan island to manage the three archipelagos of Paracel, Spratly and Macclessfield Bank.

China - itself adept at orchestrating "spontaneous" nationalistic demonstrations - chided Vietnam over the protests but refused to confirm reports of the planned upgrade of the islands administration from Woody Island in the Paracels to the new "county-level city" of Sansha (an abbreviation of Xisha, Nansha and Zhongsha, China's names for the archipelagos), part of Hainan province.

An official Internet site for Sansha city (www.sanshashi.com) however, states its inception date as of November 2007. It traces China's historical claims to the archipelagos back to their alleged discovery by the Chinese in the Qin Dynasty (around AD 200) and claims China stationed imperial troops on the Paracel Islands as early as 1045.

Last week, Chinese State Councilor Tang Jiaxuan and Vietnamese Deputy Prime Minister Pham Gia Khiem held a round of talks in Beijing in an effort to put recent tensions behind. China did not waste time reiterating its claims over the disputed South China Sea islands.

"China has indisputable sovereignty over the South China Sea islands and the surrounding waters," Chinese foreign ministry spokeswoman Jiang Yu said at a regular press briefing Thursday. "Leaders from both sides have agreed to settle the maritime dispute through dialogue and consultation."

"In recent years, China has been more assertive in all unresolved territorial disputes with neighboring countries but I believe the reason behind the decision for the creation of Sansha is oil," says a foreign diplomat in Beijing.

Since overtaking Japan as the world's second largest oil consumer in 2003, China has been closely scrutinized for its role in global energy markets. The country's voracious appetite for energy and commodities has been blamed for pushing up prices around the world.

Last year China relied on imports for 50% of its oil needs. While its oil imports amount to just 9% of the total amount of oil traded globally, the country's oil consumption is projected to rise precipitously in coming years.

Chinese experts speak of the need for Beijing to deploy "energy diplomacy" in order to secure the country's continuing supplies of oil and gas.

(Inter Press Service)

Philippines tears itself apart

By A Lin Neumann
Southeast Asia Online
Feb 25 2006

MANILA - The Philippines is marking the 20th anniversary of its finest political hour with a demonstration that its democracy remains brittle, its political institutions on the point of collapse, its economy as corrupt as ever and its leaders embroiled in endless rounds of infighting.

On Friday, as already-splintered veterans of the so-called People Power revolt prepared to mark the occasion when masses of people and military rebels peacefully forced then-president Ferdinand Marcos to flee the country on February 25, 1986, embattled President Gloria Macapagal-Arroyo declared a formal state of emergency - a chilling echo of the language and tactics employed by Marcos when he instituted martial law in 1972.

Arroyo claims to have uncovered a plot hatched by a collage of the political opposition, rebel communists and "military adventurists" to topple her government. Her emergency decree comes fast on the heels of reports about troop movements and suspicious activities of at least one army general linked to previous military attempts to overthrow the government.

The left and the right, Arroyo said, "are now in a tactical alliance and engaged in a concerted and systematic conspiracy, over a broad front, to bring down the duly constituted government". She also said, "The claims of these elements have been recklessly magnified by certain segments of the national media."

The declaration gives her government broad discretionary powers, including provisions that allow authorities to arrest without warrants, seize public utilities and, if deemed necessary, to shore up national security and censor the media. Arroyo has not yet spelled out her plans to enforce her already shaky grip on political power, but the decree sends a worrying signal for the future of Philippine democracy.

The state of emergency led to the arrest of one general linked to previous coup attempts, a few other arrests and a ban on protests and ceremonies timed to the People's Power anniversary. But when Corazon Aquino, the woman who succeeded Marcos, led a peaceful march through the heart of the business district, authorities backed down after a brief standoff with riot police and allowed several thousand protesters to continue.

Aquino is the closest thing the Philippines has to a moral leader, largely considered above partisan politics, and anger over Arroyo's move during a virtual national holiday celebrating democracy may open the door to a broader movement against her government. "I am not an icon of democracy," Aquino said in Tagalog to cheering supporters. "You are all, collectively, the icon of democracy."

Aquino, who also supported the ouster of Arroyo's predecessor in 2001, then said in English: "Mrs President, I ask you to make the supreme sacrifice of resigning." The crowd roared back: "Gloria resign!"

As important in some ways as Aquino were others in the crowd - she was joined by some of the country's leading businessmen, whose support for Arroyo has been steadily eroding. "The state of emergency weakens her," said Jess Estanislao, a well-known banker and former finance secretary, as he marched with Aquino. "This is the beginning of the end for Arroyo."

That may be wishful thinking, but Arroyo, who was installed in office in 2001 on the wave of another popular revolt against then-president Joseph Estrada's government, has been unsteady for much of the past year. The controversy surrounding her administration came to a head last year when she was secretly taped discussing the 2004 presidential-election vote count with an election official on the telephone. The tapes were made public under mysterious circumstances, and her political opponents have been trying to force her resignation ever since.

The latest turn of the political screw is further evidence that the once-high hopes for better governance and more democracy engendered by the first People's Power revolt in 1986, a peaceful four-day uprising that inspired similar actions worldwide, have now come almost completely undone. In the intervening years, in many ways, things have gone from bad to worse.

Following Marcos, Aquino's administration was beset by numerous coup attempts by a politically active and restive military. Traditional elites, some of whom had run afoul of Marcos, returned with a vengeance to resume positions of privilege and patronage. Back-door deal-making was the order of the day, despite Aquino's morally upright reputation.

Marcos died in exile, but none of his cronies, the same men who helped him systematically loot the country, were successfully prosecuted. The group Transparency International says the official thievery under Marcos made his regime the second most corrupt of the 20th century - outdone only by Indonesia's deposed Suharto.

Marcos' notoriously flamboyant and wealthy widow, Imelda, has never been convicted of any crime, despite facing hundreds of court cases. She remains a fixture on the social scene, as bejeweled and lacquered as ever, and her children are gearing up for political careers.

After a period of relative political calm and notable economic progress under Fidel Ramos' six-year term in the 1990s, political turmoil returned soon after former actor Estrada was elected president on a populist ticket. Corruption allegations hounded his government and fueled the "People's Power 2" rallies that eventually overthrew his administration - even though he was democratically elected and is still popular with the majority of poor Filipinos.

The result of what is now more than two decades of instability that began under Marcos and continued through coup attempts and the two popular revolts, the last something approaching mob rule, has been anemic economic growth, entrenched poverty, soaring birth rates and a political system captive to shifting loyalties and endless intrigues.

The Philippines' economy is kept afloat largely on remittances from overseas workers with mainly menial jobs in more-developed economies. Those inflows amounted to a record US$10.35 billion last year, equivalent to a quarter of the country's exports, or about 12% of gross domestic product.

The current state of affairs raises questions among the political elite about the future viability of liberal democracy in the Philippines. "What is clear to me after 20 years is that democracy is not a prescription for economic progress. Not the way we practice it," said Teodoro Locsin Jr, one of Aquino's closest advisers and now a nominally pro-government congressman.

Indeed, so fractured is the political environment that none of the leaders of the first People's Power movement will appear together publicly to commemorate the events. Aquino, for one, is planning to attend a mass and a rally on Saturday at the shrine to "Our Lady of EDSA", a massive statue of the Virgin Mary erected near Epifanio Delos Santos Avenue (EDSA) in Manila, the place where nuns knelt in prayer in 1986 before the armored vehicles of Marcos' army to stop potential violence.

For his part, Ramos plans to preside at a flag-raising ceremony at another monument. Juan Ponce Enrile, who was linked to a series of coup attempts against Aquino, is boycotting the whole thing.

Even before her state-of-emergency announcement, Arroyo, the daughter of a former president and herself an anti-Marcos activist, was avoiding public commemorations of the event.

The depth of the infighting runs deep. Ramos, 77, who likes to view himself as a Filipino version of Singapore's elder statesman Lee Kwan Yew, has repeatedly demanded that Arroyo step down by next year and has called for a radical new constitution that would change the Philippines from a presidential to a parliamentary political system. "It is the only solution to our instability," he said in an interview.

Is Ramos involved in current plots? He won't say. "We are trying to keep everyone in the same ship," Ramos joked over drinks in his office after a long meeting with some of Arroyo's known enemies. "But not necessarily with the same skipper.

"Arroyo," he said, "is small-minded and self-centered." Her government, he believes, is corrupt and has lost its legitimacy. Noting the self-imposed exile of her husband, Mike Arroyo, after he was accused of involvement in a nationwide gambling syndicate, Ramos said, "The First Gentleman is the source of a lot of graft and corruption."

Politicians in the Philippines routinely rip into one another, so perhaps Ramos' comments should be taken with a pinch of salt. But the current political environment is as fractured as it has been in years. Whereas the struggle against Marcos had a palpable story line of good versus evil, the current free-for-all appears venal on all sides. Ever since Marcos fell, the Philippines has been exhausted by conspiracies, half-baked economic policies and endless political intrigue. Not to mention widespread disappointment.

What did Ramos expect when the revolt he began in 1986 succeeded? "Upwards, upwards, upwards," he said. Twenty years later? "We are sinking," he said.

A Lin Neumann is a veteran Philippines correspondent who witnessed the movement that led to the overthrow of Ferdinand Marcos.

(Copyright 2006 Asia Times Online Ltd. All rights reserved.

Philippines: Power, not Gloria

By Herbert Docena
Southeast Asia Online

MANILA - If the Philippines' current political crisis was initially about the political survival of President Gloria Macapagal-Arroyo, it has quickly turned into something much bigger.

While the fallout from a scandal last year involving the president allegedly coercing electoral officials could have been contained, a confluence of events has since paved the way for a standoff that has polarized domestic political forces. Arroyo's fate is now almost incidental. Beneath the coup plots, shadow plays and shifting alliances is the protracted and unresolved class struggle for power.

Democracy lite

After the fall of Ferdinand Marcos in 1986, Philippine conservative ruling elites aided by the United States moved quickly to reinstate the pre-dictatorship political system that had under Spanish colonial rule allowed them to entrench their economic dominance over society.

Smarting from the lessons of Marcos' dictatorship, and seeing that authoritarianism was not necessarily the most effective way to maintain their collective grip on power, the elite leaders restored civil liberties, but restricted democracy to mere electoral contests that - given the ossified distribution of wealth and power in the Philippines - remained structurally skewed in their favor.

Dubbed variably as "low-intensity democracy", "limited democracy" or "polyarchy" by academics, the post-1986 consensus became both the linchpin of stability and the source of legitimacy for Philippine ruling elites.

Through elections, the elite factions were able to manage competition among themselves while eschewing outsiders who lacked the resources required to challenge them at the ballot box. Those who won the elections were able to command obedience from the masses - not by force as in a dictatorship, but by reminding them that they (the leaders) were the people's choice.

Having dominated the state through the electoral process, the ruling elites have countered challenges to their rule by successfully thwarting persistent demands for a redistribution of power, wealth and economic opportunities.

One rough measure of the entrenched inequality: on the eve of the first "people power" uprising in 1985, the top 10% of the population took 37% of the total national income; the lowest 20% garnered a mere 5%. Twenty years later, judging by the latest available official data, the top 10% still controls a whooping 36% of the national pie, while the lowest 20% remains stuck at 5%.

Challenged from outside, crumbling within
Despite its strengths, the post-1986 political system has been inherently unstable. Over time, the masses became less content with the economic results of representative democracy.

Twenty years after the people-power uprising, official polls find that 57% of Filipinos still consider themselves poor, slightly higher than the 55% who felt poverty-pinched in 1983. As much as 20% of the population is unemployed, and every day as many as 2,000 Filipinos leave the country to work abroad. Economic growth has clearly failed to trickle down, the promises of globalization notwithstanding.

This failure of consecutive democratically elected governments to deliver greater economic good - much more than allegations of cheating and corruption - has progressively eroded the legitimacy of the political status quo. But even as the current political system has led to an expansion of the disfranchised and fueled resentment, it has simultaneously extended political freedoms to the middle class.

Those freedoms have strengthened the movements calling for substantive as opposed to "low-intensity" democracy. The openness afforded by "democracy lite" has ironically allowed for the rise of a vibrant leftist movement. Despite its weakness and fragmentation, it has not been quashed to the same extent as those in neighboring Indonesia and Thailand, where capitalists rule the roost.

Increasingly challenged from peripheral political actors, political elites were also increasingly challenged by divisions from within. Historically, internal stability depended on consensus in putting their collective elite interests above the narrow interests of individual factions. This, however, has recently not been the case.

In January 2001, elite factions displaced by Joseph Estrada's presidency seized on widespread anger at alleged corruption inside his government and rode to power on the wave of another people-power-type uprising.

In an alleged rigging of the 2004 elections - and by being reckless enough to get caught speaking privately with supposedly neutral election officials - Arroyo won the ire of fellow elites. The other elite factions, for their part, have seized on the scandal and are now trying to knock her from power. But by adamantly standing her ground, Arroyo has further stretched the limits and contradictions of the established political order.

The divided front

The post-1986 political consensus is now under unprecedented strain. Weakened by internal wranglings, the once-united front of the ruling elites is quickly crumbling. With very little economic progress to show for the past two decades, the government is finding it difficult to exact consent from the middle and lower classes. It is in this larger context that the current political crisis is unfolding.

Beneath the confusing web of coalitions and alliances among powerful families, politicians, military factions, religious groups and civil-society organizations, the fundamental political division in the Philippines today remains that between those who want to preserve their position of dominance in society and those who want to dislodge them. Overlaid on this polarization is the divergence between those who want to salvage the post-1986 system and those who want to dismantle it.

The problem for the preservationist camp, however, is that its proposed solutions to the current crisis have all been dead ends.

To deflect calls for her ouster, Arroyo has been pushing for constitutional revisions that, among other recommendations, would change the government from a presidential to a parliamentary system, which critics argue could be even more easily manipulated by the elites. The ruling class has been concerned by the power that direct presidential elections gives to the masses, as demonstrated by the election of Estrada - who, while a member of the ruling class himself, appealed to the poor by stoking their class resentments and notably was not anointed by traditional elites.

The constitutional solution Arroyo proposes has not gained political traction, however, and is unlikely to overcome formidable opposition. Faced with threats both from other elite factions and from the left, Arroyo has resorted to authoritarian measures, further undermining the post-1986 system of "limited democracy". The reimposition of what amounts to martial law by the recent declaration of a "state of emergency" and other authoritarian proclamations signals the willingness of Arroyo's government to resort to force when all else fails.

The anti-Arroyo factions that also strive to salvage the current political order have likewise only shot blanks. Drawing its constituency from rightists and centrists, and those leaning center-left, this motley political grouping is represented by the Aquinos, the Catholic hierarchy, and the business class, as well as social liberals and democrats.

Most of them have come together under the banner of the so-called Black and White Movement. At first, they pushed for strict adherence to the constitutional order and initially called for the succession of Vice President Noli de Castro to the presidency. But this has since been abandoned because de Castro still supports Arroyo, and even people from within their ranks see him as too lightweight to safeguard their interests competently.

They later supported last year's impeachment proceedings against the president. After that move was blocked by pro-Arroyo legislators, who still dominate Congress, some of them have started pushing for special elections - in short, a continuation of the post-1986 system of electoral democracy, although without Arroyo at the helm.

In transition

On the other side of this jagged divide are those who seek to dismantle the system altogether. Though they have different motivations, tactics and political alternatives, they have come around to a common conclusion: their solutions would require an extra-constitutional intervention and would not be bound by the parameters of the post-1986 political system.

On one end of this spectrum are those who feel that so-called "limited democracy" cannot be relied on to preserve order; its openness has only been exploited by so-called "communists" and by corrupt elites. This camp includes rightist civilian and military factions who want to establish a military or civilian-military junta, as well as factions inside the Arroyo government who are advocating repressive measures beyond those formally allowed under so-called "low-intensity" democracy.

Another point on this continuum is the tactical alliance among elite anti-Arroyo opposition groups, most of them right-wing groups linked to Estrada, but also including well-known personalities with leftist backgrounds, some associated with the Communist Party of the Philippines (CPP). Grouped under the Solidarity Movement, they are calling for a "transitional council" that will be composed of opposition politicians and some leaders of the party.

The politicians apparently see this as a way to regain power and restore elite democracy under their command. The CPP, for its part, presumably sees this as a chance to infiltrate the highest echelons of the state, even as it continues to implement its military strategy of encircling cities from the countryside and seizing power through armed insurrection.

Another section under the left's banner is the Laban ng Masa (Fight of the Masses) coalition. They are calling for a "transitional revolutionary government" (TRG) - without conservative elite forces represented in the leadership. This umbrella coalition brings together a diverse group of leftist political forces: Leninists together with autonomous social movements and non-governmental organizations, Maoists together with left-party formations that do not see the seizure of the state as the priority, socialists, left-liberals, greens, and others.

Most of the political blocs included here broke away from the CPP in the 1990s, and the coalition is the highest level of tactical and political unity they have achieved since then.

According to the coalition, the TRG's wild aim is to institute economic and political changes that have so far been resisted by the elites, such as land reform and the reversal of neo-liberal economic policies such as privatization and free trade and "structures of popular empowerment". Elections will then resume once their conditions are met, including the suspension of the constitution and the ones mentioned above. The TRG concept has been met with trepidation in the haciendas, in the business district, and at the US Embassy in Manila.

'American approval'

As different groups and factions scramble for power, the US Embassy has become a very popular destination. "What everyone is trying to do," confided one of the cabinet secretaries who recently resigned and joined the anti-Arroyo movement, "is to get American approval." Even the government has no illusions as to what the embassy can do: "If the Americans decide to drop support of the Philippine president, it crumbles," the president's former chief of staff, Rigoberto Tiglao, has acknowledged. [1]

That has been borne out historically. The Philippines was a US colony until 1946, but even thereafter Washington regularly intervened politically by financing preferred candidates and groups, conducting widespread covert operations, and helping to stage-manage elections.

In 1950, a US National Security Council document stated that among the United States' goals in the country was the maintenance of "an effective government which will preserve and strengthen the pro-US orientation". In 1972, the US supported the declaration of martial law because, as a US Senate report put it, "Military bases and a familiar government in the Philippines are more important than the preservation of democratic institutions."

When Marcos finally became more of a political liability than an asset to the US, Washington immediately transferred its support to the anti-Marcos elite factions, attempted to unify them, and ensured that they would call the shots in the anti-dictatorship movement.

All these were critical strategies to guarantee that the outcome of people power would not be inimical to US interests. How exactly the US is playing its hand during the current crisis may not be known for years to come. Since the crisis began, however, US officials have repeatedly stated that they would oppose another "people power" incident.

Tired but wiser

Unless Arroyo voluntarily resigns or goes along with counter-elite plots to preserve the current political order, another people-power-type uprising is still what most of the groups seeking the president's ouster are leveraging to force a political transition. Whether the outcome of another popular uprising will be special elections, a transitional council or a transitional revolutionary government is still unclear. Until now the two critical elements for past successful uprisings are still apparently missing: the support of the military and hundreds of thousands of people on the streets.

In the military, cracks are showing. The government may have foiled recent coup movements by some military factions, but it has not put an end to the restiveness inside the barracks.

And the fissures in society are increasingly being reflected in the chain of command. A nationalist, and some say progressive, bloc composed mostly of junior officers, is reported to be emerging. But as outside the barracks, the military is divided between those who are committed to defending the existing political order and those who want to reconstruct it. The question is, who will strike first and who will remain standing?

So far, the only political force that has been able to fill the streets on a sustained basis, though on a limited scale, is the organized left. Some analysts attribute the general public's refusal to join them to a so-called "people power fatigue", and view this as implicit approval of Arroyo and the existing political system.

The other explanation, however, is that the people are not tired, only wiser: having seen how the previous uprisings only led to the replacement of one elite faction with another, and witnessing no real change in their economic well-being, they may be loath to support another merry-go-round at the top. But if the right combination of factions and personalities were to coalesce, for better or worse, another popular uprising is not inconceivable.

Note
1. Raymond Bonner and Carlos H Conde, "In Manila, US drawn into fight". New York Times, July 23, 2005.

Herbert Docena is with Focus on the Global South, a research and advocacy organization.

(Copyright 2006 Asia Times Online Ltd. All rights reserved.

Deadly dirty work in the Philippines

By Cher S Jimenez
Southseat Asia online

MANILA - Political killings in the Philippines have escalated into a full-blown international issue, one that threatens to further undermine President Gloria Macapagal-Arroyo's already wobbly democratic credentials and one that puts at long-term risk the Philippines' budding and lucrative military relationship with the United States.

Philip Alston, United Nations special rapporteur for extrajudicial killings, and three UN staff members arrived in Manila over the weekend to begin a three-week independent probe that will include meetings with high-level government officials as well as independent rights groups, some of which have had their members assassinated. Arroyo has also recently invited the European Union and certain individual European countries to assist with probes into the killings.

Significantly, the UN fact-finding mission comes hot on the heels of a revealing government-ordered investigation into the surge in political assassinations. Led by former Philippine Supreme Court justice Jose Melo, a commission on January 30 revealed in initial comments to the local media that members of the military were responsible for the "majority" of the killings, and although they acted of their own volition and not on direct government orders, that their superiors could be held accountable for their subordinates' crimes.

The military has already promised to prosecute any soldiers found to be guilty of extrajudicial killings. Meanwhile, Arroyo told foreign diplomats the day after the Melo Commission was released that both soldiers and armed leftist groups were responsible for the killings and that she believed "99.9% of our military are good, hard-working and patriotic Filipinos". The contents of the Melo Commission's report have not yet been revealed publicly.

Arroyo administration officials have consistently denied any responsibility for the killings, claiming reports that allege that the government ordered any of the deaths are being perpetuated by political opponents trying to destabilize the government and score political points before upcoming Senate elections. And judging by recent official statements, Arroyo believes that the UN's findings will somehow absolve her and her administration of any culpability for the killings.

Arroyo could, however, be in for a rude awakening. UN special rapporteur on indigenous peoples Rodolfo Stavenhagen said over the weekend that her government's inability to stop the extrajudicial killings and the pattern of human-rights violations victimizing human-rights defenders, social activists, community leaders and other innocent civilians "is seriously undermining the international standing of the Philippine government".

Echoes of Marcos

That echoes what rights groups such as Karapatan have been alleging for years. Since Arroyo took power in 2001, at least 830 people have been killed in an extrajudicial fashion, including 365 mostly left-leaning political and social activists, Karapatan claims. The larger figure includes assassinations of journalists, judges and lawyers known to be sympathetic to leftist causes. Civil-society and rights groups have frequently criticized Arroyo's perceived public indifference to the murders, raising questions of whether she is either unable or unwilling to stop the violence.

To be sure, there are questions about how much control Arroyo really has over certain military commanders and their lower-ranking officers. Her administration has occasionally been beset by military mutinies and alleged foiled coup attempts. However, the recent escalation in violence has placed her six-year administration on pace to surpass the total number of extrajudicial killings documented during the late dictator Ferdinand Marcos' brutal tenure. During his 20-year rule, including a decade under martial law, more than 3,000 people associated with the communist movement were killed. That's a particularly damning comparison for Arroyo, a US-educated economist and self-professed democrat.

It could also significantly act to complicate her government's relations with the United States, which is barred by the Leahy Amendment from providing military or police assistance to governments found to be involved in systematic rights abuses. Arroyo has firmly allied herself with the US-led "war on terror", and the Philippines has allowed US special forces and other military personnel to take up positions in the south to provide technical, logistical and, apparently in certain instances, operational support to the Philippine military in combating Muslim separatist insurgent groups, one of which Washington claims has ties to al-Qaeda.

Significantly, the US, no doubt at Arroyo's urging, also included the heavily armed and well-entrenched New People's Army (NPA), the armed wing of the Communist Party of the Philippines, on its list of international terrorist groups. According to Karapatan, the US has on several occasions directly supported the Philippine military's pursuit of the armed communist militia, which has been fighting the central government for more than 40 years, because of its alleged new united front with certain guerrilla Muslim organizations.

In 2002 Arroyo announced an all-out war against what she deemed internal security threats including armed leftist groups, a master military plan known locally as Oplan Bantay Laya, or Operation Plan Defend Freedom. That assault was scheduled to conclude last year, but it was recently extended by her government through 2010, when Arroyo's constitutionally mandated term as president ends. Last year was notably the bloodiest yet for extrajudicial killings, with a total of 185 people, mostly left-leaning activists, murdered without trial or punishment for the perpetrators.

It was also during this period that Arroyo made the controversial Presidential Proclamation 1017, granting exceptional unchecked powers to the executive branch. Last February she activated that order to place the country under a state of emergency and allowed law-enforcement officials to conduct warrantless arrests of alleged enemies of the state, including some members of the political opposition and journalists from critical media outlets. It's notable now that Arroyo's crackdown on civil liberties conspicuously coincided with a spike in political killings.

State of denial

Even with the international spotlight on Arroyo's rights record, Philippine military and police officials continue to play down the mounting death toll, claiming that there have been no more than 100 political-related killings over her government's six-year term. As in the past, the government blames the NPA for most of the killings, claiming the rebel group is purging its own members or those who have abandoned their ideological cause. But the pattern of the killings seems to indicate that left-leaning activists are often being targeted by security forces the same as armed NPA rebels.

Rights organizations and reportedly the Melo Commission have openly blamed particular prominent members of the military - specifically now-retired General Jovencito Palparan - for the killings of social and political activists sympathetic to the communist movement. According to Karapatan's records, more than 100 of the extrajudicial killings took place in Southern Tagalog, Eastern Visayas and Central Luzon regions, where Palparan had been assigned as a battalion commander.

Palparan told the Associated Press that "there was no evidence against him or any of his men" after the Melo Commission submitted its report to Arroyo. But Palparan's case could soon put Arroyo's government in a tricky spot. The recently retired Palparan was praised by name during Arroyo's State of the Nation address last June for his efforts in helping to reduce the strength of the communist insurgency. During the same nationally televised address, she also lamented the upsurge in unexplained extrajudicial killings.

Meanwhile, Armed Forces Chief of Staff Hermogenes Esperon has said Palparan can no longer be held accountable for any charges related to the killings because his military service has ended. Bishop Juan De Dios Pueblos, a member of the Melo Commission, said that the fact his fact-finding team's authority and findings had no legal binding was apparent in the alleged "arrogant" way Palparan answered question's from the commission's members.

In the coming months, the UN and potentially the EU will likely add a new, more legalistic and potentially damning perspective to the intensifying domestic debate about whether the killings are a matter of central government policy or the dirty work of a few wayward security officials. Whether international probity will be enough to stem the bloodletting and bring high-level Philippine officials to account still seems doubtful as the killings continue this year. What does seem certain is that the Philippines' international reputation as a respectable and stable democracy will soon take another hit.


---------------------------------------------------------
Cher S Jimenez is a Manila-based journalist with the BusinessMirror newspaper. She recently received a grant from the Ateneo de Manila University to conduct investigative journalism on illegal workers in the United Arab Emirates.

(Copyright 2007 Asia Times Online Ltd. All rights reserved.

All Quiet In The Second Front

Pepe Escobar
Southeast Asia
7 Oct 2004

MANILA - If the going gets tough in the United States, President George W Bush could always consider a move to the Philippines. He would beat Gloria Macapagal-Arroyo in a presidential race, hands down, no recounts.

Arroyo's approval rate currently stands at 48% - and falling, according to Social Weather Stations, an independent think-tank. Meanwhile, Bush's approval rate among Filipinos is 57%, according to a survey by Globescan and the University of Maryland - taken before truck driver Angelo de la Cruz's kidnapping by Islamic militants led the Philippine government to an early withdrawal of its contingent in Iraq. The Philippines was the only country in the survey in which Bush had positive numbers.

Bush has already been to Manila - last October, as part of a whirlwind six-nation Asian tour. At the time, he took credit for the United States building the Philippines into "the first democratic nation in Asia". Every Filipino familiar with his country's history would strongly disagree with Bush's rewrite. After the Spanish-American War then-president William McKinley annexed the Philippines, turned it into a colony, and for 14 years bitterly fought the Philippine independence movement. More than 200,000 Filipino civilians and soldiers were killed. The US, for its part seems not to have learned much from this colonial adventure. Harold Cole, an economics professor at the University of California, Los Angeles, says, "If Bush had applied these lessons to the American plans for invading Iraq and transforming the Middle East, he might have proceeded far more cautiously."

The second front

As far as Arroyo's government is concerned, the Philippines is indeed the second front in the "war on terror" - a favorite line of the Bush administration. But local critics, such as Jose Enrique Africa of the Center for Anti-Imperialist Studies, strongly disagree: "The US's overall geopolitical agenda for the Philippines goes far beyond just this [war on terror], and it aims to consolidate the country as a vital strategic location for regional force projection." Being designated a major non-NATO (North Atlantic Treaty Organization) ally, or MNNA, last October made Arroyo very proud. Africa stresses that the Philippines is "the first Asian neo-colony to be given MNNA status - Thailand being the second, soon after - putting it in the same league as Israel and Egypt in the Middle East".

Arroyo more than welcomes a de facto US armed intervention, regulated by a Mutual Logistics Support Agreement (MLSA) that offers Philippine airspace and seaports to US forces and includes intelligence sharing and logistical support. For the moment this involves a rotating presence of at least 2,000 soldiers and Special Forces through at least 18 annual bilateral military exercises, lasting from one week to six months. Balikatan (shoulder-to-shoulder) so-called "training exercises" - to circumvent the Philippine constitution, which explicitly forbids foreign forces fighting in the country - are now an annual routine. In May 2003 these forces were handed a special gift from Arroyo: immunity from prosecution before the International Criminal Court. Bush has asked the US Congress to increase military assistance to the Philippines to US$164 million in 2005.

Arroyo's master plan since 2001 has been to turn Manila's fight against Muslim separatists into an anti-terrorist campaign, in exchange for increased US economic and military aid. This explains the Bush-Arroyo frenzy in tagging as terrorists the Communist Party of the Philippines (CPP), the New People's Army (NPA) and famous activist Professor Jose Maria Sison, the key political consultant of the National Democratic Front of the Philippines (NDFP), and currently exiled in the Netherlands. Labeling them as terrorists seemed the easiest approach to get them out of the way and force them to capitulate. They didn't.

As for Arroyo's gamble in the Angelo de la Cruz case, it was not even a gamble. If de la Cruz had been beheaded, she knew there would have been another People Power in the streets of Manila - this time against herself. According to Social Weather Stations, 67% of Filipinos approved the withdrawal from Iraq, despite fears that US work visas for overseas Filipino workers (OFWs) might become harder to come by. Arroyo lost nothing, apart from being on the receiving end of the usual barbs from Washington hardliners. There are at least 4,000 OFWs working in Iraq at the moment. They are civilians only in name and remain especially valuable because they are engaged in military-related work inside US military bases in Iraq.

The export of labor is the only thing the Philippines has to offer: "well-educated, low-cost and English-speaking" workers, according to the government line. There are already 1.5 million OFWs established in the Middle East, most of them in public-works and energy-industry projects. There may be a flurry of new openings in information technology, catering, finance and accounting. But not in Iraq before the January elections - if they indeed take place.

Hard talk

Wishful thinking is the name of the game as far as the much-vaunted "special Filipino-American relationship" is concerned. Respected activist Walden Bello reminds anyone willing to listen that "when, during the late 1950s, president Carlos Garcia pushed for 'Filipino First' and imposed foreign-exchange control to help native industrialization and minimize importation of luxury items, American foreign-policy makers helped Diosdado Macapagal [Arroyo's father] defeat Garcia since Macapagal promised to remove the exchange control".

Furthermore, when Ferdinand Marcos "imposed martial law to perpetuate his presidency beyond the two-term limits of the Philippine constitution, America disregarded the 'showcase of democracy' in Asia and instead supported Marcos - because he promised to send Filipino troops to Vietnam and let [the US] use military bases in bombing Vietnam".

But as far as the Filipino elite are concerned, the "special relationship" is a God-given fact. Arroyo's government saw the "correct" positioning of the Philippines on the "war on terror" as a once-in-a-lifetime opportunity to get rid of Muslim separatism, especially in strategic Mindanao - located close to Indonesia and critical checkpoints in the Strait of Malacca, Sunda, Lombok and Makassar, areas through which at least 40% of Japanese and ASEAN (Association of Southeast Asian Nations) trade transits.

Arroyo is a protege of former president Fidel Ramos, who brokered an agreement with the Moro National Liberation Front (MNLF) in 1996 that would guarantee autonomous rule for the Moro areas. Critics in Manila say this only formalized the surrender of the MNLF. Nothing much has been done since then, apart from negotiations between the government and the more militant Moro Islamic Liberation Front (MILF), brokered by the Malaysian government.

Arroyo has recently approved, in principle, a so-called integrated peace plan to solve all the ills of Mindanao. This plan spells out the "continuation and conclusion" of peace talks not only with the MILF but with the CPP, the NPA and the NDFP; implementation of the peace agreement with the MNLF, as not much happened since 1996; amnesty and rehabilitation for former rebels; rehabilitation and development of the areas involved in the conflict; a "catch-up development program for the Autonomous Region in Muslim Mindanao [ARMM] and affirmative action for Muslims"; and a lot more dialogue. Elections in Mindanao are tentatively scheduled for next May.

But in Mindanao, the overall sentiment is that the region has been forgotten by the central government. There are no jobs: seven to eight people in 10 go to Sabah, in Malaysia, to find work. Muslims are being driven, maybe not to direct support, but at least to sympathy toward the MILF.

As for the communists, the CPP and the NPA, they are even more active under Arroyo than before. The military says the NPA currently has 10,000 fighters with 7,000 weapons. Their network is spread out all over the country, and not only in the north. The MILF has even struck a working alliance with the NPA: it has learned that guerrilla warfare can be very effective.

And as for the Abu Sayyaf, the Muslim extremist group operating in the southern Philippines, the consensus in Manila is that it is completely neutralized. Its ties to the Philippine military are notorious. "The Americans created them themselves," says Bobby Tuazon of the independent website Bulatlat.

If anyone asks Colonel Alfonso Bernate of the 201st Infantry Brigade in Calauag, Quezon, he's figured it all out. Bernate has launched a campaign in elementary and secondary schools teaching students that the real reason for the Philippines' poverty is insurgency. According to this brigade commander - whose opinion is far from being an exception in the Philippine army - many of the country's neighbors solved their insurgency problems while the Philippines was left behind along with Vietnam, Cambodia and Laos because of their economic difficulties. Sounds like bureaucrats in Manila blaming the capital's urban nightmare on the poor.

What about China?

Luis Jalandoni, the chief negotiator of the NDFP, and Maulana Alonto, a member of the MILF peace panel, have both accused Arroyo of bad faith. According to Alonto, the MILF has not talked formally with the government since negotiations broke down in Malaysia last year. Alonto charges that "the US supplies lethal war materials to the Philippine army, which they use to devastate Moro communities".

Jalandoni, based in the Netherlands, says his end of the peace talks were postponed so the government would remove the CPP, the NPA and Professor Sison from the US and European Union lists of foreign terrorists. Jalandoni even accuses the Arroyo government of black ops, as it has accused the MILF of collaborating with Jemaah Islamiya and al-Qaeda. But both the NDFP and the MILF leadership insist they want to talk peace - provided Arroyo's government respects the agreements it signed with them.

Arroyo also has to balance seriously her US addiction with the Philippines' key potential economic and strategic partner in Asia: China. Rommel Banlaoi, a professor at the National Defense College and author of The War on Terrorism in Southeast Asia, writes that "although Manila has an irritant issue with Beijing on the issue of the South China Sea, there is now a growing recognition among Philippine officials that the South China Sea unites rather than divides China and the Philippines". Banlaoi adds that "if the US is using the Philippines and other allies in the region as counterweights against the growing influence of China, the Philippines can also utilize China as a counterweight against American well-entrenched influence in Philippine foreign and security policy".

There are serious doubts in Manila on whether the positioning of the Philippines as the second front of the "war on terror" has done any good for the country, has improved its economy or made the Philippines safer. And as "special" as the relationship may be, answers to these crucial questions are not likely to come from Washington.

(Copyright 2004 Asia Times Online Ltd. All rights reserved.

Will The Last One Leaving, Please Turn-off the Light

Pepe Escobar
Southeast Asia
6 Oct 2004

HONG KONG and MANILA - Palmolive Palma, Rejoice Rivera, Lux Laurel and six other soft-porn "Shampoo Beauties", topless or clad in skimpy underwear and transparent yellow raincoats, didn't break a sweat literally to stop traffic in Manila recently. Nobody knew exactly what they were up to. They could have been mocking the Metro Manila Development Authority, whose chairman Bayani Fernando - in the obvious absence of really serious problems in the megalopolis - decided to go after men who refuse to wear shirts in public. Or they could have been protesting a ban on soft-porn movies ordered by SM Holdings - the country's biggest shopping-mall operator, controlled by Chinese-Filipino taipan Henry Sy.

Who cares? Public scandal or not, at least Palmolive Palma and the rest of the girls, in the midst of the current Philippine economic crisis, have found a niche home market. They don't need to karaoke a Tagalog version of Peter, Paul and Mary's "Leaving on a Jet Plane" and then slog in daily purgatory living the life of an OFW (overseas Filipino worker).

Filipino Central casting

There they are, concentric rings of Filipinas spread out in Hong Kong, on the tarmac, on the subway, on the way to the Star Ferry pier, spilling over from Statue Square through the vault of the HSBC building engulfing Armani and Bulgari luxury compounds, mobbing wily Cantonese operators promoting lucky draws of Nokia cellular phones with prepaid SIM (security identity module) cards - "as little as HK$0.15 a minute [2 US cents] to the Philippines". Everywhere there's the infectious atmosphere of a larger-than-life social club; women of all ages chatting non-stop, comparing notes, staring endlessly at photos of boys and girls in school uniforms, sharing their food, reading Tagalog-language papers or calling home on their discount Nokias. By all means, Filipino maid Sundays in Hong Kong's Central district remain one of Asia's social-anthropology highlights.

The maids configure the most conspicuous example of Ferdinand Marcos' 1970s drive to export Philippine labor as a policy to increase foreign currency and so repay the country's mounting international debt. Now there are at least 7.5 million legalizedOFWs spread throughout 186 countries, apart from at least 1.7 million illegals. The soundtrack of Southeast Asia - and most of the Middle East - is played by Filipinos. Officials and crews on cargo and cruise ships sailing across all oceans are invariably Filipino. Filipino doctors and nurses migrate to overseas hospitals by the thousands every year. At least 4,000 Filipinos risk their lives working in Iraq. (The Philippines banned its citizens from going to work in Iraq after truck driver Angelo de la Cruz was kidnapped by Islamic militants on July 7. However, 42% of all Filipinos believe they have a right to look for a job in a danger zone such as Iraq.)

More than 200 Filipinos recently used the "southern back door" of Mindanao to sail to Turkey and then cross the border to find jobs in Iraq. More than 2,000 OFWs have landed in jail. Two were beheaded in Saudi Arabia. One was hanged in Singapore. One, de la Cruz, escaped beheading in Iraq. Hundreds of thousands live under semi-slavery regimes and suffer daily abuses.

Forced by abysmal mass poverty at home and the never-ending economic crisis, the Hong Kong amahs leave their families behind and embark on three-year contracts that pay a fixed salary set by the Hong Kong government. They then send 70-85% of the total back to the Philippines every month.

The "privilege" of working in a wealthy, advanced and multi-racial society where they keep the house impeccably clean, cook tasty food, communicate well, teach English to the children of their wealthy employers for free, and learn Cantonese almost immediately, is rewarded in many cases with being treated as a very low-class citizen - not to mention a back-breaking, full six-day workweek and a single trip to see the family back home once every two years. The "social club" spread out in Hong Kong's Central district confirms that not a few among them have to sleep on kitchen floors or even on top of cupboards.

In Hong Kong's notorious, decades-old culture of labor exploitation, these women get paid less than half of what is offered by the lowest job in Hong Kong anyone would possibly contemplate taking. It's virtually impossible to gauge how such a warm, lovely people - bearing a strong Latin influence - can endure the worst of the Cantonese Inquisition - horrific abuse not too dissimilar to the case of Celestina Valdez Aquino, 44, who sued her former Hong Kong employer Betty So because she was repeatedly mistreated and then fired. Her crime: she had three deformed fingers.

So what do they get at the end of the calvary? They get education for their children, perhaps the possibility of opening a small business and improving their quality of living when they return home. This, of course, if they are not forced to come back sooner than they think - replaced by cheaper maids from mainland China.

The national heroes' plight

The peaceful weekly downtown Hong Kong sit-in, also referred to as the Sunday social club, is also a tremendously graphic political statement - an explosion of joy and autonomy after every recurrent six-day prison regime. Class struggle yes, but with a wicked smile.

How many are there in Hong Kong? The official numbers list at least 240,000 foreign maids - the absolute majority are Filipinas, with a smaller contingent of Indonesians, Thais and Nepalese. Unofficially, they number at least 400,000. The odds are always stacked against them. Racism is evident. Mean tai tais, or women of taste, don't like them - it's not hard to overhear the Chanel crowd in Hong Kong labeling Filipinas "public nuisances" or "impolite guests". In 2003, Hong Kong slashed the maids' minimum monthly wage of HK$3,670 (US$470) by HK$400 (US$51). This year, to help fund President Gloria Macapagal-Arroyo's presidential campaign, the government in Manila raised the processing fees for their employment contracts from HK$85 to HK$297.50 (US$37).

No wonder the Sunday social club, apart from the odd beauty contest - like the recent search for the "Summer Babe 2004", all contestants duly numbered, carrying a rose and sporting the same mauve dress - is also the ideal place for myriad Philippine organizations to rally against the terrible working conditions as well as the homeland policies that encourage the export of Filipino women.

Connie Bragas-Regalado, chairwoman of the Migrante Sectoral Party, is one of the fiercest voices defending the interests of OFWs. Migrante's position is that the Philippine government should at least give these women and girls adequate protection, since it can't already guarantee them jobs in their homeland.

Former president Cory Aquino used to call the Hong Kong amahs "national heroes". Not only that, they were also the unknown heroes of an Asian phenomenon - the economic boom in Hong Kong from the 1980s up until the 1997 Asian financial crisis. After all, because of the amahs the white-collar elite in Hong Kong didn't need to worry about taking care of their homes, so there was plenty of time to concentrate all their energies on making loads of money.

Now Arroyo's government wants to tax OFWs' income. Former Philippine labor secretary Nieves Confesor once said that "Filipino overseas labor should be viewed as an internationally shared human resource, whose work benefits both the host country and the Philippines". The people from Migrante totally disagree: "That's very degrading. How can you share your migrant workers when they are treated as modern slaves in different countries? The expertise of the migrant worker should be used for the development of our own country and secondarily for the development of other countries - not to provide 'entertainment' and cheap labor for foreign countries." No wonder the crucial theme of Migrante's platform is the struggle for the creation of a sustainable internal market so millions of Filipinos are not forced to go into exile to find a job.

In Manila, Bragas-Regalado lays down the line: "GMA [Gloria Macapagal-Arroyo] is pushing OFWs to pay taxes, despite the absence of adequate government services and protection here and abroad. This administration is propagating a big lie by indirectly blaming us for the fiscal crisis and poor tax collection." And this is happening while "big-time tax evaders like [Chinese-Filipino tycoon] Lucio Tan go unscathed". Migrante stresses that the US$7.6 billion in remittances by OFWs in 2003 "is almost 100 times the figures of foreign direct investments".

Bragas-Regalado points out that "both the dollar remittances and government fees on OFWs help keep the economy afloat. How can this administration even think that OFWs are not helping the country? President Arroyo and her minions brought the country to this fiscal crisis. They are the culprits who should be made to account to the overseas Filipinos and the people in the homeland."

Nightlife economics

There are OFWs who are not as patient as the Hong Kong amahs and prefer to take a shortcut. Every day, when the bright lights start shining in Wanchai, one of Hong Kong's financial districts, an army of made-up, dressed-up young Asians - Chinese, Mongolians, Thais and most of all Filipinas - hits a string of bars like the immense Neptune II. At 4 or 5 in the morning, if they're lucky, they may be richer by US$100 or so - courtesy of business executives and expats. This certainly beats one week of toiling under the domestic Cantonese Inquisition.

These so-called public relations girls play the game with deftness. All it takes is to be "tabled" (served drinks by a customer), occasionally danced with, served as many drinks as possible, and then the girl can collect a percentage from the bar or club owner (who is not her employer). In one hour in a nightclub, a girl makes three or four times what she would make in one hour under the Cantonese Inquisition. And everything extra that happens outside the nightclub is the girl's own business. More than a few young Filipinas in Hong Kong end up following the bumpy road of working as a maid, then a waitress, and then PR girl, until they reach Valhalla: marriage with a Westerner.

There is no shortage of websites advertising Filipino ladies for Westerners; some even boast a top 10 on why they are the ultimate prize. (For the record: a Filipino lady is loving, romantic and caring; puts family first ahead of money; is deeply religious; believes in a one-man, one-woman relationship; is understanding, patient and supportive; has a flexible personality and is very optimistic; is well educated; dedicates profound respect to her partner or provider in the family; and adores a partner that makes her feel good about life.) Since the International Monetary Fund and the World Bank are not doing much to alleviate the Philippine economic crisis, some Western lonely hearts are more than happy to volunteer for the job.

(Copyright 2004 Asia Times Online Ltd. All rights reserved.

Japan plays peacemaker in the Philippines

By David Adam Stott
Southeast Asia
Jun 23, 2006


Once a foreign occupier and now a major donor and investor, Japan is currently pursuing a whole new role in Southeast Asia: peacemaker. Tokyo recently put itself in the mediating middle of the ongoing conflict between the Manila government and Moro Islamic Liberation Front (MILF) rebels on Mindanao, the second-largest island in the Philippines.

At stake is the prospective Bangsamoro Juridical Entity, which if fully implemented would allow for enhanced self-rule and a governing role for the MILF in the troubled region. Bangsamoro refers to "Muslim Nation" in the local vernacular, and it is worth noting that Islam predates the arrival of Christianity in the Philippines by a few centuries.

Philippine Muslims - most of whom are Sunni - have proudly reclaimed "Moro", formerly a derogatory term used by the colonial Spanish, as a label for their national identity. The Moros mostly live in Mindanao and the neighboring Sulu Archipelago, and Muslim insurgents from the Moro National Liberation Front (MNLF) have since 1968 resisted the Philippine central government in an armed struggle.

The 1996 signing of the optimistically named Final Peace Agreement (FPA) between the MNLF and the government splintered the rebel movement, and the struggle has since been carried on by the MILF, a more overtly Islamic breakaway faction with an estimated 12,000 armed fighters. In recent weeks, Japanese officials have held meetings with the MILF with the aim of forging a permanent peace deal.

Further complicating the situation is the presence of another armed separatist group, the Abu Sayyaf, which has largely morphed into a criminal organization specializing in kidnapping and demanding ransom both from foreigners and from locals. The United States has included the Abu Sayyaf on its list of international terrorist organizations, and Japanese nationals have been among the group's victims.

The southern Philippines' Muslim rebellion has been one of the most protracted and brutal in modern Asian history. It is estimated that from 1970 to the present, the conflict has resulted in more than 150,000 battle-related deaths. Between 2000 and 2003, it is estimated that about 1.5 million civilians were displaced by government military offensives and MILF counter-offensives. For the past three years a ceasefire has been in place, and the casualty rate has thus dropped dramatically.

Representatives of the MILF met with at least two Japanese diplomats on May 7 in a MILF satellite office in Simuay, Sultan Kudarat, Maguindanao. The diplomats reportedly proposed that Japan join the International Monitoring Team, led by Malaysia and assisted by Brunei and Libya, to police the ceasefire while peace talks are held in Kuala Lumpur. Ghadzali Jaafar, the MILF's vice chair for political affairs, was quoted as saying, "We are very grateful to the Japanese government for [its] great concern in ensuring the peace and stability of our homeland and in Mindanao."

Inaugurated in 1990, the Autonomous Region in Muslim Mindanao (ARMM) consists of five provinces and one city: Maguindanao, Lanao del Sur, and Marawi City on Mindanao itself, and Sulu, Basilan and Tawi-Tawi in the Sulu Archipelago. The western and central Mindanao regions have significant Muslim populations, while the eastern part of the island is predominantly Christian. Armed conflict has been concentrated in the ARMM and the Zamboanga Peninsula.

Philippine President Gloria Macapagal-Arroyo has urged foreign donors to pour more development aid into Mindanao to help cement the tentative peace. The ARMM received no local or foreign equity investment in the period spanning 1994-200l, and its gross regional domestic product (GRDP) is by far the lowest of Mindanao's six already poor regions. In per capita terms, the ARMM's output is only two-thirds that of the next-poorest region, Caraga in northeastern Mindanao, and less than one-third that of the northern Mindanao region, the island's leading performer.

Against that dire backdrop, Manila reached out to Tokyo, a longtime major donor of official development assistance. In 1989, Tokyo launched the Grant Assistance for Grassroots Projects in the Philippines to alleviate poverty and help various communities engage in grassroots economic activities. Since then, more than 300 small-scale projects have been implemented across the country. As of this February, the Japan International Cooperation Agency (JICA) had dispatched a total of 77 staff members, 26 long-term experts and 60 volunteers throughout the Philippine archipelago.

Tokyo unveiled its 44 billion yen (US$383 million at the current exchange rate) Support Package for Peace and Stability in Mindanao during Arroyo's state visit in late 2002. Since then, Tokyo has funded many humanitarian projects in areas as far-flung as the Tawi-Tawi and Basilan Islands - both Abu Sayyaf strongholds, where some Japanese nationals have recently been killed. Japan assured Manila this year that it would continue its humanitarian projects in Mindanao despite growing concerns about the safety of its citizens and aid workers there.

Mediating motivations

Japan has long sought a political profile commensurate with its economic weight in Southeast Asia. Tokyo has previously attempted to play a mediatory role in civil conflicts in Myanmar, Cambodia, East Timor, Indonesia's Aceh province, Afghanistan and, most recently, Sri Lanka. In May, Japanese envoy Yasushi Akashi held meetings with both sides of Sri Lanka's protracted dispute, which is on the verge of tipping back toward civil war as the most recent ceasefire breaks down.

There are various dynamics at play behind Japan's Asian peace drive. Analysts note that the policy can be traced back to the first Gulf War in 1991, when Japan was widely criticized for conducting so-called "checkbook diplomacy" where it committed funds but not personnel. At the same time, Japan seems to be responding to domestic calls to both develop an imaginative foreign policy distinct from its relationship with Washington and to play a greater leadership role in Asia.

The latter policy has been spurred by the resurgence of China. Tokyo plainly realizes that Beijing represents a growing threat to its "natural" leadership role, particularly in Southeast Asia and more generally in the Asia-Pacific region as a whole. Japanese Official Development Assistance (ODA) still vastly outweighs that of any other country, and Tokyo has historically been more determined than most to get good value for its money by ensuring that Japanese companies are often awarded related contracts.

At the same time, a succession of scandals has recently rocked Japan's Foreign Ministry and given the public cause to question Tokyo's ODA distribution, especially after a decade of stagnant economic growth at home. Using ODA for high-profile peace initiatives in conflict-ridden Southeast Asia thus bolsters the ministry's otherwise sagging reputation and fends off calls for further cuts in its budget. Meanwhile, Japan's "Peace Constitution" still draws widespread support among the general public and the Foreign Ministry's peace initiatives plainly appeal to this constituency.

In recent years there have been unsubstantiated reports of the MILF's links with global terror group al-Qaeda, and more recently with the Southeast Asian transnational terror network Jemaah Islamiyah. By engaging with the MILF, Japan is probably hoping that it will gently help the Philippines battle against terrorism, but also improve its image in the eyes of the region's Muslims.

For its part, the MILF denies any direct role in terrorism and often contends that any terrorist activity attributed to it is the handiwork of its alleged "lost commands". Nevertheless, evidence continues to surface that its jungle camps in Mindanao are home to some Jemaah Islamiyah trainees and operatives from around Southeast Asia.

Importantly, there is also a potential commercial element to Japan's Philippine peace initiative. Mindanao is the second-largest island in the Philippines and is considered by many Filipinos a land of opportunity. The island contains 48% of the nation's gold production, 63% of its nickel and 18% of its charcoal reserves. Mindanao dominates most of the country's major commodity crops, such as rubber, pineapple, cacao, banana, coffee, corn and coconut, contributing anywhere between 60% to 100% of total output. Despite large-scale deforestation, the island still boasts nearly 39% of the nation's forest cover and currently supplies about 90% of the Philippines' total timber production.

Japan has historical roots in the region. Japanese emigration to the Philippines dates back to 1903, where Davao, Mindanao's largest city, was known as "Little Tokyo". Then, Japanese management and leadership of the local hemp industry made the Davao area economy thrive and turned abaca into a major Philippine export commodity. So important was the island to Japanese trade that apparently a trade map in the Japanese consulate in Davao labeled Mindanao - along with Korea and Formosa - as domestic territories, according to a source familiar with the matter.

Now, Mindanao is obviously attractive to Japan because it holds a significant portion of the Philippines' unexploited oil and natural-gas deposits, much of which rest in Muslim-majority territories, especially within former MILF-controlled areas. In 2000, the Philippine government began implementing the Liguasan Marsh Development Project to extract natural gas in marshland occupied by Moro communities claimed and largely controlled by the MILF. The Muslim strongholds in Maguindanao, North and South Cotabato, Basilan and the Sulu Islands are also believed to contain various untapped natural resources. With the ever-increasing global competition for resources, in particular with China, Tokyo surely recognizes the importance of any goodwill it can build with the future gatekeepers to such sought-after commodities.

Complicating the conflict resolution picture are the at least 13 different ethno-linguistic Muslim groups indigenous to Mindanao, of which three predominate politically and in numbers: the Maguindanao-Iranun in the Cotabato region, the Maranaws of the Lanao region, and the Tausug-Samal group of the Sulu Archipelago. There are also an increasing number of Islamic converts across the island, many of whom married into the faith. Such tribal divisions are significant because these ethno-linguistic distinctions have formed the core of the three main rebel groups, with the Tausug dominating the MNLF, the Tausug and Yakan the top recruits to the Abu Sayyaf, and the Maguindanao making up the largest part of the MILF.

Conflicted ethnic mosaic

Early in the struggle, the MNLF placed great emphasis on constructing a shared cultural-historical identity that transcended differences among these 13 different Muslim ethno-linguistic groups. As such, the term "Bangsamoro" was created to imply a shared heritage and then overrode the occasional call for Islamic renewal and jihad. At the same time, the MNLF was keen to stress continuity with the Moro sultanates, which had some modern state features prior to their absorption into the Philippine colonial state before World War II.

Meanwhile, the MILF has recently gone to great lengths to accentuate its stronger commitment to Islamic ideals in contrast to the largely secular posture of the MNLF. That religious stance has allegedly attracted financial support for the MILF from such groups as al-Qaeda.

Nevertheless, the underlying Islamic nature of both the MNLF and the MILF is subordinate to the cause of defending Moro territory and traditions, both as a response to perceived Christian chauvinism and as a desire to strengthen social and political connections between Philippine Muslims and the wider Islamic world. These connections, facilitated by rebels and local ulama, or Islamic scholars, have resulted in an influx of funds from governments, private organizations and wealthy individuals in the Middle East for building mosques and Islamic schools throughout Mindanao. In turn, this has helped foster an Islamic consciousness and, through front organizations, the MILF promotes Islamic religious and cultural values that have increased its own local legitimacy and popular support and hence contributed to its ability to sustain armed conflict.

So does poverty. A two-tier Mindanao is clearly emerging, in which the Muslim areas in the west lag noticeably behind the predominantly Christian eastern areas. Using the United Nations Development Program's Human Development Index as a benchmark, the quality of life in Muslim Mindanao is significantly below both the national level and the Christian-majority provinces of Mindanao. These same areas have also had the least access to potable water and electricity.

Given that Mindanao's Muslim-majority areas suffer from a plethora of social, economic, institutional, demographic, geographic and governance problems, Japan will quickly find that ending the cycle of violence will not come easily. Insufficient levels of government spending, a lack of infrastructure, abysmally low levels of foreign and local investment, and clan rivalries among rebel and government forces represent just the tip of the iceberg.

The most pressing practical problem to the peace process now is the lack of agreement on which areas in southern Mindanao should be declared Muslim ancestral domains, a disagreement that is clearly tied to control over natural resources. Entrenched personal and corporate interests from Christian landowning families in Mindanao and Manila will likely oppose any major government concessions to Moros, and overcoming these obstacles will be a formidable task given the Philippines' deserved reputation for corruption and oligarchism.

For all Tokyo's good and commercial intentions, it will take more than goodwill to solve the Philippines' entrenched and costly conflict.


---------------------------------------------------------------------
David Adam Stott is a lecturer at the University of Kitakyushu in southern Japan, where he teaches international relations and researches the political economy of conflict in Southeast Asia.

(Copyright 2006 Asia Times Online Ltd. All rights reserved.

How the US got its Philippine bases back

By Herbert Docena
Southeast Asia
Nov 28, 2007

MANILA - Last year, the United States Quadrennial Defense Review, a public and official document required by the US Congress from the Pentagon to express US military strategy, announced that: "Of the major and emerging powers, China has the greatest potential to compete militarily with the United States and field disruptive military technologies that could over time offset traditional US military advantages absent US counter-strategies."

Capping a series of pronouncements by high-level US officials warning China not to challenge the US as well as a series of actions indicating US moves to encircle China with US military assets and allies, the document confirmed what many had long suspected to be the case: that the US sees China as the rival whose rise it must prevent and whose military power it must contain. One of the countries in which the US has been deepening its military presence in is the Philippines - considered by US analysts as firmly located within what they call "the dragon's lair" - that strategic area around China where decisive battles could erupt in certain war-planning scenarios.

Though the US military officially vacated the Philippines and its mammoth Subic Bay base in 1991, since 2001 it has moved to re-integrate the Philippines firmly within what it now calls its "global defense posture". Despite the US and Philippine governments' efforts to play down their presence, a clearer but still incomplete picture of the extent and depth of the re-establishment of the US's military presence in the Philippines has emerged.

Recurring exercises

First, the US has stepped up deploying troops, ships and equipment to the country, ostensibly for training exercises, humanitarian and engineering projects and other missions, even though its military officially vacated the Philippines and its mammoth Subic Bay base in 1991.

Since 1998, a steady stream of US troops has arrived in the country for regular military exercises involving up to 5,000 troops, depending on the exercise in various locations throughout the country. Through the Visiting Forces Agreement, which was required by the US to conduct the exercises, it was only beginning in 2001 that the number and the size of troops involved jumped significantly. In 2006, up to 37 exercises were scheduled, up from 17 to 24 in the preceding years. [1]

In any given year since then, few are the days or weeks when there would be no US troops somewhere in the country, giving lectures to Philippine troops, participating in large-scale maneuvers, joining command exercises, simulating war games or taking part in other related activities. Compared to any other Southeast Asian country, the Philippines hosts the most number of such exercises and activities. As a result of these continuing deployments, former US ambassador to the Philippines Francis Ricciardone has described the US presence in the country as "semi-continuous". [2]

Though presented largely as efforts to improve the skills of Filipino soldiers, the aim is also to gain strategic ground. As former US Pacific Command chief Thomas Fargo himself has pointed out: "The habitual relationships built through exercises and training and a coherent view of regional security with regional partners is our biggest guarantor of access in time of need ... Access over time can develop into habitual use of certain facilities by deployed US forces with the eventual goal of being guaranteed use in a crisis, or permission to preposition logistics stocks and other critical material in strategic forward locations." [3]

As US troops come and go in rotation for frequent regular exercises, their presence - when taken together - makes up a formidable forward-presence that brings them closer to areas of possible action without need for huge infrastructure to support them - and without inciting a lot of public attention and opposition. For instance, US troops will be able to deploy faster to the South China Sea if they are holding exercises off Palawan or in Zambales than if they were in Hawaii. In the face of domestic sensitivities regarding a permanent US military presence, they would also be able to say publicly that they are only in the Philippines temporarily and that they will be leaving soon. What is left unsaid, however, is that they are also always arriving.

And as US troops depart then come back again, they leave behind the infrastructure that they had built and used ostensibly for the exercises and which could still be of use to the US military in the future for missions different from those for which they were initially built. In General Santos City, for example, the US constructed a deepwater port and one of the most modern domestic airports in the country, connected to each other by one of the country's best roads.

In Fort Magsaysay in Nueva Ecija, where US troops routinely go for exercises, the airport has been renovated and its runway strengthened to carry the weight of C-130 planes. [4] In the southern islands of Basilan and Sulu, venues of Balikatan exercises, the US, through United States Agency for International Development (USAID), has also built roads and ports that can berth huge ships. [5]

Along with troops, an increasing number of ships have also entered the country with increasing frequency, ostensibly for exercises and humanitarian missions. On at least one occasion, it appeared that they even came unannounced and unexpected. [6] According to the US Congressional Budget Office, "[T]he Navy counts those ships as providing overseas presence full time, even when they are training or simply tied up at the pier." [7] Though they come and go, the US military sees their regular and frequent "temporary" deployments as part of its global "posture."

As the US National Defense Strategy states, "Our posture also includes the many military activities in which we engage around the world. This means not only our physical presence in key regions, but also our training, exercises and operations. They involve small units working together in a wide range of capacities, major formations conducting elaborate exercises to achieve proficiency in joint and combined operations, and the 'nuts and bolts' of providing support to ongoing operations. They also involve the force protection that we and our allies provide to each other." [8]

Just-in-time basing

Second, the US has secured arrangements and built infrastructure that would allow it to use ports and airfields to pre-position equipment, secure logistics support and engage a broad range of locally-provided services that would enable it to launch and sustain operations from the Philippines if necessary.

In September 2001, President Gloria Macapagal-Arroyo granted the US free access to its ports and offered it over-flight rights to its airspace. [9] In November 2002, the US and Philippine governments signed the Mutual Logistics Support Agreement (MLSA), which has been described by researchers with the US Congressional Research Service as "allowing the United States to use the Philippines as a supply base for military operations throughout the region". [10] The MLSA obliges the Philippine government to exert "best efforts" to provide the US logistics supplies, support and services during exercises, training, operations and other US military deployments.

The agreement defines these to include food, water, petroleum, oils, clothing, ammunition, spare part and components, billeting, transportation, communication, medical services, operation support, training services, repair and maintenance, storage services, and port services. "Construction and use of temporary structures" is also covered. [11] In other words, the MLSA gives the US access to the full range of services that the US military would require to operate in and from the country. Also through the MLSA, the US has secured the services that it would normally be able to provide itself inside a large permanent base but without constructing and retaining large permanent bases - and without incurring the costs and the political problems that such bases often pose.

In 2003, an analyst reported that among all Southeast Asian countries only the Philippines has provided a "forward positioning site" for the US to store equipment to be used for regional operations. [12] In August 2005, the Overseas Basing Commission, the official commission tasked to review US basing, identified the Philippines as one of the countries - along with Thailand, India and Australia - in which so-called "Cooperative Security Locations" (CSLs) are being developed by the US in the region. [13] According to the Pentagon, CSLs are a new category of bases that refer to facilities owned by host-governments but are to be made available for use by the US military as needed.

The Philippine government has not disclosed the locations and other details about these CSLs. The airport in Mactan, which now hosts a fleet of US Orion reconnaissance planes, [14] is reported to be one site where Pentagon officials intended to establish such a facility, [15] but this has not yet been officially acknowledged or independently confirmed. Yet Arroyo herself had earlier in July 2001 raised the idea of renting out naval facilities in Subic Bay, an oft-used venue for joint exercises to the US military.

Lockheed Martin, a company often contracted by the US military, was reported to have been waiting for approval to establish a regional aircraft maintenance facility at Clark Air Base. [16] Halliburton KBR, another US corporation that has secured US military contracts, was reported as having been granted in November 2001 a US$100 million contract to convert Subic Bay into a modern commercial port. [17] The company had earlier announced that it was exploring redeveloping the former US Navy Ship Repair Facility in Subic Bay for maritime logistics and ship support services. [18]

Arrangements that combine commercial with military activities, noted then US PACOM Admiral Dennis Blair, "opens up possibilities for the sorts of things that we can work together on in the future". [19] Indeed in a recent thesis for the US Naval Postgraduate School, these arrangements are precisely what were recommended by Thomas Garcia: "not a return to the grand infrastructure of the past" but "the use of only a small logistical facility currently utilized by the commercial ship industry, and the port infrastructure of berths and airfield already in place." [20]

Another option suggested by Garcia was to locate the Philippine Navy in Subic and then allow the US to position its ships inside the nominally Philippine-owned base. [21] Former US PACOM chief Admiral Thomas Fargo had in fact announced plans to use Subic and Clark for the transit of personnel and trans-shipment of equipment, as well as a re-fueling post for US ships from Honolulu, Guam, or the US West Coast bound for the US base in Diego Garcia. [22] Though nothing has since been heard of these plans, the reports indicate that such options are still on the table. Given the US government's policy of partial disclosure, it's also possible that such plans have gone ahead unannounced and possibly in other places, in the manner that Kaplan had described above. [23]

The terms of the MLSA and the establishment of CSLs reflect the US's increasing emphasis on just-in-time logistics support and pre-positioning of equipment to ensure that US forces - dispersed as they are around the world, often far away from main bases where they store equipment and tap all kinds of services - are always ready and rearing to go. It is not so much the size of the base that matters, but whether it can provide the US military with what it needs and when it's needed.

As the Council on Foreign Relations recently pointed out, "While host nation support often carries the connotation of basing, its role of staging and access is perhaps more critical. Support for port visits, ship repairs, over-flight rights, training areas and opportunities, and areas to marshal, stage, repair, and re-supply are no less important for both daily US presence in the region and for rapid and flexible crisis response." [24]

Forward operating unit

Third, the US has already succeeded in stationing indefinitely a US military unit in the Philippines. Since 2002, a unit now called the Joint Special Operations Task Force-Philippines (JSOTF-P) has been deployed to and based in Zamboanga, Basilan, Sulu and other areas in Mindanao in the southern Philippines.

While initially presented as part of on-again, off-again temporary training exercises, it has since been revealed that this unit has continuously maintained its presence in the country for the past six years. With the Philippine government not giving a definite exit date, and with US officials stating that this unit will stay on as long as they are allowed by the government, it is presumed that it will continue to be based in the Philippines for the foreseeable future.

In an apparent effort not to draw attention to the unit, the US and Philippine governments have publicly revealed little about the real nature and mission of the JSOTF-P, except to project it as part of the US-led "war on terror" and to highlight the humanitarian and civil engineering projects that it undertakes. The media, for the most part, have through the years uncovered little about the unit and have reported on it by following the description offered by the US and Philippine governments. Most of what has since been gathered about the unit has come from US military publications and specialist sources not intended for general public consumption.

Headquartered in the Philippine military's Camp Navarro in Zamboanga City, [25] but with its personnel sent to various locations, the JSOTF-P has effectively established a new form of US military presence and basing in the country. When it was publicly revealed in August 2007 that the US Department of Defense via a US military construction unit had granted a contract to a company providing "base operations support" for the JSOTF-P, [26] the US Embassy admitted that the US was setting up allegedly "temporary"structures for "medical, logistical, administrative services"and facilities for "for them to eat, sleep and work" [27].

The Philippine's own Visiting Forces Commission also confirmed that the US maintains "living quarters" and stock supplies inside Philippine military camps. [28] Renowned US military historian Robert Kaplan, who revisited the JSOTF-P inside Camp Navarro in 2006 described these structures as signifying a "more hardened, permanent arrangement".[29] According to a US military publication, the JSOTF-P's area of operations covers about 20,000 square kilometers, covering the entire island of Mindanao and its surrounding islands and seas. [30] According to various media reports, the number of troops attached to the unit has ranged from between 100 and 450, but it is not clear what the actual total number is for any specific period. [31] US Lieutenant Colonel Mark Zimmer, a JSOTF-P public affairs officer, said it varies "depending on the season and the mission." [32]

US officials have consistently maintained that US troops belonging to the unit "train, advise and assist" the Philippine military in their war against alleged terrorists in the country. Though denying that they are involved in "actual combat", US officials also repeatedly assert that they have the right to shoot back when under fire. In US military publications, US troops belonging to the unit have characterized their mission as "unconventional warfare", "foreign internal defense" and "counter-insurgency". [33]

In fact, they have been reported to have exchanged gunfire with and to have been attacked by alleged insurgents. [34] There have also been numerous sightings of US troops in the vicinity of active military operations, some of which have been confirmed by Philippine military officials. [35] At the height of Philippine military offensives against insurgent targets in August 2007, US soldiers were photographed by a press wire agency leading a military convoy in Sulu. [36]

All of this has served to challenge Philippine government claims that the US troops are not involved in the fighting. As Colonel Jim Linder, former head of JSOTF-P, has stated, "We're very much in a war out here ... We'll spill American blood on Jolo. It's only by luck, skill and the grace of God we haven't yet." [37] Referring to their bases in the southern Philippines as "forward operating base-11" and "advanced operating base-921", [38] the JSOTF-P corresponds to the new kind of forward-deployment that the US has introduced as part of its ongoing effort to realign its global posture and overhaul its offensive capabilities.

In terms of profile and mission, the JSOTF-P is similar to the Combined Joint Task Force-Horn of Africa (CJTF-Horn of Africa), which was established in Djibouti in eastern Africa in 2003 and also composed mostly of Special Forces. Like the JSOTF-P, the CJTF-Horn of Africa has also been conducting "humanitarian"missions and aid projects. Similar to the Philippines, Djibouti has also seen a dramatic increase in the amount of military aid it receives from the US. [39] As a sample of the US's new austere basing template, the CJTF-Horn of Africa has been described as the "model for future US military operations". [40]

Indeed, more deployments similar to that of the JSOTF-P and CJTF-Horn of Africa are planned in other locations around the world. [41] In 2004, former PACOM commander Thomas Fargo talked about expanding Special Operations Forces in the Pacific. [42] Apparently referring to the JSOTF-P, former secretary of defense Donald Rumsfeld also announced that the Pentagon would establish more "nodes for special operations forces". [43]

In his 2005 Annual Defense Report, Rumsfeld said that the US military "will improve its global force posture to increase strategic responsiveness while decreasing its overseas footprint and exposure. In place of traditional overseas bases with extensive infrastructure, we intend to use smaller forward operating bases with prepositioned equipment and rotational presence of personnel ... We will maintain a smaller forward-presence force in the Pacific while also stationing agile, expeditionary forces capable of rapid responses at our power projection bases." [44]

As evidenced by the fact that most Filipinos are not even aware of their presence and their actions, the JSOTF-P has managed to circumvent public opposition and legal restrictions governing the presence of foreign troops in the country. Hence, as Kaplan noted, "The JSOTF had succeeded as a political mechanism for getting an American base-of-sorts up and running ..." [45] C H Briscoe, command historian of the US Army Special Operations Command, under which the units of the JSOTF-P belong, concurs: "After more than 10 years, PACOM has reestablished an acceptable presence in the Philippines ..." [46] (Italics added.)

Though the Abu Sayyaf Group and other "terrorists" are the self-avowed targets of the JSOTFP, its location and capabilities allow it to aim much farther. In fact, the JSOTF-P's "area of operations" covers places in Mindanao in which the communist paramilitary group the New People's Army (NPA) is also active. The US had also tagged the NPA as a "foreign terrorist organization" and therefore as a legitimate target of the "war on terror". In fact, the US has also directly offered to more actively help in fighting the NPA. [47] As it is, US military assistance and training are directly contributing to the Philippine military's war against them.

Strategically positioned between two routes at the entrance of a major sea lane, the Makassar Strait, at the southwestern rim of the South China Sea, closer to Malaysia and Indonesia than most of the rest of the Philippines, the JSOTF-P, according to C H Briscoe, the unit's official historian, is "now better able to monitor the pulse of the region". [48] Indeed, Major General David Fridovich, commander of the US Special Operations Forces-Pacific, has stated that the area including the Philippines, Malaysia and Indonesia is the "key region where we presently focus our indirect efforts". [49]

Rommel Banlaoi, an analyst with the National Defense College of the Philippines, finds, "The American war on terrorism has provided the US an excellent justification to hasten its reestablishment of a strategic presence in Southeast Asia." [50] Having secured that presence, the US has become closer to that country with "the greatest potential to compete militarily" with the US.

By getting the US "semi-permanently" based south of Luzon for the first time since World War II, Kaplan notes that "the larger-than-necessary base complex" in Zamboanga has delivered more than tactical benefits. [51] In the minds of the US Army strategists, Kaplan notes, "Combating Islamic terrorism in this region [Southeast Asia] carried a secondary benefit for the United States: it positioned the US for the future containment of nearby China."


Notes

1. Carolyn O Arguillas, "Q and A with US Ambassador Francis Ricciardone: Ops-Intel-fusion is not spying," MindaNews, February 28, 2005; Jojo Due, "Biggest RP-US military exercise starts next week," Philippine Business Daily Mirror, February 17, 2006.

2. Carolyn O Arguillas, "Q and A with US Ambassador Francis Ricciardone: Ops-Intel-fusion is not spying," MindaNews, February 28, 2005.

3. Admiral Thomas Fargo, Transcript of Hearing of US House of Representatives Committee on International Relations Subcommittee on Asia and the Pacific, June 26, 2003.

4. Karl Wilson, "US force in Asia to become smaller but deadlier," Daily Times, August 22, 2004.

5. United States Agency for International Development (USAID) Growth with Equity in Mindanao project website; Embassy of the United States of America, Manila, Republic of the Philippines, "Securing Peace in Mindanao through Diplomacy, Development, and Defense," August 2006.

6. In October 2005, for example, a huge US military ship, later identified as a high-speed vessel, was spotted off Basilan near Zamboanga City. The Armed Forces of the Philippines and the Department of Foreign Affairs gave conflicting versions as to the nature and mission of the ship, with the DFA spokesperson even initially indicating that they were not informed about its arrival only to subsequently claim that the US Embassy had actually requested permission for the ship's entry. ("US military ship sneaks into Southern RP, Sunstar, October 12, 2005, Manila Times, October 13, 05, Phil Star, October 28, 05.

7. US Department of Defense, National Defense Strategy 2005, Washington DC, pp. 18-19.

8. US Department of Defense, National Defense Strategy 2005, Washington DC, pp. 18-19.

9. Mark Lander, "Philippines Offers US its Troops and Bases," New York Times, October 2, 2001; Rufi Vigilar, "Philippines opens its ports to US military," CNN, September 18, 2001; Angel M Rabasa, "Southeast Asia After 9-11: Regional Trends and US Interests," Testimony presented to the Subcommittee on East Asia and the Pacific House of Representatives Committee on International Relations on December 12, 2001.

10. Thomas Lum and Larry A. Niksch, "The Republic of the Philippines: Background and US Relations," Congressional Research Service Report for Congress, January 10, 2006; Sheldon W Simon, "Theater Security Cooperation in the US Pacific Command," National Bureau of Asian Research Analysis, Volume 14, Number 2, August 2003.

11. Mutual Logistics Support Agreement Between the Department of Defense of the United States of America and the Department of National Defense of the Republic of the Philippines, November 21, 2002.

12. Sheldon W Simon, "Southeast Asia solidifies antiterrorism support, lobbies for postwar Iraq reconstruction," Pacific Forum CSIS Comparative Connections, Second Quarter 2003.

13. Overseas Basing Commission, Report to the President and Congress, Arlington, Virginia, August 15, 2005, p. H11.

14. Al Jacinto, "NGOs: Probe US military facilities," Manila Times, August 29, 2007.

15. Robert D Kaplan, Hog Pilots, Blue Water Grunts: The American Military in the Air, at Sea, and on the Ground (New York: Random House, 2007), pp. 88-90.

16. Thomas Fuller, "Subic Bay May be Up for Rent," International Herald Tribuna, July 13, 2001; "US Briefs RP on plans for using Subic, Clark," Inquirer, September 28, 2001.

17. Frida Berrigan, "Halliburton's Axis of Influence," In These Times, March 28, 2003.

18. Halliburton, "Press Release: Halliburton KBR to Evaluate Subic Bay Facilities," November 21, 2001.

19. Admiral Dennis Blair (Commander in Chief, US Pacific Command), Transcript of Press Conference, Manila, July 13, 2001.

20. Thomas J Garcia, "The Potential Role of the Philippines in US Naval Forward Presence," Thesis for US Naval Postgraduate School, Monterey, California, December 2001, p. xiv.

21. Thomas J Garcia, "The Potential Role of the Philippines in US Naval Forward Presence," Thesis for US Naval Postgraduate School, Monterey, California, December 2001, p. 30.

22. "US Briefs RP on plans for using Subic, Clark," Inquirer, September 28, 2001.

23. Council on Foreign Relations, The United States and Southeast Asia: A Policy Agenda for the New Administration, July 2001, pp. 47-48.

24. Robert Kaplan, Imperial Grunts: On the Ground with the American Military from Mongolia to the Philippines to Iraq and Beyond, New York: Vintage Books 2006, p.147.

25. In August 2007, Focus on the Global South publicized the granting by the US Department of Defense, through the US Naval Facilities Engineering Command (NAVFAC), of a six-month $14.4-million contract to a certain "Global Contingency Services LLC" of Irving, Texas for "operations support" for the Joint Special Operations Task Force-Philippines (JSOTF-P). According to its own website, the NAVFAC is the unit within the US military that is in charge of providing the US Navy with "operating, support, and training bases". It "manages the planning, design, and construction and provides public works support for US Naval shore installations around the world". Among their business lines are "bases development" and "contingency engineering". According to the announcement by the Pentagon, the contract awarded to Global Contingency Services LLC includes "all labor, supervision, management, tools, materials, equipment, facilities, transportation, incidental engineering, and other items necessary to provide facilities support services." Global Contingency include "facility operations and maintenance; air operations; port operations; health care; supply and warehousing; galley; housing support; emergency services; security, fire, and rescue; vehicle equipment; and incidental construction." Contingency Response Services LLC describes its work as encompassing "operating forces support", "community support", and "base support". According to the Defense Industry Daily publication, the contract also includes "morale, welfare, and recreation support". The specific contract for work for the JSOTF-P is expected to be completed in January 2008 but other contracts may follow as part of the $450 million-package. ("Contracts, June 6, 2007," US Department of Defense; Press Release, "DynCorp International and JV Partners Win $450 million NAVFAC Contract," DynCorp International, November 2, 2006; "Contingency Response Services", DynCorp International; Defense Industry Daily, "$14.4M to help US SOCOM in the Philippines," June 8, 2007; Ethan Butterfield, "DynCorp lands $450M Navy Contingency Services Deal," Washington Technology, November 3, 2006.

26. "US denies building bases in Mindanao," GMANews.TV, August 27, 2007.

27. Veronica Uy, "VFACom Chief Denies US bases in Mindanao," Inquirer.net, August 24, 2007.

28. Robert D Kaplan, Hog Pilots, Blue Water Grunts: The American Military in the Air, at Sea, and on the Ground (New York: Random House, 2007), p. 319.

29 T D Flack, "Special Operations Force Aiding an Important Ally," Stars and Stripes, March 11, 2007; T D Flack, "Special Operations Force Aiding an Important Ally," Stars and Stripes, March 11, 2007; Colonel Gregory Wilson, "Anatomy of a Successful COIN Operation: OEF-Philippines and the Indirect Approach," Military Review, November to December 2006.

30. At start of the deployment in January 2002, there were supposed to be 160 to 250 who were joining. (Steve Vogel, "Americans Arrive in Philippines US Special Forces To Aid Filipino Army In Threatened Areas," Washington Post, January 16, 2002; Fe B Zamora, "All US troops will leave on July 31, says Wurster," Philippine Daily Inquirer, July 1, 2002; Pat Roque, "US Special Forces in Philippines," Associated Press, February 18, 2002; Bill Gertz and Rowan Scarborough, "Philippine confusion," Washington Times, February 8, 2002). In November 2002, the Army Magazine reported that there were 260 members of the task force were in the southern Philippines. (Army Magazine, "News Call," November 1, 2002). In February 2003, 350 Special Forces were reportedly scheduled to be sent to Sulu but this was postponed. (Eric Schmitt, "US combat force of 1700 is headed to the Philippines", New York Times, February 21, 2003; Bradley Graham, "US Bolsters Philippine Force," Washington Post, February 21, 2003) In October 2003, 300 Special Forces were reported to be in Basilan ("US spy aircraft deployed in Philippines," October 13, 2003 The News International (Pakistan). By February 2006, 250 more troops were reported to be joining those who were already in Sulu but it was not clear how many were still there at that time ("RP-US to conduct war games amid 'rape' controversy," Philipine Daily Inquirer, January 10, 2006; "No time frame of US troops' stay in Sulu," Mindanews, January 17, 2006). Shortly after, US military spokesperson Captain Burrel Parmer announced that 400 US troops will be Sulu for various projects. (Ding Cervantes, "5,500 US military personnel coming for Balikatan 2006," Philippine Star, February 17, 2006). In September 2006, 114 US troops were reported to have arrived in Zamboanga City as part of the "normal rotation" of soldiers under JSOTF-P, according to the US Embassy. (Julie Alipala, "100 GIs held at Zambo immigration," Philippine Daily Inquirer, September 28, 2006). In February 2007, US today reported 450 and Reuters put the number at 100 (Paul Wiseman, "In Philippines, US Making Progress in War on Terror," USA Today, Februay 13, 2007; "Philippines increases security for US forces," Reuters, February 26, 2007).

31. "Civilians want probe on US military's alleged supervision in Sulu war," Mindanews, November 24, 2005.

32. Colonel David Maxwell, "Operation Enduring Freedom-Philippines: What Would Sun-Tzu say?" Military Review, May-June 2004; Members of the 1st Special Forces Group, "The history of the 1st SF Group in the Republic of the Philippines; 1957-2002," Special Warfare, June 2002; C H Briscoe, "Why the Philippines: ARSOF's expanded mission in the war on terror," Special Warfare, September 2004; "Interview with Vice Admiral Eric T Olson," Special Operations Technology Online, July 13, 2004, Volume 2, Issue 4; Colonel. Gregory Wilson, "Anatomy of a Successful COIN Operation: OEF-Philippines and the Indirect Approach," Military Review, November to December 2006.

33. John Hendren, "Rebels shoot at US Troops in the Philippines," Los Angeles Times, June 18, 2002; Army Magazine (published by the Association of the United States Army), "News Call," August 1, 2002; Roel Pareno, "Gunfire hits Huey with US troops," Philippine Star, March 9, 2006.

34. See Herbert Docena, Unconventional Warfare: Are US Special Forces Engaged in an 'Offensive War' in the Philippines?" (Quezon City: Focus on the Global South, 2007).
35. "American troops aboard Humvee spotted leading military convoy," Philippine Daily Inquirer, August 15, 2007.

36. Eliza Griswold, "Waging Peace in the Philippines", The Smithsonian, December 2006.

37. Major Kevin T Henderson, US Army, "Army Special Operations Forces and Marine Expeditionary Unit (Special Operations Capable) Integration: Something a Joint Task Force Commander should Consider," monograph, United States Army Command and General Staff College, School of Advanced Military Studies, 19 May 2004; another writer talks about a "Forward Operating Base 11" in the southern Philippines (Cherilyn Walley, "Impact of the semi-permissive environment on force protection in Philippine engagements," Special Warfare, September 2004); T D Flack, "When Visiting Jolo, Show a Little Courtesy, Please," Stars and Stripes, March 12, 2007.

38. Alain Lallemand, "Profiteering on Location," International Consortium of Investigative Journalists, May 22, 2007.

39, Center for Defense Information, "Worldwide Reorientation of US Military Basing: Part II: Central Asia, Southwest Asia, and the Pacific," October 7, 2003; Stanley A Weiss, "After Iraq, a New US Military Model," International Herald Tribune, December 27, 2006.

40. Greg Jaffe, "Rumsfeld details big military shift in new document," Wall Street Journal, March 11, 2005.

41. Admiral Thomas B Fargo, "Regarding the Defense Global Forces Posture Review," Testimony before the Senate Armed Services Committee, September 23, 2004.

42. Donald H Rumsfeld (US Secretary of Defense), Testimony before Senate Armed Services Committee, Washington DC, September 23, 2004.

43. Donald H Rumsfeld (US Secretary of Defense), Annual Report to the President and the Congress 2005, p. 36-37.

44. Robert Kaplan, Imperial Grunts: On the Ground with the American Military from Mongolia to the Philippines to Iraq and Beyond, New York: Vintage Books 2006, p.150.

45. C H Briscoe, "Reflections and Observations on ARSOF Operations During Balikatan 02-1," Special Warfare, September 2004.

46. Christine Avendano, "US willing to help RP troops in fight vs NPA," Inquirer.net, June 28, 2007.

47. C H Briscoe, "Reflections and Observations on ARSOF Operations During Balikatan 02-1," Special Warfare, September 2004.

48. "Interview with Major General David Fridovich," Special Operations Technology SOTECH, April 23, 2007.

49. Rommel C Banlaoi, The War on Terrorism in Southeast Asia, (Manila: Rex Book Store Inc., 2004).

50. Robert Kaplan, Imperial Grunts: On the Ground with the American Military from Mongolia to the Philippines to Iraq and Beyond (New York: Vintage Books, 2006), p.178.

51. Robert Kaplan, Imperial Grunts: On the Ground with the American Military from Mongolia to the Philippines to Iraq and Beyond (New York: Vintage Books 2006), p.134.

---------------------------------------------------------------
Herbert Docena is author of "At the Door of all the East: The Philippines in United States Military Strategy", a new report launched by Focus on the Global South, an international policy research institute.

(Copyright 2007 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

US digs in deeper in the Philippines

By Noel Tarrazona
Southeast Asia
Sep 5, 2007

ZAMBOANGA CITY, Philippines - As the Armed Forces of the Philippines expand the scope of their offensive against Muslim insurgent groups on Mindanao, some are wondering if the escalating conflict could lead or already has led to the establishment of a permanent US military presence in the restive region.

Since the September 11, 2001, terror attacks on New York and near Washington, the United States has, as part of a Visiting Forces Agreement (VFA) with the Philippines, poured hundreds of millions of dollars' worth of military aid and technical assistance toward the army's counterinsurgency campaign against Abu Sayyaf, a radical separatist group that Washington contends has links to regional and global terror groups, including Indonesia-based Jemaah Islamiya and al-Qaeda.

More recently, the Philippine Army has resumed low-intensity hostilities with two Muslim ceasefire groups, the Moro National Liberation Front (MNLF) and the Moro Islamic Liberation Front (MILF). Manila has accused the MNLF of harboring members of the 300-member Abu Sayyaf. With US military assistance, though not full-fledged fighting forces, the Philippine Army is believed to have largely hobbled the dwindling Abu Sayyaf by decapitating its top leadership.

With the spiraling fiasco in Iraq and the re-emergence of the Taliban as a fighting force in Afghanistan, the US has no clear-cut victories to show after President George W Bush launched his "war on terrorism" in 2001. Southeast Asia, including combating Abu Sayyaf in the southern Philippines, was identified by Washington as an important theater in the global campaign and by certain measures now represents the only front were the US could conceivably declare any sort of a military victory.

The irony, of course, is that US soldiers have reputedly not done any of the fighting in Mindanao and that the Philippine Army is now threatening to widen the conflict seemingly beyond the United States' original strategic objectives. Some political analysts believe that the recent army operations against the MILF and MNLF have been driven by military leaders keen to keep the United States' financial assistance flowing - despite the new offensive's only tenuous link to Washington's stated counter-terrorism goals. The US has so far remained mum on the Philippine Army's recent allegations that the MNLF, and to a lesser degree the MILF, are in league with Abu Sayyaf.

But a widened conflict and longer stay in the Philippines could serve Washington's broader strategic goals beyond the "war on terror" in the region - counterbalancing China. Since 2002, the US has invested millions of dollars toward the construction not only of military facilities, but also of development and humanitarian projects in and around Zamboanga City, where the US and the Philippine Army have staged a series of ever larger "shoulder to shoulder" joint military exercises, including June's joint Cooperation Afloat Readiness and Training (CARAT) naval exercises. More than 600 US troops took part in the original six-month exercises here in 2002, and the US has established a counter-terrorism training camp in the area.

Those joint exercises have now extended into the Muslim-dominated neighboring provinces of Sulu and Basilan, conflict-ridden areas where the fighting between rebel and government forces has been most intense. In Sulu alone, the US has allocated more than US$100 million for infrastructure and social services, an attempt to address the abject poverty that Manila contends has driven the region's unemployed youth into insurgent camps, but also possibly to pave the way for future resource extraction.

Ever since the Philippines' former colonial overlord was ousted in 1991 from its long-held military bases at Subic Bay and Clark, local law has strictly prohibited the re-establishment of foreign military bases in the country. The legislation was put in place specifically to guard against a repeat of the country's experience under the late dictator Ferdinand Marcos, who for years was financially propped up by Washington and symbolically fortified by the United States' military presence in the country.

Yankee come home

Now some in President Gloria Macapagal-Arroyo's camp are believed quietly to favor maintaining some sort of US military presence in the country - both to consolidate recent US-supported battlefield gains against Muslim separatist groups and more broadly to counterbalance China's growing military might in the region.

Outwardly Manila's bilateral relations with Beijing are cordial, but the two sides have in recent years skirmished over their competing claims to the reputedly oil-rich Spratly Islands. The recent joint CARAT exercises with the US notably coincided with a Foreign Ministry announcement of a new joint seismic marine undertaking with Beijing to settle their disputed claims in the South China Sea.

For their part, US officials deny harboring any ambitions to establish a permanent military base in Mindanao, or for that matter anywhere else in the Philippines. Joint Special Operation Task Force commander Colonel David Maxwell, who leads the joint exercise with the Philippine Army, says the US presence is strictly consistent with the provisions of the VFA.

Left-leaning groups, such as Focus on the Global South (FGS), a research institute based in Thailand that has closely monitored the US military's presence in the Philippines, contend that the US has, in apparent violation of Philippine laws, already established de facto bases in Mindanao. According to VFA commissioner Edilberto Adan, the technical definition of a US base entails US troops and supplies being located inside a host nation's facilities - as is now the case in the southern Philippines.

FGS noted in a recent statement that the US Overseas Basing Commission (OBC), an official US government body, has recently listed the Philippines as developing "cooperative security locations" - a category of military bases in official US parlance - and that US troops in Mindanao refer to their locations there as "Advanced Operating Base 920".

The research outfit also said that the OBC currently describes the Philippines as a supply base for military operations throughout the region and asked why the US base-construction unit, the Naval Facilities Engineering Command, recently allocated a P650 million ($14 million) six-month contract to US firms offering "base operations" services in the Philippines.

It also asked why the US has launched a series of new military-related projects across the region - estimated to be worth at least $14.4 million - at a time the campaign against the emasculated Abu Sayyaf should in theory be winding down.

FGS argues that, consistent with US practice and that of governments in other countries that host US bases where they face domestic opposition, in an attempt to obscure the precise definition of what constitutes a base, Washington and Manila are deliberately keeping the exact nature of the US military presence in Mindanao under wraps.

Although the so-called "Cooperative Security Locations" are technically run and maintained by Manila or private contractors, the Pentagon considers them US military facilities that may be activated for pre-positioning logistics support and as venues for joint operations with host militaries during actual combat operations.

VFA commissioner Adan has reacted to the allegations by saying that the said facilities only serve to provide living quarters for the small number of US troops who are providing technical and logistical assistance to the Philippine Army in its operations against Abu Sayyaf.

He said the facilities are "not bases inside our camps; these are lodgings that are under Philippine control", and emphasized that US troops are not engaging in actual combat but rather are sharing intelligence with the Philippine Army and providing humanitarian, engineering, medical, veterinarian and explosive and disposal services.

Other Philippine officials contend that the US-financed construction of the contested facilities will benefit the impoverished region by creating hundreds if not thousands of new jobs. Several local leaders and residents have been openly supportive of the United States' presence in the historically restive region, noting that the Philippine Army failed to come to grips with Abu Sayyaf until US soldiers arrived on the scene. Whether those same local groups would be willing to accept a more outwardly permanent US military presence is altogether unclear.

Noel T Tarrazona is a journalist and training consultant to non-governmental organizations promoting Christian-Muslim peace dialogue and leadership training in the southern Philippines. He may be contacted at zpressclub@yahoo.com.

(Copyright 2007 Asia Times Online Ltd. All rights reserved.

Filipino diaspora moves up value chain

By David L Llorito
Southeast Asia
Jul 21, 2007


MANILA - A growing global search for English-speaking talent is greatly benefiting Philippine workers who pursue overseas opportunities and badly hurting the local companies and domestic economy they are in growing numbers leaving behind.

A recent study conducted by Grant Thornton International and Philippine accounting firm Punongbayan & Araullo found that 43% of Philippine companies rated the scarcity of skilled labor as the major impediment to their business-expansion plans. Last year only 15% of Philippine companies surveyed complained about a chronic lack of skilled labor.

"Employers across industries are experiencing ... the draining of our local talent pool," said Greg Navarro, managing partner and chief executive officer of Punongbayan & Araullo. "Even in the accounting practice, we are struggling to compete with foreign firms that see the Philippines as a good resource for highly trained, English-speaking [staff]."

Official statistics from the Philippine Overseas Employment Administration corroborate those complaints. Since 2000, the Philippines on average has seen 79,000 professional and technical workers, most of them college or university graduates, take positions overseas each year.

Over the past six years, 10,000 nurses have left the country annually for Saudi Arabia, the United Arab Emirates, the United Kingdom, Ireland, the United States and other destinations. Close to 13,000 medical caregivers, many also with nursing backgrounds, have likewise left each year for jobs in destinations as far flung as Taiwan and Israel.

Meanwhile, Japan and South Korea are emerging as the most popular destinations for performing artists, with each country now receiving on average 55,000 Filipinos per year. More worrying to national competitiveness, the Philippines is sending a growing number of highly trained information-technology (IT) workers to such countries as Saudi Arabia, the UAE, Malaysia, Singapore and the US - undermining the crucial local electronics industry.

Official figures may understate the actual outward movement of IT workers to such countries as Singapore and Malaysia, where they are often directly recruited by employers there. Many Filipino IT workers take advantage of the waived visa requirements for fellow Association of Southeast Asian Nations countries by applying directly to regional companies while traveling on tourist visas.

Manuel Villa, a Filipino industrial engineer who works for Fairchild Semiconductors in Singapore, said there are many professional Filipinos in that country. He said that apart from IT workers, a growing number of Filipino professionals are seeking high-paying jobs with Singaporean and multinational companies, including positions in upper management, engineering, logistics and aviation. "The [official] Filipino population here has already reached 120,000 and is rising," he said.

Previously, the professional exodus only affected a few sectors of the Philippine economy, predominantly shipping, aviation, engineering, construction and nursing. In the past three years, however, the loss of professionals has hit nearly every sector.

That includes Filipino journalists moving to Singapore, Saudi Arabia and the UAE; engineers and oil-rig workers to Nigeria, Russia, and the Persian Gulf states; speech and physical therapists to the US; and mining engineers and geologists to Australia and China.

According to the Personnel Management Association of the Philippines (PMAP), high-value-added industries are being hit by higher staff turnover rates, including pharmaceuticals, banking, consumer goods, hotels, electronics, semiconductors, telecommunications, and IT. Anywhere between 33% and 59% of employees who recently left their jobs in these industries pursued new opportunities abroad, according to a recent PMAP survey.

The lower-paying public sector is also being adversely affected. For instance, the state-run Weather Bureau and Mines and Geosciences Bureau are increasingly losing forecasters and geologists to better pay offers from abroad. The Department of Science and Technology recently revealed that out of almost 3,000 national scientists with PhD degrees in various scientific disciplines, nearly 500 have left the Philippines in recent years.

Outward march

Even the Armed Forces of the Philippines have not been spared foreign poaching. Army sources who spoke with Asia Times Online said Australia recently started to recruit Filipino soldiers trained in asymmetrical warfare and counterinsurgency operations, sometimes luring them with the offer of citizenship.

The Australians "know that Filipino soldiers are well trained in the different occupational specialties which make them competent and efficient and they can communicate and verbalize [in English] very well", a senior army officer said in an interview. "The Armed Forces of the Philippines is using American military doctrines and it is compatible with Australian military doctrines. For several decades, our soldiers have been fighting the NPA [New People's Army], secessionists, and terrorist groups. The Australians do recognize this Filipino talent," he said.

As more Filipino professionals move offshore, local companies are scrambling to recruit from a thinning talent pool. "In just 12 months, we lost about a dozen human-resource officers to other companies," said Raymond Santiago, corporate-affairs manager of Unilab, producer and exporter of prescription and consumer-health products.

Noel de Leon, country manager of Mercer Consulting, a global human-resources company with clients in 42 countries, attributes the fierce global competition for Filipino talent to demographic change in the US and the Asia-Pacific region. "There's a war for talent out there because China is growing so fast," said de Leon. "The trend of rising demand for skilled workers is really Asia-Pacific-wide."

In a recent regional survey, Mercer found that anywhere between 50% and 77% of companies in Japan, South Korea, mainland China, Hong Kong, Taiwan, Singapore, Malaysia, Thailand, Indonesia, Vietnam, Australia and New Zealand had expressed intentions to hire more English-speaking staff, even as many of them are experiencing high local worker attrition rates. "And where are they going to get new talents? Naturally, many of them will recruit from the Philippines," said de Leon.

And global economic trends show that demand will grow before it diminishes. In a recent paper titled "Global Competition for Skilled Workers and Consequences", Manolo Abella, a Bangkok-based labor-migration expert who formerly worked for the International Labor Organization, said the intensifying battle for Filipino and other English-speaking professional talent results from "the growth of global supply chains" brought about by trade and investment liberalization.

"The emergence of these global production structures has been everywhere accompanied by greater movements or transfers of technical and managerial personnel," said Abella. "Another important development has been the growth of informal as well as flexible forms of employment, opening markets for foreign workers willing to enter occupations or sectors abandoned by [local workers]."

According to Dieter Ernst, an economist and senior research fellow at the East-West Center based in Hawaii, the trend toward downsizing of local staff among US firms since the late 1990s has also been a major factor in the hiring trend. Ernst explained that because many US companies operate on very lean staff, many of these firms are now scrambling for lower-paid, but equally skilled, foreign workers.

"For many high-tech companies, competing for scarce global talent has become a major concern," said Ernst. "As a result, global sourcing for knowledge workers now is an important global manufacturing and supply-chain strategy. The goal is to diversify and optimize a company's human-capital portfolio through aggressive recruitment in global labor markets."

But what's adding real fire to the global professional-talent war is increasingly aggressive recruitment from the US, Canada and Australia, especially in regional areas suffering from low population and labor-force growth. For instance, Canada and Australia have been offering permanent residence and citizenship as incentives for skilled migrants, including from the Philippines.

Through its so-called H1-B visa program, US firms have been increasingly aggressive in trying to lure IT workers from the Philippines to Silicon Valley. Middle Eastern countries such as Saudi Arabia and the UAE have been giving temporary admission to skilled engineers, welders, pipe fitters, accountants, journalists and advertising people from the Philippines and other Asian countries. And Australia is now using its universities as so-called "academic gates" for attracting skilled migrants from the Philippines and all over the world.

Slowly but surely, the mounting professional exodus is driving up wages in the Philippines. Patrick Marquina, associate consultant for Watson Wyatt, another human-resources-related firm, says 148 Philippine companies involved in manufacturing, business process outsourcing, banking and other industries have in the past year all raised their pay scales by an average of 9.2%, or nearly three times the benchmark inflation rate.

Rising pay scales, Marquina explained, are moving fastest in the outsourcing and IT-related businesses. Still, several economic analysts and corporate executives believe average professional wages have risen too little, too late, and fret that the mounting exodus of talent from the Philippines is adversely hitting overall national competitiveness.

Labor expert Abella said: "Experience has shown that human capital, rather than natural-resource endowments, is the key to economic development. The current competition for the highly skilled has raised alarms that ... developing countries will have difficulty in creating a critical mass of professionals and technical workers needed to raise productivity."

David Llorito is a researcher at the BusinessMirror, a Manila-based daily newspaper. He has more than a decade of experience in socioeconomic research, policy analysis and business-economy journalism in the Philippines.

(Copyright 2007 Asia Times Online Ltd. All rights reserved.

US outsources war to Filipinos

By Cher S Jimenez
Southeast Asia
Jul 15, 2006


MANILA - Filipinos are taking up work at US-run facilities in Iraq, dodging an official Philippines travel and employment ban on the war-torn country and providing the US military and its affiliated contractors the cheap, English-speaking manpower it is having increasing difficulty recruiting at home.

The deployments to Iraq represent an illicit spin on the Philippines' global outsourcing phenomenon, where more than 8 million Filipinos have left home for higher paying jobs abroad. The Philippine government imposed a ban on the deployment of overseas Filipino workers (OFWs) to Iraq in July 2004, soon after Manila recalled its small humanitarian contingent after militant captors threatened to behead a Filipino truck driver working for the US occupation forces.

The Philippines remains a staunch supporter of US-led counterterrorism operations in Southeast Asia, including cooperation in combating alleged Islamic terror groups in the southern Philippines. Critics contend that the hotly contested 2004 election had abruptly influenced President Gloria Macapagal-Arroyo's government decision to withdraw from the US-led "coalition of the willing" occupation forces in Iraq. Two months before the ban was announced, another Filipino truck driver was the Philippines' first casualty in Iraq, which unleashed a torrent of anti-American protests in Manila.

More recently, however, the Philippine government has demonstrated a waning verve in enforcing that ban. Two years later, an estimated 3,000 out of the total 7,000 Filipinos now serving at four US military-run camps in Iraq are undocumented workers, according to Philippine labor officials. Comparatively high wages have been a push factor: Filipinos in Iraq earn monthly salaries from the US military and its affiliated business interests ranging between US$600 to $1,000 excluding special allowances, according to the labor official.

Filipinos already were a massive presence in the Middle East, and have historically shown extraordinary staying power in the region when faced with violent conflict. When the first Gulf War erupted between Iraq and the US in 1991, there were nearly 100,000 OFWs working in a wide array of jobs in Kuwait. When Iraqi forces first invaded the oil-rich sultanate in 1990, despite offers of free repatriation by the Philippine government, only a few of the workers took up the offer to leave their jobs and fly home.

Philippine labor officials estimate that there are currently about 1.5 million OFWs in the Middle East - many of whom are willing to work amid grave security risks rather than face the dismal labor market back home. An estimated 11% of the Philippine's in-country labor force is currently unemployed, and that rate is steadily rising due to an explosive population growth rate. Last year an estimated 8 million OFWs pumped nearly $12 billion of remittances into the Philippine economy.

The comparatively high wages on offer in Iraq has made it an attractive growth market for Middle East-based OFWs, Philippine labor officials say. Despite the "not valid for travel to Iraq" advisory stamped into every Philippine passport, thousands of Filipinos are openly defying the ban and government officials are either hard-pressed or unwilling to find a solution to the subversion of the ban.

US looks the other way

Philippine-based labor groups contend that the US and Philippine governments are covertly using OFWs to advance American interests in Iraq. While Philippine labor officials openly admit that many OFWs stole into Iraq after the ban was imposed and now work openly at US-run military facilities, they do not have hard evidence to confirm that US government or wayward Philippine officials are behind the illegal deployment of workers.

The US Embassy in Manila declined to comment on the allegations. A Philippine labor official wouldn't address the specific allegations, but admitted that US "employers" in Iraq still "favor" Filipinos because of their English-speaking abilities and long experience in the region. Former Philippine Labor Secretary Patricia Sto Tomas said many Filipinos evade immigration authorities by using secret passage points in Dubai in the United Arab Emirates, Kuwait and Jordan. The Philippine government has a standing agreement with all of these countries to block OFWs from traveling or crossing into Iraq.

In December, 88 Filipinos were stranded in Dubai after immigration officials there stopped them from boarding a flight to Iraq. It was apparently the first time that OFWs were prevented from illegally entering into Iraq. But Rosalinda Baldoz, chief of the Philippine Overseas Employment Administration (POEA), said officials in these countries usually look the other way when Filipinos pass through proper immigration channels. "They don't really care if you have a stamp in your passport that says you're not allowed to enter Iraq," she said.

Jason Cruz, a 40-year-old warehouseman, and Ernie de Leon (not their real names), a 23-year-old lifeguard, told Asia Times Online that they were able to enter Iraq illegally through Dubai. Cruz said he flew to Dubai on a visit visa and then later applied for work through United Arab Emirates-based Prime Projects International (PPI), a subcontractor of US military contractor Halliburton, which provides support services to US armed forces in Iraq.

Communicating by e-mail, both men said they traveled to Iraq from Dubai without any hitches and suggested that this is was at least partly due to their employer's known connection to the US military. "What I know is that PPI is a subcontractor of Halliburton/KBR, so there was no problem for us to come here even if there is a ban stamped on our passports," Cruz wrote in an e-mail.

According to www.icasualties.org, an independent organization that monitors conflict-related deaths in Iraq, a number of Filipinos have been killed in Iraq since the 2004 ban was imposed. Rey Torres, a driver and security guard with Qatar International Trading Company, was shot and killed outside Baghdad on April 18, 2005. Ponciano Loque and Benjie Carreon were killed on November 11 in a roadside bomb in eastern Baghdad. The organization listed their profession and employer as "unknown". The following week, on November 18, Alexander Mesa Ilocto was killed in a road accident between Iraq and Kuwait. His position and employer were likewise listed as "unknown".

Recent reports have revealed that a syndicate operating through the Philippines' Department of Foreign Affairs was selling "clean" passports for P5,000 to P25,000 ($100 to $500) to OFWs, with the rate scale depending on how fast the applicant desired to leave the Philippines. However, the tide of OFWs flowing into Iraq has recently kicked up a legal fuss back in the Philippines.

Mark Villacruzes, who has previously claimed to represent US contractor Triple Canopy, a private security and special operations firm founded in 2003 by former US Delta Forces, allegedly recruited former members of the Philippine armed forces after the ban was imposed to work as security personnel for American officials and facilities in Iraq.

Villacruzes, who is now out on bail on charges of illegal recruitment, is alleged to have employed about 300 former Philippine soldiers for Triple Canopy's operations in Iraq since the Philippine government ban was first imposed in 2004. Most of the recruits came from the Subic Naval Base, a former American facility in the Philippines.

Before the ban, Villacruzes ran a brisk recruiting business through Armstrong Resources Corporation, a licensed recruitment firm based in east Manila. In March 2003, he allegedly recruited 21 former Philippine soldiers to work for Triple Canopy in Iraq. That batch of recruits was reportedly offered six-month contracts on a US$1,000 per month salary, US$150 in special allowances and free accommodation basis. While attractive by Philippines' standards, the wages and benefits are considerably less then US national recruits receive.

Last month, Villacruzes was charged with illegal recruitment and breach of contract for failing to pay war compensation payments, which amounted to $9,000 for each of the 21 returnees, who sued him through the POEA. The case has since reached the justice department. They have also asked POEA to put Armstrong Resources Corporation under preventive suspension and bar Triple Canopy from participating in Philippines overseas employment programs.

Significantly, Philippine officials have so far been reluctant to make accusations or pursue charges against the US firms that appear to have played a key role in the illegal recruitment of OFWs to staff their operations in Iraq. That inaction might be explained by previous close government-to-government cooperation in awarding Filipinos work in strategically sensitive business related to the US-led global "war on terror" campaign.

In March 2002, local recruitment firm Anglo-European Services, which is known to have ties with Kellogg Brown & Root, a division of the Halliburton Company that has won massive troop support contracts in Iraq, sent 250 Filipino construction workers to build additional detention cells for US-held terror suspects at Guantanamo Bay in Cuba.

The recruitment was kept under wraps by both the US and Philippine governments, which apparently agreed that all worker travel documents and recruitment requirements would be expedited in just a few hours by US embassy officials. According to people familiar with the situation, the Guantanamo-bound Filipino workers were allegedly slipped out of the Ninoy Aquino International Airport without passing through standard immigration procedures and left Manila onboard a chartered flight to Cuba.

Anglo-European Services is now aggressively querying the Philippine government to clarify if the ban on travel and employment in Iraq is still in effect, due to reports that large number of OFWs who continue to pour into the war-torn country. The recruitment company says it has a big job order on hold for Filipino workers in Iraq due to the official but lightly enforced ban.

Cher S Jimenez is a Manila-based journalist with the BusinessMirror newspaper. She recently received a grant from the Ateneo de Manila University to conduct investigative journalism on illegal workers in the United Arab Emirates.

(Copyright 2006 Asia Times Online Ltd. All rights reserved.

Disconnect in Philippines over China deal

By David Llorito
Southeast Asia
Aug 24, 2007


MANILA - A US$329 million broadband infrastructure contract inked between the Philippine government and Chinese telecom giant ZTE Corp has raised critical questions here about the deal's lack of transparency and threatens to kick off a new round of political troubles for President Gloria Macapagal-Arroyo's already scandal-plagued administration.

The infrastructure deal involves the construction of an integrated Internet-protocol-based broadband network that would provide connected voice, data and video services for national, regional and local government agencies. The Export-Import Bank of China agreed to provide concessionary loans at 3% annual interest with a five-year grace period on the condition that ZTE is the exclusive supplier for the project.

In a dramatic twist, government officials recently disclosed that the actual contract - of which Arroyo was in attendance for the signing ceremony in China on April 21 - has since gone missing. The alleged misplacement of the contract - some officials have said the signed document was stolen from a China hotel - has raised allegations among opposition politicians and the media of possible official impropriety.

In part that's because the ZTE contract was priced higher than other competitive bids for the contract, including offers from Amsterdam Holdings Inc (AHI), a Philippine company in partnership with another Chinese firm, Huawei, and Arescom, a US telecommunications supplier. The Huawei deal proposed to build the same broadband network for $240 million, while Arescom's offer was reportedly $135 million.

Sources familiar with the negotiations say ZTE initially tabled a proposal for $262 million, which apparently was close to the bid made by AHI. Why the awarded contract was inflated to $329 million when the deal was finalized and signed in China is still unclear, the same sources say. So too is the added $500 million expense for a "cyber-education" component to the deal, which Arroyo reportedly wanted to maximize the utilization of the broadband network's capacity.

Technical experts have already raised critical questions about the cyber-education project's expense and viability. Nonetheless, Arroyo's government initiated the separate big-ticket project when the Chinese government indicated it would not finance the e-education component of the original broadband-network contract, according to minutes of a March 27 meeting of the government's Investments Coordinating Committee seen by Asia Times Online.

The document has prompted opposition speculation that the Chinese government - which has agreed to provide concessionary loans for both multimillion-dollar projects - may have dictated the terms of the deals, which when finalized were nearly three times the value of ZTE's original bid for the project.

That price inflation is bringing Arroyo's personal relations with Beijing under new scrutiny. Meanwhile, ZTE has not commented publicly on the deals and failed to reply to e-mailed questions from Asia Times Online.

The company recently sponsored an all-expense-paid trip for Filipino journalists to travel to Shanghai to witness the company's technological expertise.

Business backlash

The Philippine business community has openly questioned the government's decision to opt for the higher-priced Chinese bid.

"The contract appears to be highly questionable," said a joint statement of the Philippines' three major business organizations, namely the Management Association of the Philippines, the Makati Business Club, and the Financial Executives Institute of the Philippines. The influential Bishop-Businessmen's Conference also signed the statement.

"The country still lacks 41,000 classrooms, even as our constitution mandates that education should be the top priority in the national budget," the statement said. "In remote barangays and in quite a few municipios, access to water is still a basic need. The ZTE contract value of US$330 million could be spent in building 36,000 classrooms, or 6,000 rural health centers or 120,000 artesian wells."

ZTE competitors have made similar grumbles. Marinelle O'Santos, lawyer and spokesperson for AHI, said that as early as last December her company had offered an "unsolicited proposal" to undertake the project for $240 million at "no cost to the government" under the Philippine build-operate-transfer (BOT) law. She said AHI proposed to build the infrastructure backbone and transmission sites and provide all other technical and software support for the entire national network at rates "25% less" than other private telecommunications companies had offered. Philippine officials, on the other hand, have questioned the merits of the AHI and other bids.

"There's no such thing as a free lunch," Lorenzo Formoso, assistant secretary of the Department of Transportation and Communications (DOTC) and commissioner of the Communication of Information and Communications Technology Council, said in an interview. "If they [AHI] are serious about putting in a network, then they should put up the money where their mouth is."

Formoso said AHI, owned and controlled by businessman Joey de Venecia, son of the current of Speaker of the House of Representatives, doesn't have the funds or know-how to undertake and complete the project. He claimed AHI is requesting that the government grant it the contract through an "executive performance undertaking", which the firm would leverage to raise funds for the project in capital markets.

"They are going to borrow P10 billion [$214.6 million] at commercial rates, so you can imagine how much debt servicing that will be," Formosa said. "Plus they are going to enter a very competitive field and still give us a 25% discount. That doesn't add up."

Formoso said AHI proposed to set up a mobile-telecom network, which the government doesn't need because its coverage would be limited to urban areas. "They are profit-driven, so they want to concentrate on urban centers - which is not the right thing to do when you are in a missionary environment like the government," he said.

He also dismissed Arescom's proposal for allegedly using "obsolete technology", because it would include the use of expensive satellite-based technology. The ZTE proposal, Formosa asserted, is "superior" because of its greater coverage and advanced technology, which according to the plan will connect through fiber optics more than 25,000 government offices from the national level down to the local level.

Conflicting signals

Critics contend that Formosa's DOTC favored ZTE's bid from the outset, which is why the government allowed the company exclusively to modify its originally tendered proposal.

"The ZTE offer when they submitted in September 2006 was very modest," said O'Santos. "What was signed was totally different. It's vastly improved. It's actually a lot closer to our proposal. I have no beef with that. But they never allowed us the same courtesy that they gave ZTE to make adjustments to the proposals."

According to Emmanuel de Dios and Raul Fabella, economics professors with the University of the Philippines, the DOTC was able to favor ZTE over other proposals because the government did not specify its minimum technological requirements and commitments if the project were implemented via BOT. As a result, they said, government officials were able to fob off one proposal against another by merely citing one or the other technical details.

Sharper criticism of the $830 million projects is that they contradict current government privatization policy and will duplicate broadband services already on offer by private companies.

"The private sector has provided not one but two such backbones: the PLDT's [Philippine Long Distance Telephone Co's] loop-type fiber-optic backbone, which anchors the signal coverage of the entire country, and the Telecphil fishbone-type fiber-optic backbone, which is owned and employed by a consortium of telcos," said de Dios and Fabella in a recent paper critical of the ZTE deal.

"All smaller local telcos are hooked up to either of these two backbones. Even the local area networks of large government agencies are already currently connected to either of these backbones, for national and global connectivity," the academics wrote.

Top officials of the National Economic and Development Authority, which serves as the secretariat of the Investment Coordinating Committee that gave final approval on the national-broadband-network project, claim that the new network will "bridge the digital divide" between urban and rural populations.

Other government officials, however, have sent contradictory messages. Formoso said the network is in reality an "intranet" project, which will be used solely by government agencies and local government units, including about 50% of the country's barangays, the lowest unit of government in the Philippines.

Formosa estimates that the new broadband network will save the government close to P4 billion pesos ($89 million) a year on telecommunication services, including Internet, land-line and cellular-phone calls by government officials. At the same time, he also admitted that government will continue to rely on private telecom companies for certain cellular as well as bulk Internet services.

Arroyo has said more conservatively that the savings will be closer to P1 billion per year, as government agencies will still need to subscribe to private telecoms for communications outside the intra-government network, including when making calls to private companies and state agencies not covered by the to-be-built broadband network.

Those estimates may be overly optimistic, however. Calculations by economists with the University of the Philippines revealed that the government could even incur a financial loss over the life of the system. De Dios and Fabella contend that the government's projected savings of P27.75 billion over the project's 15-year life span is less than the P31 billion the system would cost over the same period. "The numbers ... simply fail to add up," the two independent economists concluded.

In retrospect, Arroyo initially opposed financing the new broadband network through Chinese concessionary loans and at first preferred a BOT scheme where private companies would shoulder the investment risk. Her unexplained about-turn in April, the alleged loss of the signed contracts in China, and the emerging hard questions about the network's economic benefits, fairly or unfairly, have generated widespread speculation about possible high-level corruption.

So far the government is undaunted by the allegations. "It's so easy to say [corruption], but could you prove it?" asked Formoso.

Yet time will tell: the new opposition-dominated Senate has promised to investigate the controversial deal, meaning Arroyo's post-mid-term-election headaches have already begun.

David Llorito is a researcher at the BusinessMirror, a Manila-based daily newspaper. He has more than a decade of experience in socioeconomic research, policy analysis and business-economy journalism in the Philippines.

(Copyright 2007 Asia Times Online Ltd. All rights reserved.

US, China vie for Philippine military influence

By Noel Tarrazona
Southeast Asia
Sep 20, 2007

ZAMBOANGA CITY, Philippines - Competition for military influence in the Philippines is heating up, with both the US and China making new pledges of funds, arms and equipment to help modernize the Armed Forces of the Philippines.

Since 2002, Washington has poured hundreds of millions of dollars of military aid into helping the Philippine Army combat radical Islamist groups as part of the US-led campaign against terrorism in Southeast Asia. Now China is responding in kind with its own offers of military assistance to modernize and improve the army's capabilities.

Chinese Defense Secretary Cao Gangchuan and his Philippine counterpart Gilbert Teodoro Jr met this month to discuss new ways to enhance bilateral military cooperation. As part of his five-day "goodwill" visit, Cao was granted full military honors at the Department of National Defense, which on the occasion announced that bilateral relations are entering a new "golden age of partnership".

The senior Chinese defense official later met with President Gloria Macapagal-Arroyo and other senior politicians. Cao pledged an initial US$6.6 million grant to the Philippine Army in what was announced as a "confidence-building" measure. According to senior Arroyo administration officials, the grant was provisionally for non-lethal military equipment, including construction machinery earmarked for the army's engineering department, which manages development projects in various conflict-ridden areas.

Philippine government sources confirmed that the initial grant will also cover the creation of a Chinese-language training program for the military, participation of the Armed Forces of the Philippines in future naval exercises in China, and five seats for Filipino officials to enroll in intensive military courses in Beijing. The cooperative agreement builds on Arroyo's 2004 visit to China, where defense officials of both countries agreed to a continuing dialogue on security matters.

Arroyo has made several visits to China and has reportedly appointed at least four special envoys to manage the two countries' growing economic, political and strategic ties. That strategic cooperation took a significant economic turn this month, with Arroyo signing a confidential protocol with China related to the exploitation of South China Sea oil resources. Government sources also told Asia Times Online that the agreement would allow China to explore for oil resources within the Philippines' exclusive economic zone, including within areas the two sides have historically disputed.

Depending on how the various cooperative programs play out, China appears ready to ante up substantial assistance toward modernizing the Philippine Army's military machinery. A Philippine television station reported that China had offered provisionally to provide as much as $1.2 billion in financial facilities for the Philippine military. The report did not divulge details of the apparent agreement, including conditions concerning how or over what period the funds must be spent. Philippine defense officials contacted by Asia Times Online would not confirm or deny the report.

Nor has the Defense Department articulated how Chinese financial assistance would fit, if at all, with the ongoing and expanding US military joint exercises in the southern Philippines, aimed in particular at uprooting the Abu Sayyaf terror group. Officials told Asia Times Online that the Philippine government views both US and Chinese military assistance as "beneficial", but declined to acknowledge any competition for local influence between the two rivals for regional influence.

"We treat all nations equally. Under our constitution, we have to treat and respect all nations as good neighbors in the spirit of amity and cooperation," Defense Minister Teodoro was quoted in the Philippine press as saying when asked how the country's growing strategic ties with China would impact on Manila's ties with Washington. "Closer ties regionally with all our neighbors are good for the military. We agreed to continue to dialogue, which is a mutual exchange of views regarding regional concerns."

Competitive arms

Apart from dialogue, China is bidding to become a leading supplier of arms to the Philippine Army, which has recently relied largely on the US for its procurements. Beijing has reportedly recently offered to sell at a discount rate eight Harbin Z-9 utility helicopters to Manila. A licensed copy of Eurocopter's AS365N Dauphin, the Z-9 has since 1980 been manufactured by the Chinese company, a subsidiary of Beijing's state-owned AVIC II, can transport 10 armed soldiers, and reputedly can be configured for so-called electronic warfare.

The army also reportedly needs new, modern attack and utility helicopters for its expanding fight against Muslim separatists in the country's restive southern regions. In July, as part of the government's military-modernization campaign, Arroyo earmarked P5 billion ($106 million) for the purchase of new helicopters. The air force has allocated an additional P1.3 billion to purchase six helicopters with night-attack capabilities, and sources say military planners are leaning toward Boeing's MD530-MG. The air force currently operates an aging fleet of MD520s, Bell UH-1H transports, and Sikorsky S-76 assault helicopters.

Arroyo has gone out of her way to demonstrate equal treatment toward both the US and China, repeatedly saying her administration welcomes any military-related venture that is beneficial to the Philippine people. The US has emphasized development projects with the military aid it has extended to conflict-ridden areas in the southern island of Mindanao and the positive impact the assistance has had on the local economy, including the creation of badly needed jobs. The US recently launched a series of new military-related projects across the region estimated to be worth about $14.4 million.

China has likewise emphasized economics in pursuit of strategic leverage. That includes the two sides' expanding trade ties, including most recently at the Asia-Pacific Economic Cooperation meeting in Sydney, where Philippine Trade Minister Peter Favila and Chinese Commerce Minister Bo Xilai exchanged new trade commitments. Favila told reporters, "As long as I am the minister, we should not allow anything that will get in the way of furthering relations. So let us look at the bigger picture ... our trade with China is expanding."

Arroyo's recent visits to China this year not only benefited the Philippine Army but also several powerful ethnic-Chinese Philippine business people, known locally as tsinoys, who are rapidly expanding their enterprises into China. The ethnic-Chinese Gokongwei family, which has expansive interests in telecommunications, financial services, petrochemicals and power, has through a foundation sent more than 50 young Filipino leaders to China to study that country's economic-development model.

China's recent economic charm offensive toward Southeast Asia in general and the Philippines in particular is clearly starting to take a hard strategic turn, aimed specifically at counterbalancing US military influence in the region. At the same time, Washington seems keen, under the guise of combating terrorism, to establish a new military foothold in the Philippines, where until 1991 the US maintained significant military assets at the Subic and Clark military bases.

So far Arroyo has played both Beijing and Washington deftly and in the process secured significant benefits for both the Philippine military and the economy. But as US-China competition for regional military supremacy intensifies, it will likely be an increasingly difficult balance for her and future Philippine administrations to strike.

-------------------------------------------------------------
Noel T Tarrazona is a journalist and training consultant to non-governmental organizations promoting Christian-Muslim peace dialogue and leadership training in the southern Philippines. He may be contacted at zpressclub@yahoo.com.

(Copyright 2007 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

Poverty and Corruption: The Ties That Bind

MANILA - Smoky Mountain, in the Tondo neighborhood across Manila harbor, is a Dantesque vision from hell turned postcard of global poverty. Smoky Mountain is a 40-year-old mountain of garbage. The locals literally live off it - they search it, burn it, separate it in plastic bags, recycle it, sell it to junk shops, even eat some of the remains.

Eighty percent of the children of the estimated 30,000 people living in the area don't go to school - although there are a kindergarten and an elementary school in the surroundings. Some of the locals set up food stalls at the harbor, some are cargadores (porters), some are pedicab drivers, but most live off the garbage. Under a bridge by the Pasig River rattled by the non-stop traffic of container trucks, stuck under the pollution, haze and that unbearable smell, a teenager beams: "It's good to make money here. Three hundred pesos a day [a little more than US$5] if you work hard." In the May presidential election, he voted for action star Fernando Poe Jr, a close friend of ousted-in-disgrace former president Joseph Estrada (Poe won in Manila but lost overall to incumbent Gloria Macapagal-Arroyo). He believes the elections were stolen, as do 55% of Filipinos. And he wouldn't leave Smoky Mountain for anything. "There are no jobs out there," he says, pointing toward Metro Manila.

The notoriously corrupt Metro Manila Development Authority (MMDA) - which also indulges in a quirky form of performance art, tagging colored walls around town with its acronym - keeps a sinister top-10 list of the dirtiest barangays (districts) in town. Just for the record, Smoky Mountain is not even close to No 1; that honor belongs to Barangay 145, Zone 16 in Pasay City - notified 225 times (and counting) as having mountains of uncollected garbage.

Why us?

It didn't have to be this way. Filipinos, rich and poor alike, often look in awe at the so-called newly industrialized countries (NICs) ofNortheast Asia and ask themselves: Why haven't we accomplished anything similar? The main reason may be the absence of a real agrarian reform (see Part 2 of this series) - an absolute precondition for the economic miracle in Taiwan and South Korea. Land reform created an egalitarian distribution of income, ignited domestic demand, and the whole thing drove an industrialization drive in the 1950s and '60s.

Meanwhile, in the Philippines, few were paying attention: after all, the country was growing at rates from 6-10% a year, fueled by its own brand of import-substitution industrialization. But in the late 1960s, the turbo-jeepney came to a halt, because of a structural problem still not solved in 2004: the Philippines was and remains a small market, chiefly because of its tremendous income inequality.

With no land reform and anemic exports, the dictatorship of Ferdinand Marcos came up with what might have been a great coup: exporting the country's labor force. Economists in Manila say this was supposed to be a temporary measure. It turned out to be the ultimate lifeline to the Philippine economy - with remittances even helping to prevent the peso from spiraling into total disaster after the 1997 Asian financial crisis. No wonder: when the internal market remains small and jobs are scarce, the only way, if you don't want to recycle garbage, is out - often by a one-way ticket departing from the ghastly Ninoy Aquino International Airport in Manila. According to labor-export specialist Jorge Tigno, almost 10% of the country's population are now OFWs (Overseas Filipino Workers). In Metro Manila, at least one in every three households has a member who was or still is an OFW.

Where is our sushi?

The Anti-Development State: The Political Economy of Permanent Crisis in the Philippines, a recent joint publication by the Universityof the Philippines and the non-governmental organization (NGO) Focus on the Global South, written by respected activist Walden Bello and co-authored by Herbert Docena, Marissa de Guzman and Marylou Malig, spells out a devastating case on all the reasons for a crisis that's been going on for four decades. It's unlikely to find readers in Malacanang, the presidential palace. Absence of meaningful land reform certainly is one of the reasons for the crisis. But another, almost as compelling, has been the absence of Japanese capital.

"In the period 1985-93, some $51 billion worth of Japanese investment swirled though the Asia-Pacific in one of the most rapid and massive outflows of foreign capital toward the developing world in recent history," the publication states. Thailand, Malaysia and Indonesia could not but grow at dizzying rates - while the Philippines was almost totally bypassed. According to Japanese figures, from 1987-91 Thailand benefited from $24 billion in Japanese, Hong Kong and Taiwanese investments. The Philippines, on the other hand, got only $1.6 billion.

The authors speculate: were the Japanese put off by Philippine corruption? Not really, because South Korea was as corrupt, and Indonesia under Suharto infinitely more corrupt. The answer, once again, refers to the anemic size of the Philippine market. "Japaneseinvestors are strategic investors - that is, they invest if there is the prospect of a growing market ... In the late 1980s, the Philippines was simply not attractive since development, expansion of the market, reducing poverty to create more purchasing power were all being sacrificed to the national priority of repaying the foreign debt - a goal forced on the country by the IMF [International Monetary Fund] and the World Bank acting on behalf of the country's foreign lenders."

So the Philippines under president Cory Aquino was basically servicing the huge debt incurred by the Marcos dictatorship. The country's physical, technical and educational infrastructure was left to rot - as it is still. Aquino sank the country further into debt - to pay for the past pile of debt. When Japanese executives examined this situation, they identified nothing else than a strategically depressed market.

As for the poor Filipino taxpayer, he will keep paying for Marcos' debts until at least 2025, according to a recent report by the Ibon Foundation. The foundation reminds everyone that "before Marcos became president in 1966, the country's foreign debt was only $599 million. When he fled Malacanang 20 years later, the foreign debt had already ballooned to $28 billion. Most of the debts were incurred during martial law, when foreign debt grew by 27% per year from 1973 to 1982."

In his monumental Crime of Empire, Filipino economist Ricco Alejandro Santos estimates that the Marcoses, Ferdinand and Imelda, "have looted $10 billion in the course of 20 years". As for his American business and government patrons, they certainly were not innocent bystanders: "They were the first to know about this, before most Filipinos would." The US Central Intelligence Agency knew about it as early as 1969. "And yet American foreign investors and government, then under presidents [Richard] Nixon, [Jimmy] Carter and [Ronald] Reagan, would be Marcos' prime backers and patrons until his ouster and exile."

Arroyo inherited this giant bitter pineapple from Marcos and subsequently Aquino, Fidel Ramos and Estrada in early 2001. But according to many a Manila businessman, she came up with no development strategy whatsoever. Not that Estrada, her predecessor, had any. The authors of The Anti-Development State ram the point home: the only "strategy" by Arroyo was to attach the Philippine jeepney to Washington's B-52s after the attacks on the United States on September 11, 2001. "Massive economic aid and investment from US business was at the top of President Arroyo's concerns when she reversed 10 years of an increasingly independent foreign policy followed by the country since the expulsion of the US bases in 1992. 'It's $4.2 billion and counting,' she gushed during her state visit to Washington in October 2001, calculating the sums of aid and capital promised by President George W Bush."

The problem is that most of the money - like the billions promised to Afghanistan - never materialized. And it won't: Washington is still obsessed with Iraq. So throughout 2002 and 2003 the Philippine fiscal crisis spiraled out of control, leading to the current climate of panic and hastily arranged austerity measures in Malacanang (see Part 1 of this series).

Ruling elites in perpetual war

The greatest merit of The Anti-Development State is the powerful case it makes in puncturing a pervasive myth not only in the Philippines but found with minute variations all over the developing world: the myth that a country is poor because its leaders are corrupt. The authors of the book get very close to the heart of the matter when they write, about the Filipino case: "A more adequate explanation lies in the state being subjugated by a succession of ruling elite factions to serve narrow interests instead of the larger goals of sustainable development and social justice."

Most Filipinos have no reason to doubt that sleazy Estrada and his cronies "represent what is so wrong with the Philippines and so many other poor countries - the rampant bribery and fraud, the unbridled rent-seeking, the brazen patronage politics, the flagrant abuse of public resources for private gain, and the widespread clientelism".

A Coalition Against Corruption led by business groups, NGOs and the Catholic Church has just been launched in Manila. Former president Cory Aquino, delivering the keynote address, said that everyone had to pay his due taxes and so exercise his moral right to "demand from government transparency, accountability and the political will to prosecute tax evaders, smugglers and those who disgrace public service". Lofty rhetoric apart, the results remain to be seen.

Corruption, embodied in "crony capitalism" - as ATol readers will remember - also was pinpointed by the US establishment, from treasury secretaries Robert Rubin and Lawrence Summers on down, as the main reason for the 1997 Asian financial crisis, implying it was all Asian governments' fault. But then the assumption can be turned on its head: "If corruption is the reason the Philippines is poor, why are so many rich countries also corrupt?"

The definitive comparison is between the Philippines and South Korea, as argued by the authors of The Anti-Development State with substantial help from Crony Capitalism: Corruption and Development in South Korea and the Philippines, by David Kang of Dartmouth College in the United States. Kang poses the million-dollar question: "If both Korea and the Philippines experienced extensive corruption, why did Korea grow much faster than the Philippines?"

Filipinos watch while Koreans act

These are the main points. Both countries started at the same level; the average Filipino even earned slightly more than a South Korean in the mid-1950s. In 50 years, the South Korean economy has grown by more than 10 times, while the Philippines' has only doubled. South Korea is a more egalitarian society: the richest 20% are only five times as wealthy as the poorest 20% (in the Philippines they are 13 times as wealthy); and only 7% of South Koreans are poor, while two in five Filipinos live below the poverty line.

Then there's the United States, considered by Blowback author Chalmers Johnson as "the most legally corrupt political system in the world today". The Enron debacle and the Halliburton and Bechtel bonanza in Iraq dwarf anything perpetrated by Estrada or his cronies Lucio Tan and Danding Cojuangco. Economist Paul Krugman was once hired as a consultant by the Philippines, and often joked while comparing George W Bush to Ferdinand Marcos in the cronyism stakes. Economist Jeffrey Sachs insists, "America has shown itself to be second to none in practicing cronyism, first with its rotten corporate scandals of recent years, and now in Iraq."

The authors of The Anti-Development State stress instead how the Philippine state has been "successfully taken over by one faction [of the ruling elite] in order to dominate the other factions". So the big difference, compared with South Korea - or Thailand, Indonesia and Malaysia, for that matter - lies "not in the extent of corruption but the balance of power among ruling elites as well as the balance of power between these elites and the state".

In South Korea the elites were balanced, and disciplined by a very strict central state. In the Philippines, on the other hand, it has always been open war, with the state as the ultimate prize. So corruption, as Kang puts it, "swung like a pendulum. As one group or the other gained predominant power, it would busily set about lining its own pockets, aware that in the next round its fortunes might well be reversed." The crucial point, then, is that in the Philippines "the state has traditionally been hijacked at all levels by private interests, making it an ineffective instrument of national development".

The reasons, of course, are steeped in Philippine history. For 330 years, Spanish colonizers never bothered to establish an effective, competent state administration machine. And during the 50-yearPentagon/Hollywood phase, US colonialism only cared about oligarchy-building, not state-building. In Thailand, by comparison, a great deal of the elite come from the state-administration machine. Today, while the Philippines is a disaster area, Thai officials talk of their country rising to the rank of a developed nation by 2010, while they frantically sell Thailand as the perfect investor destination if one wants to diversify from China and India: "Lower costs than Singapore yet a larger market than Malaysia."

For Filipinos, the conclusions of The Anti-Development State represent a rude blow: "The country has failed to develop and so many of its people are mired in poverty because the state, strangled as it is by competing factions' demands, has been rendered too powerless to even chart the country's direction, much less subordinate ruling elites under its control. Further sapping the state's potential to act according to democratic and developmental lines have been external interests constraining its range of allowable actions in the larger context of the North's persistent and often successful efforts to subordinate the South."

Now tell that to the people of Smoky Mountain - not to mention the absolute majority of 84 million Filipinos.

(Copyright 2004 Asia Times Online Ltd. All rights reserved.

Goodfellas with Tagalog subtitles

MANILA - Don't show up at the gate in Greenhills without an invitation. There's a chance you might get shot.

Welcome to the 21st-century face of social apartheid - in the Philippines and all over the developing world. Greenhills - as well as Forbes Park - is where the few Filipino "haves" and "haves more" live. Asia Times Online, tipped by a local businessman with a sense of humor, showed up there without an invitation. The visibly nervous guard working for private security agency Padpco, caressing his shotgun, wouldn't let us in without a sticker in our car. Could we take pictures? No way: we would have to write a letter to one Sy Crisanto, the president of Greenhills Association. It was also impossible to reach Pablo David, the barangay (district) chairman. "But if you have a relative living inside, he might sponsor your visit," the guard said.

Before the incident degenerated into checkpoint-in-Fallujah mode, we were allowed in for a quick drive, with an official in our car, and after we'd agreed to no pictures. The guy with the shotgun was edgy: "Open the trunk. Do you have a bomb?" Sy Crisanto and the other 300 residents of Greenhills have every reason to be cautious. If the average Filipino takes a peep at Greenhills, he might start entertaining funny notions.

Greenhills is no different from any affluent gated community in the developing world: sprawling houses, Mercedes-Benz and sport-utility vehicles in the driveways, 26 armed security guards, security cameras. But there are two significant differences, as far as Southeast Asia is concerned: the green signposts sport names of US presidents - Taft, Roosevelt, Adams; and a disproportionate amount of residents are Chinese-Filipino.

Dudek is a little out of place in Greenhills. He's working on the construction site of a new Chinese-Filipino mansion. Dudek needs three hours by bus to go from his home to work, and another three hours to go back. That's P60 (a little over US$1) a day. His salary is P200 a day. So most days he is forced to sleep in barracks on site, and he seldom sees his family. He complains about the low pay, but it's better than nothing: it took him months just to find this job.

To check out the perfect microcosm of the country, many Filipinos recommend a visit to the sprawling, 6,000-hectare Hacienda Luisita, bought in 1957 by the filthy-rich Cojuangco landowning family from the original Spanish owners. Haciendas are all the same - in Latin America or in Southeast Asia. Greenhills is certainly more relevant. Here, 300 residents - on a small piece of land in the heart of Manila - make their own rules. And the rules absolutely exclude the rest of the city, not to mention the rest of the country's 84 million Filipinos.

It's a family affair

Almost everything one needs to know about who's in charge in the Philippines is included in The Rulemakers, a recent publication by the Philippine Center for Investigative Journalism and written by Sheila Coronel, Yvonne Chua, Luz Rimban and Booma Cruz.

As the dynamic Coronel, the center's executive director, puts it, the key to the whole equation is in the Philippine Congress. "The typical Filipino legislator is male, middle-aged, and college-educated, most likely with a degree in law. He has previously held a local government post and is a member of a political family ... There is one chance in two that he is related to a former legislator. He is also into business and has multiple income sources ... He is well off, with a net worth (most likely understated in his statement of assets) in the P10 million range [almost $200,000]. The likelihood is that the longer he stays in Congress, the richer he becomes ... The typical representative or senator therefore is not the typical Filipino, who is likely to be 35, with a few years of high-school education and an annual family income of about P150,000 in 2000 [less than $3,000]".

Philippine politics is the ultimate family affair. In Landlords and Capitalists, political scientist Temario Rivera revealed that 87 families controlled the top 120 Philippine manufacturing companies from 1964 to 1986. Sixteen of these families were involved in politics, and most were part of the landowning elite. According to The Rulemakers, most of the representatives in the Philippine Congress over the past century have come from only 134 families. The names are recurrent: Aquino, Duran, Ramos, Cojuangco, Dimaporo, Enrile, Espinosa/Martinez, Garcia, Imperial, Laurel, Lopez, Marcos/Romualdez, Osmena, Roxas, Veloso.

In the mid-1960s, political scientist Dante Simbulan came up with the concept of "modern principalia", referring to the educated, landed Filipino aristocracy, who behaved like agents of the Spanish colonizers and of course monopolized local office. The modern principalia is still in Congress - and just like before they monopolize political office as well as economic power.

This land is my land

The motto shared by this modern principalia seems to be "shop till you drop" - an inflation of Gucci, Prada and Ferragamo bought at Makati's top mall, Greenbelt, coupled with the usual torrent of Mercedes and Lexus. Conspicuous consumption is the norm. Congresswoman Emily Lopez, a former model and second wife of the scion of the Lopez clan that owns the ABS-CBN television network, boasts her proud ownership of millions in jewels and paintings. Danilo Suarez was famous for driving to Congress with a different car for each day of the week. Bobby Tuazon, executive editor of the independent website Bulatlat, says there are currently only six progressive members in Congress. Coronel sums it all up: this is "a Congress of millionaires that makes laws for a poor country".

The Philippine Congress used to be landlord territory. Nowadays, still 40% of its members own agricultural land. But they used to be 58% in the early 1990s.

The Cojuangco landowning family - which has wisely branched out into manufacturing, real estate and services - has been in Congress for four generations. But power based on landowning has now dwindled, to the benefit of manufacturing, services and trade (agriculture still accounts for roughly 20% of the Philippines' gross national product). True, in many provinces the descendants of the caciques still rule. Coronel says they are now "a mongrel class - landlord-comprador turned capitalists, real-estate developers, and bankers".

Eduardo "Danding" Cojuangco Jr may be the ultimate haciendero mega-capitalist - "and notorious anti-labor", adds Bulatlat's Tuazon. A former congressman himself, Cojuangco has concocted a formidable political network, all the more impressive because he fled the country to Hawaii with former president Ferdinand Marcos in 1986 and only returned home in 1989 - as a political pariah, but a very flush one anyway. Cojuangco, who has only Marcos as a serious rival among the top 10 all-time looters of the Philippine state, amassed at least $1.5 billion in corporate assets during the Marcos dictatorship, diversifying from coconut and sugar to agri-business and banking.

When Joseph Estrada was ousted from power in 2001, Cojuangco preferred not to flee. After all, one week after Estrada's inauguration, he had taken possession again of his beloved San Miguel Corp, the giant food and beverage conglomerate and the largest corporation in the country - which he allegedly bought using coconut farmers' money. And thanks to Estrada, Cojuangco had eluded land reform with dodgy schemes, a feat that earned him the qualification - by Estrada - "godfather of land reform".

His cousins in the other branch of the Cojuangco family are the owners of the famous Hacienda Luisita - where some workers earn the fabulous salary of P90 (a little more than $1.50) a day: the law says the minimum wage is P200 a day. Their answer to land reform was to make a mockery of the law at a time when the House Speaker was none other than a family member, Jose "Peping" Cojuangco Jr. Close to Hacienda Luisita is the sprawling Hacienda Tinang, a sugar estate once owned by the Aquino clan, sold to the De Leon family, and then partitioned among dozens of members of mostly the De Leon family (who else?), plus a few investment bankers, socialites, businessmen and friends and relatives of politicians, all belonging to wealthy families, as the Philippine Center for Investigative Journalism has shown. This privileged bunch paid an average P450,000 (little more than $8,000 by the current exchange rate) for the estate, an absolute bargain for plots of land that should have been awarded to people who were really entitled to them: landless tenants, farm workers or tillers. This is a graphic example of how "land reform" in the Philippines really works.

The Philippines does have a Comprehensive Agrarian Reform Program (CARP), established under former president Cory Aquino (she's also a Cojuangco by birth). The government of current President Gloria Macapagal-Arroyo claims that 5.8 million hectares have been distributed to 2.7 million beneficiaries, or 72% of the forecast total. For starters, no one seriously believes in this 72% - and people are very much aware of Hacienda Tinang-style schemes. Moreover, the program should have been completed in 1999. And accusations of shady deals have been flying non-stop for 15 years. Arroyo, in the inaugural speech for her six-year term starting in 2004, didn't utter a single word about land reform or rural poverty. The Philippines Center for Investigative Journalism stresses that "ideally, CARP would correct centuries-old injustices by giving land to the landless. In the Hacienda Luisita case, however, land remained in the hands of the landowner: in this case, in the hands of the president's family" - a reference to the Aquino-Cojuangco clans.

The Rulemakers also shows how a mix of the Aquino-Cojuangco clans has generated a disproportionate amount of legislators dating back to 1890. And since Philippine politics is family politics, there is no room for trophy wives. Like shoe-fetishist Imelda, the wife of Marcos, and wife-turned-president Cory Aquino, politician's wives work as political confidantes, collect campaign contributions, manage political networks and, in the case of Aquino, even become president. The public face of the Aquino family is now the ubiquitous TV host, skin-whitening endorser and self-proclaimed actress Kris Aquino, currently gracing Philippine cinemas in a ghastly thriller, Feng Shui. She wants to become - what else - a senator.

The chop suey gang

As for the ultra-wealthy - and very discreet - Chinese-Filipino tycoons, they have always preferred to remain in the shade and fund their own congressmen. But post-Marcos some taipans have sprung up, such as Sherwin Gatchalian, the son of the Filipino king of plastics, and stockbroker Harry Angping. But no Chinese-Filipino taipan comes close to matching Lucio Tan, the ultimate embodiment of the Filipino dream: from janitor to the nation's wealthiest man - and one of Asia's Top 50. He made his fortune with tobacco, built a diversified empire, merged from being the ultimate Marcos crony to a supreme in-the-shade arm-twister of the House and the Supreme Court, and practically made president Estrada. Tan, additionally, has excellent relations with Beijing - something that largely explains the $1 billion in investment and soft loans that Arroyo brought from her recent trip to China.

Another invaluable volume by the Philippine Center for Investigative Journalism, Investigating Estrada: Millions, Mansions and Mistresses, published in 2000, before Estrada was ousted from power, documents in minute detail the many facets of Estrada-Tan cronyism. Economist Solita Monsod paints Tan as "the role model for the worst kind of conduct as far as our national economic objectives are concerned. He signals that you can evade taxes and get away with it, pay the courts and get the judges to decide in your favor, get good lawyers and delay your cases. The messages that are given by the kind of treatment he gets from the government are the antithesis of what we need for sustainable development."

Martin Scorsese would have loved this larger-than-life version of Goodfellas with Tagalog subtitles. Lucio Tan bet heavily on Joseph Estrada in the 1998 presidential election: at least $37 million, plus total cooperation by his nationwide business network. And he won - big. With his pal Joey running the country, the biggest tax-evasion case in recent Philippine history, slapped on him by former president Fidel Ramos, simply disappeared. Tan's deep-in-trouble Philippine Airlines was protected from competition by Estrada. And on top of it, he was handed the Philippines National Bank by Estrada on a silver platter.

Manila's coterie of resident Sinologists cannot list enough reasons for a Filipino politician to seek a Chinese connection - as Estrada did. Chinese businessmen "swim between the rivers". They are not a political threat. They ask - or feign to ask - nothing in return for their largesse. They quickly share their fortunes with close friends and godfathers. They spend fortunes on the campaign trail. They keep their word - even when it's not on paper. And most of all they keep their mouths shut.

Dressed for success

A certified member of a Filipino political family needs, for starters, loads of money. Elections are a costly affair - for local standards. A Congressional campaign in Metro Manila cost as much as $500,000 in 2004. In rural provinces, it's much cheaper - less than $200,000. Once in Congress, however, families are impeccably positioned to expand their business empires, manipulating the state as a cash cow: they can get loans, franchises, monopolies, tax exemptions, subsidies, cheap foreign exchange, the works. And as they get wealthier, they become formidable election machines.

If you start as a movie star, then you've really got it made. Ramon Revilla was a lousy actor, but he got three Senate terms just because of his pop icon status. Sultry talk-show host Imee Marcos, Ferdinand's daughter, is also in Congress. In 2002, Congressman "Jules" Ledesma IV - a descendant of a wealthy sugar-planter clan also related to the Lopez family, owner of the ABS-CBN network - married knockout movie star Assunta de Rossi in his hacienda on live TV.

Which leads us to marriage, another surefire way to improve your capital. When, in 1954, Benigno Aquino Jr married Corazon Cojuangco, the most powerful political clans in the Tarlac region were united. Also in 1954, when ambitious congressman Ferdinand Marcos married Imelda Romualdez, a powerful clan in Ilocos united with a powerful clan in the Visayas. It was a great Marcos coup: Imelda's cousin Daniel at the time was House Speaker and her uncle Norberto was a former Speaker.

As for the eternal House Speaker Jose de Venecia (1992-98, then 2001-04, and now 2004-10) he also has to thank the Lord for his marriage: it was his first wife - the daughter of political godfather Eugenio Perez - who kick-started his political career.

It also helps to drape yourself in popular myth - as Marcos did, casting himself as a World War II hero who won 32 medals. In the mid-1980s it was discovered all the medals were fake. So what? Shoe fetishist Imelda still shows them off. Disgraced president Joseph Estrada got the job selling the myth of a man of the masses. It took millions of Filipinos a corruption scandal and an impeachment for them to start measuring the gap between Estrada's public Robin Hood image and his private life of sleaze, thuggery and extra-dirty politics.

Being in the Philippine Congress also means golden showers of "free money" - which everyone can spend at will (and without paying taxes). Congressmen as a rule make as much - if not more - than business executives.

The majority of bills approved in the House are of only local interest. The result, as The Rulemakers points out, is "a chain of perverse behavior". Virtually no one gives a damn about the common good of the country: "Broader development and reform goals are forgotten, further entrenching a system that mires the people in poverty and traps legislators in the role of fighting for spoils." It's unlikely Arroyo's government will muster enough Nietzschean will power to change the story.

As to where the elites stand at the moment, analysts broadly agree they now are congregated into roughly four groups:

1) The traditional elite - the Ayalas, Aquinos, Lopezes, De Leons, Osmenas and a few other families that were snubbed by Marcos;

2) The "sons of Marcos" who blossomed handsomely during the dictatorship - tycoons Lucio Tan, Danding Cojuangco and former president Estrada, for instance;

3) The anti-Marcos camp, which includes former president Fidel Ramos and ultimately his protege Arroyo; and

4) A group of gung-ho parvenus that includes shady businessmen Dante Tan and Mark Jimenez. These are the people who actually rule the country.

Got pork, will travel

Senator Panfilo Lacson - who did a study of the pork-barrel system - may be one of the few Philippine legislators publicly to describe pork-barrel funds as "a very corrupt and corrupting system in our political institutions". In 2003, Lacson announced he would give up his "pork" allocation for the year - almost $4 million. He urged other senators to do the same. Nobody paid attention. Now, because of the country's alarming fiscal and budgetary crisis, finally there's a House and Senate drive to scrap pork altogether in 2005.

Still, there's a crucial problem. Even if money is not used, according to budget secretary Emilia Boncodin, it does not revert to the bleeding national treasury: it stays with the relevant government agency, which then identifies projects it wants to fund. This legislation also has to go.

According to Lacson, less than half of Filipino taxpayer money goes to actual projects. He even figured a complete breakdown of the kickbacks: 20% goes to the legislator who comes up with the idea; 14% goes to the contractor; 10% goes to the district engineer and other officials at the nefarious Department of Public Works and Highways (DPWH); 5-10% goes to the governor or mayor; 2% goes to the barangay captain; and 2% goes to the government bureaucrat supposedly in charge of these public funds. Lacson says even the billboards all over Manila that advertise a given project are overpriced. One of these billboards, by the way, reveals the face of Arroyo the real-estate developer: she is promoting Residencias de Manila - still one more Greenfields-style gated community. Lacson is one of the few legislators denouncing corruption on a monumental scale as one of the key reasons that explain the appalling state of infrastructure in the Philippines. All over Manila it's easy to see unfinished or extra-shoddy construction projects. No wonder, most of the money disappeared in bribes.

Where's my cut?

When he became president, Estrada had an ambitious Caring for the Poor program. He wanted to reduce the number of Filipino poor from 24 million in 1997 to 17 million by 2004. The problem is that two-thirds of the funds were under the control of the House. The whole thing turned into a mess. According to a World Bank study, the program even invented a new class of poor: "the political poor, who are chosen by the political establishment".

Why did that happen? Because the really poor were not well connected enough. Only a few knew a congressman or senator who could recommend their household to be included in the government program. And of all this mass of non-connected, many thought they could only advance their interests if they paid a few bribes. This means only the well-connected Filipino poor in Congress get to see the fruits of pork acting to the benefit of their communities.

In the absence of all hope, the poor gamble. Jueteng is the biggest and most public racket in the Philippines. Jueteng is a variation of a Chinese numbers game in which you have to pick two numbers between 1 and 37. Once the lucky pair is drawn, the winnings vary wildly, depending on the bets. It's a complex network of cobradores (collectors), cabos (headmen) and operators, protected by another network of civilian, military and police officials, even judges, from the local level to the national level. The whole thing is illegal, but everybody and his neighbor seem to be involved. Once again, Estrada went where no one's ever been before: he invented jueteng room service, centralizing the collection in the presidential office. He may have pocketed as much as $10 million in gambling payoffs.

How could such a gangrenous system change? Coronel of the Philippine Center for Investigative Journalism welcomes the current crisis: "We need a national trauma. It's the only way to forge ahead." There's hope from people like the party list group Bayan Muna - which has spun off into Gabriela, a woman's group; Anakpawis, a workers' party; and Migrante, a migrant workers' organization. Bayan Muna fights for human, labor and peasants' rights. One of its leaders, Satur Ocampo, a former reporter of the Manila Times and one of the few progressives in the House, now rubs elbows with sultry Imee Marcos: Ocampo bitterly fought her dictator father in the 1970s and '80s.

Ocampo says his party has no secret agenda: "Our program is to empower - in a real, not rhetorical sense - the workers, peasants, fishermen, indigenous peoples, urban poor and other oppressed sectors, as well as women, youth, students, professionals and small entrepreneurs." Whether he and a few others make a difference may pave the way for a Philippines that will cease to be a vast collection of dirt-poor islanders ruled by a gang of Goodfellas.


(Copyright 2004 Asia Times Online Ltd. All rights reserved

Philippines: More pain, no gain

EDITORIAL
2004 Asia Times Online

In a statement printed in the Philippine Star newspaper on September 21, Philippine President Gloria Macapagal-Arroyo urged her fellow citizens to "suffer the pain now and experience the gains two years hence [rather] than postpone the pain and die a painful economic death two years from now".

The pain hapless, ordinary Filipinos are told to suffer comes in the form of new tax measures to the tune of P80 billion (about US$1.43 billion) a year Arroyo has asked Congress to enact posthaste. The sum amounts to 1.8% of the country's 2003 gross domestic product (GDP). The promised gain is uncertain at best: passage of the measures might forestall a threatened sovereign credit downgrade from the country's present rating, already two notches below investment grade.

Big bloody deal, say a large majority of Filipinos. A mid-September survey by the Manila-based Pulse Asia polling organization found that 78% of respondents "see no need to impose new taxes as long as the government strengthens its tax-collection efforts".

It's time to bell the cat. Who's to blame for running up the country's massive public debt to more than 70% of GDP, in spite of which abject poverty continues to increase; in spite of which some 27 million Filipinos (one-third of the population) have to subsist on less than a dollar a day; in spite of which Filipinos in ever-larger numbers are forced to leave the country to make a living and support the relatives they leave behind?

In an upcoming five-part series, Asia Times Online's Pepe Escobar explores both the makings and the makers behind the social catastrophe a once rich and promising nation (called "the next Japan" 40 years ago) has become. We won't preempt his findings but will note some equally astonishing and disturbing, but incontrovertible, facts.

Unsustainable demographics. The total population of the Philippines will reach nearly 84 million by the end of 2004. After slowing somewhat in the 1980s and '90s, the population growth rate has once again accelerated to 2.36% per annum, or a doubling rate of just 30 years. The total population could exceed 200 million well before 2050. However, the Catholic Church, to which the great majority of Filipinos belong, continues to prohibit contraception.

Declining per capita income. High population and mediocre GDP growth make for a noxious mix. In real (inflation-adjusted) peso terms, GDP per capita has remained virtually unchanged since 1980 (P12,619 vs P13,139 in 2003). In US dollar terms, it peaked at $1,180 in 1996, and in 2003 had declined to $953.

Growing poverty. Incidence of poverty - the inability to provide for basic food (adequate caloric intake) and shelter - increased from 36.8% of the population in 1997 to more than 40% in 2002. Thirty-eight percent of families do not have solid-structure shelter. Access to safe drinking water declined from 81.4% of families in 1999 to 80% in 2002. Twenty-one percent of all families and 44% of families in the lower 40% income group have no electricity.

Super-rich in undiminished control. The Philippines boasts an unenviable Asian, perhaps global, record among major nations. One family, the Ayalas, controls 18% of total stock-market-listed corporate assets. Moreover, the country's top 10 most powerful families control 56.2% of such assets. Just over 50% of total GDP is controlled by the top 15 families. In sharp contrast, only 2.8% of listed corporate assets are owned by the 15 top families in Japan.

These facts in combination define socially, economically and politically unsustainable circumstances and go a long way in explaining the persistent political turbulence of the past two decades. Time and again since the first so-called People Power revolt of 1986 that swept away the Ferdinand Marcos regime, the hopes and aspirations of the large majority of impoverished Filipinos have been thwarted. Neither Cory Aquino nor Fidel Ramos, who lifted Aquino into the presidency before becoming president himself, carried out the land-reform measures they had promised. What land reform was enacted was largely a sham. Aquino, who talked about it incessantly, still owns the huge hacienda that should have been one of the first reform targets. Most senators and congressmen are rich landowners and members of or hangers-on of the elite families that control the bulk of the nation's wealth. No one else can afford to run for office.

When the poor thought they had elected a president who would champion their cause, he was promptly overthrown by another People Power revolt organized by the elite families and the Church on charges of corruption, real or contrived. The person who was installed as president, Arroyo, now has won an election in her own right. A captive of the de facto feudal powers that be, she'll prove every bit as unwilling and unable to bring basic social and economic change as Aquino.

The Filipinos are a capable, well-educated, joyful people. Most who have settled abroad, escaped the misery of semi-feudal rule, and been given the opportunity to prosper have done so. But, of course, they can't all emigrate or become overseas workers. Ultimately, they will need to find the political means to rid themselves of the oppressive medieval structures that make their lives on Earth the equivalent of purgatory.

(Copyright 2004 Asia Times Online Ltd. All rights reserved.

The Sick Man Of Asia

MANILA - Now let's put our hands together and pray.

This is exactly what the top stars in the administration of President Gloria Macapagal-Arroyo did recently at the 23rd National Prayer Breakfast in a Manila hotel. Everybody was there, from cabinet ministers to Supreme Court justices, from former president Fidel

The crisis is triggered by a P200 billion (US$3.5 billion) budget deficit and a P3 trillion ($53.2 billion) public-sector debt. The budget crisis gets even more serious because of the ballooning foreign debt. According to the Freedom from Debt Coalition, total Philippine debt, public and private, domestic and foreign, is now $96 billion - and counting. More than 31% of the 2004 national budget bleeds to service the debt. Many an economist warns that the Philippines could soon face a crisis of Argentine proportions.

Just so the message was clear, American motivational speaker John Maxwell also lent a hand to the National Prayer Breakfast. Maxwell called on all Filipinos to support Arroyo, asking that she be "the servant of all Filipinos". Compounding the mood of non-separation of Church and state - which would have pleased many a member of the Christian Right in the United States - Foreign Affairs Secretary Alberto Romulo even implored the Lord to help Arroyo bear the cross of leading the Philippines out of a number of appalling poverty statistics: "Bless her, O Lord, and give her the courage to carry on."

There's only one problem. The Lord does not seem to be listening.

Have mercy

In the 1950s, the Philippines was the most dynamic economy in Asia - hailed by the World Bank as a future powerhouse. Half a century later the country is, in the words of Rommel Banlaoi, a political-science professor at the National Defense College, "the sick man of Asia".

The numbers are extremely alarming. Let's start with the demographic bomb. The Philippines is already the 12th-most-populous country in the world: 84 million by the end of 2004, and counting. At an annual growth rate of 2.36%, the population will have doubled by 2033 and may reach 200 million by 2042. The growth rate is extremely high compared with other Association of Southeast Asian Nations (ASEAN) countries such as Indonesia (1.6%) and Thailand (1.3%). Thailand and the Philippines had the same population size in 1965. Twenty years later, Thailand was at 52 million and the Philippines at 55 million. In 2004, Thailand's population stands at 64 million while the Philippines is approaching 84 million. Sheila Coronel, executive director of the remarkable Philippine Center for Investigative Journalism, says "we'll have to endure nine years of Arroyo without a population policy. She's a devout Catholic. She won't budge. A partial solution would be the private sector taking over the distribution of contraceptives."

This is a young population - 50% under 21 years old - and it's facing myriad very serious shortages. According to Congressman Gilbert Remulla, the latest data reveal that in 2003 there was only one government doctor for every 28,493 people; one government nurse for every 16,986 people; one government midwife for every 5,193 people; and only one rural health-care unit for every 29,746 people. The Philippines needs 9,000 additional teachers per year just to cope with the arrival of new students.

The missing doctors, nurses and teachers are part of the vast legions of Overseas Filipino Workers (OFWs) - something that leads former senator and vice-presidential candidate Loren Legarda to cry over the international image of Filipinos as "the groveling nomads of the world". Up to 8 million Filipinos are OFWs. Of those, about 2.5 million are permanent foreign residents; but the majority are registered (42%) or illegal (58%) overseas workers, at least 50% of them women. Without OFWs, the Philippines would already have hit rock bottom: they are sending about $8 billion back home per year, and counting. Unofficially, the total amount of remittances may be 50% higher, or more.

Incredible as it may seem in booming East Asia, the Philippines' average gross domestic product (GDP) per capita is actually shrinking. It peaked at $1,180 in 1996 (before the Asian financial crisis), stood at $998 in 1999 and was at $953 in 2003. Compare this with Thailand: from $1,876 in 1999 to $2,322 in 2003. Last year, at least 27 million Filipinos - one-third of the population - were living with well under $1 a day, too poor to sustain their basic food and shelter needs. Today these poorest of the poor may be closer to 40% of the total population. According to a 2002 National Statistics Office report, during that year 3.4 million Filipinos were unemployed and 4.6 million underemployed. Today it is widely assumed, unofficially, that there are at least 10 million unemployed or underemployed Filipinos. The national debt is hovering around 85% of GDP. And with the price of oil on the rise, poverty in the Philippines is expected to worsen.

Gloria in excelsis

So what is Arroyo doing about this unmitigated disaster? The buzzword in Manila - from the Malacanang presidential palace to state-run companies - is "austerity". For many Filipinos - smiling, lovely, very perceptive - it's just panic: Aquilino Pimentel Jr, the minority leader in the Senate, agrees. For the absolute majority of an impoverished population, the whole thing means more sacrifice: Arroyo, via press secretary Ignacio Bunye, hinted there will be no wage increases until the economy is "nursed back to good health". Acid commentator Adrian Cristobal, a former press secretary to mega-dictator Ferdinand Marcos and currently a columnist in the Manila Bulletin, says that "if anyone is in panic, it's the people who have to live with rising prices for everything while salaries stay the same". But still everyone wants to help. "Their only condition is that since the crisis has to do with the foreign debt [more than P5 trillion], they want the IMF [International Monetary Fund], the World Bank and other foreign banks to receive their contributions directly," Cristobal says.

Press secretary Bunye - who did not reply to an Asia Times Online request for an interview - actually told workers demanding a modest wage increase they should be grateful they still had jobs. Cristobal once again hit the right note: "Shouldn't Mr Bunye be also grateful that his fellow countrymen are grateful? It took 330 years for them to be ungrateful to the Spaniards." The Philippines, as is well known, spent more than three centuries as a Spanish colony before its half-century under the Pentagon/Hollywood axis.

Arroyo, always sporting a Philippine terno (women's business suit), tries to look as though she does mean business. Her current mantra is Administrative Order No 103, which spells out a torrent of cost-cutting measures, including no foreign and local travel, no overtime pay and a ban on benefits for top executives in state-run corporations and agencies. Those who won't bow to austerity will be summarily fired. As for the 68,437 government-owned vehicles, in theory they are now closely monitored: no more free trips to the mall or weekend holiday getaways.

The frenzy inevitably has led to a surrealist show, including the campaign to have government workers drop their coins into contribution boxes and the idea that every policeman should contribute to the government one day's pay (a little more than $5). Police bosses happily say that if every cop did this they could hand a hefty $450,000 to the government. Cynics like Senator Pimentel insist that if that happens, it would only compel dirty cops to raise extra money from petty rackets.

On a more serious note, Malacanang decided to cut by 38% the P70 million of pork-barrel funds allocated to each congressional district. House Speaker Jose de Venecia swears that pork barrel will totally disappear from the 2005 national budget. The name of the game will be line-item budgeting, so "there can be no more suspicious realignment of funds". In theory, in a new, cleaned-up Philippines, the pork barrel would disappear from the Senate, the House and the executive. Cynical businessmen are not so sure. For his part, perpetually scowling Senator Panfilo Lacson - who ran against Arroyo in the latest presidential election - worries about much-needed funds ceasing to flow toward poor cities and towns that need to improve their water systems, barangay (district) roads and other vital projects.

Besides the austerity pose, Arroyo travels. She recently carried the whole family to China, including shady First Gentleman Mike Arroyo - prompting angry cries of a "family vacation". Powerful Chinese-Filipino tycoon Lucio Tan apparently paid for the family's expenses. But then Arroyo managed to bring home an alleged $1 billion in investment and soft loans. Arroyo gloated that Chinese President Hu Jintao was glad bilateral trade has gone "from practically nothing to $10 billion". She also touted the outcome of her visit: "We made another agreement, this time to increase total trade to $20 billion in the next five years."

A strong partnership with China would be essential at least to alleviate the Philippine drama: think of millions of Chinese tourists ready to burn their yuan on the pristine beaches straddling the Philippines' 8,000 islands. Moreover, it's in China's best interests to fish in the Philippines' pool of millions of skilled, English-speaking - and in many cases unemployed - professionals in communications, construction, engineering, education, distribution, environment, finance, health, tourism, travel and transport.

The non-stop Filipino talk show

The daily lunch buffets at the Peninsula or the Shangri-La in the Makati business district are essential to gauge business sentiment in Manila. And the mood is somber indeed. As a local factory owner puts it: "The banks are not lending to us. They'd rather buy [Treasury] Bills and government papers. The rates are so attractive, and the investment is risk-free and protected from depreciation." Other businessmen complain that the Philippines is forced to pay much more than Malaysia or Indonesia to get foreign currency loans. A bank analyst is adamant: "Arroyo has no short-term or long-term strategy whatsoever on how to deal with the fiscal and economic crisis. I have yet to see a well-documented plan."

Among Filipino businessmen, criticism of the daily barrage of Malacanang speeches alerting about the crisis is pointed. At the mention of Thailand or Malaysia, Filipino businessmen acknowledge that other ASEAN counties also borrowed a lot, but at least they have built highways and improved their education systems. "Our greatest achievement in education is the increase of illiteracy in our public schools," says an angry teacher.

Businessmen also complain the government is not doing anything about smuggling. Car assemblers complain that they sell a maximum of 100,000 automobile units a year while Thailand, with a smaller population, sells more than 500,000: they're still waiting for a ban on the unlimited import of used cars. "We keep asking the Americans and the Japanese to set up their Asian manufacturing hubs here, but obviously they prefer Thailand," says a Toyota dealer. "We lose because our market has no purchasing power, and on top of it there's a lot of smuggling."

There's a certain degree of schizophrenia in the air, though. While a delegation of American businessmen has praised Arroyo's "decisive steps" to deal with the crisis, local businessmen question why these "decisive steps" have not addressed another major Philippine catastrophe in the making: a looming power crisis in 2007 or 2008. "It's tempting to reach the conclusion that what's good for American investors is not necessarily good for Filipino investors," says one businessman. This perception dovetails with what Alexander Remollino writes on the independent website Bulatlat ("to search" or "to probe" in Tagalog) about how Arroyo is very close to US President George W Bush and the reason she was Washington's favorite in the May presidential race: "The United States [is] the real decision-maker ... no one has been able to ascend to Malacanang, and stay there, without its blessings."

A consensus emerges anyway. The crisis has existed since Marcos; it's a consequence of what happened under Marcos. And Malacanang rhetoric will do nothing to solve it. But then there's the "dirty secret" that the elites will never admit to openly: the iron link between the Marcos, Aquino, Ramos, Estrada and Arroyo administrations, unable to pierce an immutable class structure in which wealth and income distribution is one of the worst in the developing world.

No biz like political show-biz

Is Arroyo credible and legitimate enough to pursue the austerity measures that would "save" the country? Hardly. According to Social Weather Stations, an independent think-tank, her popularity index is at 48% - and going down. Much of this has to do with what happened in the May presidential election.

Banlaoi of the National Defense College charges that in the Philippines "elections are nothing but overt expressions of competing interests of the Filipino elite rather than venues of contending programs of government". This being the easy-going Philippines, competitive elitism takes the form of a huge fiesta - or politics as entertainment. "Filipino voters participate in the election for the same reason they go to cockfights, boxing and basketball, festival and beauty contests," Banlaoi says. "Election season is like a big sports or concert season - highly entertaining." That's the same analysis given by Coronel from the Philippine Center for Investigative Journalism.

So the May election - the fourth presidential contest since the restoration of democracy in 1986 - was a fiesta, including elite stalwart Arroyo, inevitable former action star Fernando Poe Jr and even born-again televangelist Eduardo Villanueva. Arroyo, a self- proclaimed Harvard-trained economist and daughter of former president Diosdado Macapagal, ran under a party coalition named K4 - in pure Philippine show-biz style, the acronym was copied from F4, a male pop singing group from Taiwan. Show-biz politics has already given the Philippines former action star and disgraced former president Joseph Estrada - not to mention his son Jinggoy, who got a Senate seat last May. Nowadays the Senate has no fewer than three Filipino clones of Ah-nuld the Gubernator, California state Governor Arnold Schwarzenegger.

Former action star Poe, a very close friend of Estrada, ran without a program or even ideas, apart from a vague "unity of the Filipino people". It doesn't matter, because he got the vote of the TV-and-cinema-going masses. Manila Archbishop Rosales was not very pleased with the whole show, even saying that the greatest destructive element that ever visited the country in the past 58 years was Philippine politics. He hit the fundamental nerve when he organized a movement called Pondong Pinoy (Filipino Fund) to force people "beyond the politics of money, power, class, greed and family ambitions that has held the country captive for many generations".

The first People Power revolt in 1986 got rid of Marcos - and inspired, among others, the mass protests that got rid of Suharto in Indonesia in 1998. People Power 2, in 2001, ousted the mega-corrupt Estrada. In both events, the Catholic Church played an absolutely crucial role - mobilizing millions to change the course of Philippine history. But now the Church simply has no one to trust: it has barely begun to contemplate the implications of the four-day military-backed civilian uprising - a de facto coup d'etat - that put Arroyo in power in January 2001. Estrada, a certified rascal, never formally resigned as president and still claims he was "robbed" - the ultimate irony. He now lives under a relaxed form of house arrest near a military camp. As for the Church, it is mired in crisis, with a shortage of priests and the occasional ban on a progressive bishop.

An informal survey around Manila, especially in poor neighborhoods, reveals a widespread popular perception that the May presidential election was also stolen. Fernando Poe is still contesting the result. The "stolen election" explains both the Church reticence toward Arroyo and Arroyo's low approval rating. Moreover, she was never popular enough to succeed Estrada in the first place.

Filipinos have had more than three years to judge Arroyo in action. When she claimed power in January 2001 she proclaimed "four core beliefs" as her government platform: 1) elimination of poverty within a decade; 2) improvement of moral standards and good governance; 3) true political reforms and "dialogue with the people"; and 4) leadership by example. On the troubled economic front, she set to work brandishing the good old IMF one-size-fits-all recipe book.

In 2000, the Philippines was not in as bad a shape as it is in 2004. With inflation at 4.4%, the lowest in a decade, real per capita GDP growth was only 1.8%, denoting low economic growth. Arroyo's government entered into a so-called Poverty Partnership Agreement with the Asian Development Bank (ADB), which is based in Manila. This was tried in the past - and failed. By 2002, unemployment had expanded from 10% to 11.4% (it currently stands at 11.7%). There were no wage increases. And the debt-service ratio rose from 16% of total exports of goods and services to 17%.

Arroyo's approval rate sank. She then came up with the concept of a "strong republic" as a cure to all ills - an empty public-relations mantra repeated ad nauseam. Arroyo resorted to practicing old-school Philippine politics to the hilt - appointing some dodgy characters to important positions and dressing up every successful government program as an act of personal benevolence by the benign sovereign. In 2003, per capita GDP growth slowed from 2.4% to 2.2% - one of the lowest rates among the 10 members of ASEAN. And the main factor in the growth of the gross national product (GNP) remained the increased flow of remittances by OFWs. Foreign direct investment plummeted from $1.8 billion in 2002 to a paltry $319 million in 2003. Blame the usual suspects: political instability, the terrible state of Philippine infrastructure and, most of all, corruption.

By the time of the May election, Filipinos were extremely gloomy. A survey by the Social Weather Stations think-tank revealed that 44% of the respondents believed their quality of life had deteriorated; and the all-meaningful self-rated poverty index - which had oscillated between 54% and 65% under Estrada and 53-66% during the 2001-04 Arroyo years - was still stuck at 56%. Since July 2001 there have been at least 11 accusations of corruption targeting First Gentleman Mike Arroyo, apparently very fond of dodgy "commissions". In the Corruption Perception Index established by Transparency International, the Philippines is ranked 2.5 on a scale of 0 (very corrupt) to 10 (very clean). Even under the racketeer Estrada, the country's index was 2.9.

After the first 100 days of Arroyo Part 2, enveloped by a rhetorical blitzkrieg from Malacanang, the country remains gloomy. Arroyo's national approval rate remains at only 48% - and falling. And 55% of Filipinos still believe the May elections were stolen.

Blame the poor

The Manila Municipal Development Authority (MMDA) is widely considered to be a nest of bureaucratic corruption - probably even worse than the Department of Public Works and Highways. These two agencies keep exchanging rhetorical blows over who's responsible for Manila's urban nightmare. But it seems some MMDA officials know something that 84 million Filipinos don't. An official with the Estrada government once famously said that Filipinos were rich because they had a lot of garbage. Now MMDA officials under Arroyo have discovered that the "uncontrollable floods" in the national capital are caused by the urban poor and their garbage. So Arroyo may be right, in a sense: waging war on poverty is meaningless. After all, the poor are responsible for the whole mess. Well, not really, as we'll see next in this series.

According to research by the Philippine Center for Investigative Journalism, "the poor vote is a thinking vote". The masses are constantly dismissed by the middle classes and the Filipino elite, but they seem to smell that something is terribly wrong. The shrinking Filipino middle class shares most of the values of the conservative ruling elite. They may be striving to amplify their political voice, but they definitely have no interest in radical change - an absolute must if this long-suffering land of warm, gracious people does not want to be devastated by a social volcano.

People Power 1 got rid of a corrupt dictator, Marcos, and People Power 2 a sleazy, corrupt president, Estrada. Some say a mild version of People Power 3 has already happened - when disgruntled Estrada supporters rallied in May 2001 and almost laid siege to Malacanang. Metro Manila's Epifanio Delos Santos Avenue (EDSA) Shrine - with its faux-golden freedom statue - is constantly barricaded on Arroyo's orders. The president will do anything to prevent a People Power 4, which, considering the depth of popular desperation, is all too possible within the next two years.


(Copyright 2004 Asia Times Online Ltd. All rights reserved.

Corruption harmful to Philippines' health

By Seth Mydans Published: WEDNESDAY, MAY 31, 2006

MANILA: Election campaigns are a great thing for Joeje Tubal, a nurse's aide at a small government-run clinic here.

That's when local officials bring out the vaccines, vitamins and painkillers they have hoarded for just this occasion - to show their generosity to voters.

"They'll hold medical missions here and give things away," Tubal said. "Even health workers' allowances increase at election time. We get free meals. That's where the health budget goes, to elections. If there were no elections we'd get nothing."

Doctors say that some of these medications expire or lose their potency through lack of refrigeration as officials delay their release to clinics to achievemaximum political effect.

"It happens a lot," said Philip Paraan, information officer for the Council for Health and Development, a private health network. "It's everywhere. Everyone knows about it. Corruption here is overwhelming, and that includes the health care field."

The use of medications as political pork is just one of many forms of corruption in medical care that a recent study by Transparency International, an independent agency that tracks corruption around the world, showed was directly harming the health of Filipinos.

One of the authors of the study, Omar Azfar, said the picture in the Philippines was not unusual for developing nations. In the study, released in February, Transparency International compared indicators of corruption and health in a controlled study of 80 communities around the country.

It found that for every 10 percent increase in corruption, immunization rates dropped as much as 20 percent, waiting time in public clinics increased as much as 30 percent and user satisfaction dropped 30 percent. It also found that children were one-fourth as likely to complete their courses of vaccination.

"It does reinforce the idea that there's nothing you can do," said Michael Tan, a medical anthropologist at the University of the Philippines. "We are a poor country, but we do have resources. They just get swallowed up by corruption."

In its 2005 report on worldwide corruption, Transparency International placed the Philippines in 117th place out of 159 countries in a listing that ran from the cleanest down to the most corrupt.

The UN Development Program estimated in 2004 that $1.8 billion a year, or about 13 percent of the government's annual budget, is lost to corruption.

The Philippines is trapped in a cycle of corruption that has its roots in a culture of mutual help and obligation, family loyalties and political patronage. Poverty, low pay and a breakdown in services have led to a free-for-all of payoffs and pilferage.

People here say corruption has only grown in the 20 years since Ferdinand Marcos, the former dictator, found a place in the Guinness Book of Records for squirreling away as much as $10 billion of the nation's wealth.

In a recent survey, according to Transparency International, 7 in 10 Filipinos said corruption had grown significantly worse over the past three years.

Accusations of electoral corruption are behind a swelling drive to force President Gloria Macapagal Arroyo to resign. Her predecessor, Joseph Estrada, was driven from office by a popular uprising that grew out of disclosures of presidential corruption.

The two most recent military coup attempts have been motivated in large part by a perception of pervasive corruption in the government and the armed forces.

Because it involves some of the country's most powerful people, efforts to combat corruption have not gotten far. According to a presidential commission in 2003, only 6 percent of cases taken to a special anti-corruption court resulted in convictions.

"These are prominent and wealthy people, and they hire the best lawyers money can buy," said Simeon Marcelo, a former government ombudsman who worked to improve the conviction rate and who reported that statistic.

He declined to comment on the role of corruption within the anti-corruption court itself.

In its report, Transparency International said corruption in the field of health care costs tens of billions of dollars a year around the world.

According to one estimate, it said, annual earnings from the sale of counterfeit drugs alone was more than $30 billion.

The report on the Philippines was based on data first published in 2001 byAzfar and Tugrul Gurgur, who are based at the University of Maryland, College Park.

The report said the corruption can take place in procurement, recruitment, the theft of money and supplies, absenteeism, induced demand for unnecessary goods and services and the solicitation of bribes for services.

"It can happen in many ways," Azfar said in an interview. "It is particularly pernicious if vaccines are pilfered and the refrigeration is not effective or if they are diluted and lose their power, in which case resistant strains of bacteria can develop."

In January, Health Secretary Francisco Duque told Congress that millions of pesos had been lost in expired vaccines and medicines purchased in just one government hospital.

In February, the national Bureau of Food and Drugs reported that 8 percent of medicines bought from pharmacies in 1999 were counterfeit. According to the World Health Organization, 6 to 10 percent of all medications on the world market are counterfeit, with estimated sales of more than $35 billion a year.

In the Philippines, corruption eviscerates a health care system that is already severely underfinanced, experts say.

One of the most widespread forms involves payoffs from drug companies to local officials who then pay them inflated prices for often substandard medicines."It's the way of life of the politicians," said Dr. Merry Mia, 29, a general practitioner who has worked in both government and private clinics. As a result, she said, the prices often climb out of reach of poor patients.

In a country that lightens its burdens with wordplay, these payoffs are known as incentives, rebates, internal arrangements, standard operating procedures and love gifts.

Health workers say corruption, including deals with drug companies, has expanded in the past decade as many civic functions have been handed down from the central government to local mayors and governors.

An investigation by the Philippine Center for Investigative Journalism found that these kickbacks can now range from 10 percent to 70 percent of the contract price.

Another common practice is the renting out of pharmaceutical diplomas, together with academic transcripts, to untrained people who want to open a drug store, several health workers said.

"It's almost natural, it's almost an accepted practice, although it's illegal," Paraan said.

The devolution of services to local governments has added medical supplies to the repertoire of political manipulation. Not only do local officials hoard medications for distribution during election campaigns, health workers say, but they also sometimes withhold them from clinics in neighborhoods where the local vote goes against them.

This does have a downside for local officials because, as an accepted practice, people expect them to deliver.

"Our congressman gave us some medicine, but it wasn't enough medicine," said Salvacion Berza, 44, who works at a food stall and whose children have been patients at San Roque Health Clinic Extension, where Tubal works as a nurse's aide.

As with other forms of patronage, local officials are now in a position to appoint unqualified friends or relatives to jobs in health care or to sign up "ghost doctors" and "ghost nurses" to draw government salaries for nonexistent employees."My father is friends with the mayor," Mia said, "and he'll tell him, 'Pal, do you want a job without working?' In many health clinics there are only a few people working, but they declare a lot more."

Tubal herself is a product of that system. She was a campaign volunteer for a local official and was given her job as an untrained nurse's aide as a reward.

"The neighborhood captain chose me because I know the area," she said. "My work as a volunteer was going house to house, so I know the people here."

Now she must deal with the shortages that are partly the result of that same system. In her one-room clinic in a Manila slum, she said, there are generally only about five courses of antibiotics available to serve a population of 5,000. Often the doctors, who visit twice a week, rely on drug company samples to treat patients."If we run out of syringes, we use donations from the patients to buy syringes," she said. "For tooth extractions they have to buy the anesthetic on their own."

In public hospitals, Mia said, interns who have not yet become hardened to these shortages sometimes pitch in from their own allowances to buy things like syringes, sutures and anesthetics for indigent patients. "It's very depressing," she said.

Tan, the medical anthropologist, told of a hospital that did not have gowns to distribute to women in its maternity ward."The funds have been depleted and there has been pilferage of gowns," he said. "The pilferage is amazing; it becomes a dog-eat-dog world. And for it to happen in a sector that is supposed to be nurturing and caring I think says a lot about where we are today."

Corruption's Many Manifestations

Posted by: Alecks P. Pabico | October 18, 2007 at 7:35 pm
Filed under: Governance, In the News

PRESS Secretary Ignacio Bunye initially referred to them as donations. The congressmen who admitted to being recipients considered these either as cash gifts or party contributions. None, including the two governors who first came forward to shed light on the matter, Ed Panlilio of Pampanga and Joselito Mendoza of Bulacan, thought they were being bribed. Environment Secretary Lito Atienza even went to the extent of saying such “gift-giving” is customary, relating how he was handed out P100,000-200,000 in cash or checks as financial assistance by the President when he was mayor of Manila.

No matter how our public officials are trying to justify last week’s confirmed distribution of money to congressmen and local executives after meetings with Gloria Macapagal-Arroyo in Malacañang, this latest scandal surely smells of yet another government anomaly, if not corruption.

But granting there were indeed payoffs, says Presidential Legal Counsel Sergio Apostol, this cannot be considered a case of bribery in the absence of any imposed conditions. So says Acting Justice Secretary Agnes Devanadera, who notes as well that “nobody is crying bribery from those who accepted it.”

Well, technically. Bribery, as perhaps the most common, and most visible, type of corruption, is defined as giving anything of value — whether in cash or in kind — to an official in exchange for an act or an omission in that official’s public functions.

In the PCIJ book, Investigating Corruption, bribes (citing Yale University professor Susan Rose-Ackerman) are paid primarily:

to get a benefit (in the case of procurement contracts; access to government-regulated goods, credit, foreign exchange, import and export license, or business permit; access to government services or subsidies; even purchase of state assets at a bargain-basement price)

to avoid costs, such as compliance with regulations, taxes, prosecution for illegal activities, delays, and red tape
for official positions (as in the case of school teachers paying principals one-month’s salary to get a teaching position)
While it can be argued that there were no favors asked as a quid pro quo, the “gift-giving” cannot simply be seen as an isolated act of kindness, far removed from the context of recent events. There was, after all, a recently filed and endorsed impeachment complaint against Arroyo that stemmed from the controversial, bribery-tainted national broadband network deal.

And what of her announcement to revive charter change initiatives this time anchored on federalism immediately after the Palace meetings? Wasn’t this a throwback to July 2005, when she first called for a shift to a parliamentary and federal form of government in her state of the nation address on the same day that an impeachment complaint was filed against her?

But let us grant Apostol and Devanadera their legal reasoning. Still, if not bribery, then clearly there’s patronage here. In the academic sense, dispensing patronage is considered a form of corruption though unfortunately, in the Philippine setting, it isn’t. Yet while the practice of dispensing government largesse is seen as socially acceptable, few would deny patronage’s corrosive influence on our politics.

From the same PCIJ book, patronage is described as:

entailing the distribution of government largesse — jobs, subsidized housing, public land, and other public goods and services — in exchange for political support. It is a way of acquiring, maintaining, and expanding political power by distributing economic benefits from the state and dispensing them to political allies, ward leaders, and followers.
Undeniably, patronage permeates Philippine politics, both at the national and local levels. The President, with his/her control of much of the economic resources of the state, remains the supreme dispenser of patronage in the country. But, for the sore lack of mature political parties, he/she has to rely on local politicians to govern and be elected. For instance, patronage in the form of prompt releases of pork-barrel funds has effectively been used to get congressmen to vote for administration-sponsored bills. During elections, patronage keeps the vote-getting machinery well oiled.

And in Arroyo’s particular case, patronage engineered the demise of the first impeachment case against her, which was attended by reports of fund releases to congressmen, appointments of members of their families and relatives to government positions, promises of projects and other favors.

Apparently, they are into it again.

All The President's Fund

Posted by: Isa Lorenzo | October 19, 2007 at 4:54 pm
Filed under: Arroyo Impeachment, Governance, In the News

NOW that Budget Secretary Rolando Andaya has denied that the funds used for “cash gifts” and “tokens” to local officials came from the national budget, many are wondering where the money could have come from.

Some have suggested that the money came from the Union of Local Authorities of the Philippines (ULAP) which promptly issued a denial, saying that it doesn’t have access to such a big amount of money. Interior Secretary Ronaldo Puno said that the money came from the Office of Speaker Jose de Venecia Jr., which the latter also denied.

Speculations have formed around the Office of the President, which has one of the biggest budgets in the bureaucracy. This year the budget amounted to about P3.8 billion, according to Andaya, who also denied that the money came from the Office of the President.

If Andaya is to be believed, then the money may have come from the as-yet-unknown benefactor/s’ private funds, something which is no less disturbing. Pampanga Governor Ed Panlilio has said that the money was withdrawn from the Bank of Commerce.

WHERE DID THE MONEY GO?

P500,000 Amount of ‘cash gift’ received by some local officials at Malacañang

238 Number of congressmen and governors who attended meetings at Malacañang

7 Number of local officials who have admitted receiving money

P119 MILLION Total amount of money received by local officials (assuming each received P500,000)

The President draws her confidential and intelligence funds from the budget allotted to her office for maintenance and other operating expenses (MOOE.) These funds include amounts from savings authorized by special provisions to be used for intelligence and counter-intelligence activities and are released only upon approval of the President.

Confidential and intelligence funds, along with other discretionary funds, do not undergo the usual auditing procedures. Instead, a quarterly report on the accomplishments in the use of confidential and intelligence funds is submitted to the Senate President, the Speaker of the House of Representatives, and the Chairman of the Commission on Audit.

There is also the executive’s “pork barrel” under the President’s Social Fund which are sourced from earnings of the Philippine Amusement and Gaming Corporation (Pagcor) to help finance development projects. The Philippine Charity Sweepstakes Office (PCSO) also contributes portions of its earnings to the Office of the President.

There are also lump-sum allocations falling under Special Purpose Funds which, although meant for the specific purposes they were appropriated, critics say, are vulnerable to presidential discretion. These include the National Unification Fund, Calamity Fund, Contingent Fund, E-Government Fund, and certain funds categorized under Allocations to Local Government Units such as the Kilos Asenso and Kalayaan Barangay Program Funds.

The Kilos Asenso Fund is the national government counterpart to support programs and projects of LGUs under the Kilos Asenso Movement. The fund is meant to finance construction of farm-to-market roads, small bridges, and day care centers; improvement of potable water supply; setting up or upgrading of micro-financed community livelihood enterprises; investments in agro-forestry projects; and other similar projects.

Funds under the Kalayaan Barangay Program, on the other hand, are financial assistance to barangays in conflict areas as identified by the Department of National Defense and the Office of the Presidential Adviser on the Peace Process. These are to be used for livelihood projects and basic infrastructure works such as access roads, school buildings, water systems, electricity and medical facilities.

Lastly, there are unprogrammed funds in the national budget that are also under the discretion of the President. The release of the funds, however, is contingent on an excess in revenue collection targets.

FUNDS UNDER THE PRESIDENT’S DISCRETION

P650 million Confidential and Intelligence Funds

P9 billion Calamity Fund

P800 million Contingent Fund

P50 million National Unification Fund

P1 billion E-Government Fund

P1.7 billion Pagcor Social Fund and Intelligence Fund

P3 billion PCSO and Lotto Funds

P5 billion (2006) Kilos Asenso Support Fund

P3 billion (2006) Kalayaan Barangay Program Fund

P30.5 billion Unprogrammed Fund (Support for Infrastructure Projects and Social Programs)

Sources: DBM, House of Representatives

In 2005, the PCIJ revealed that Arroyo issued postdated checks to support the pet projects of favored legislators and other questionable projects.

Three postdated checks worth P15 million were released from the President’s Social Fund to the Department of Education (DepEd). Although the DepEd was listed as a payee, the A.M. Diaz Scholarship Program of then Zambales representative Antonio Magsaysay Diaz was printed on the back of the checks.

Then, DepEd sources suspected that the fund releases were tied to Palace maneuvers to kill the impeachment complaint against President Arroyo.

With another impeachment complaint looming on the horizon, could history be repeating itself?

How The Congress Voted For the Impeachment of GMA

Posted by: Avigail Olarte | August 24, 2006 at 8:33 pm
Filed under: Arroyo Impeachment, In the News

THE PCIJ is providing a list showing how members of the House of Representatives voted on the impeachment complaint this morning and how they voted last year.

Seven congressmen reversed their votes in last year’s impeachment by voting this year to junk the complaint against the President. (see table below)

HOUSE MEMBER PARTY 2006 VOTE 2005 VOTE
Proceso Alcala LP Yes No
Teodoro Locsin Jr. PDP-Laban Yes No
Rodante Marcoleta Alagad Yes No
Jacinto Paras LDP Yes No
Antonino Roman LP Yes No
Arthur Pingoy Jr. NPC Yes No
Christian Señeres Buhay Yes No

Meanwhile, majority of those who voted for the complaint’s dismissal in 2005 had voted consistently. (See table.)

For the full list comparing how congressmen voted this year and last year, click here.

Below is the list showing how they voted today, courtesy of inq7.net:

Affirmative votes:
1. Benjamin Abalos, Jr.
2. Bienvenido Abante Jr.
3. Harlin Abayon
4. Roque Ablan Jr.
5. Rodolfo Agbayani
6. Rodolfo Albano III
7. Proceso Alcala
8. Felix Alfelor, Jr.
9. Joel Mayo Almario
10. Antonio Alvarez
11. Genaro Rafael Alvarez III
12. Prospero Amatong
13. Hussin Amin
14. Rodolfo Antonino
15. Trinidad Apostol
16. Jesus Reynaldo Aquino
17. Munir Arbison
18. Ignacio Arroyo
19. Augusto Baculio
20. Alipio Badelles
21. Leovigildo Banaag
22. Roseller Barinaga
23. Salacnib Baterina
24. Claude Bautista
25. Luis Bersamin
26. Ferjenel Biron
27. Anna York Bondoc
28. Narciso Bravo Jr.
29. Danton Bueser
30. Elias Bulut
31. Belma Cabilao
32. Douglas Cagas
33. Roberto Cajes
34. Carmen Cari
35. Bobbit Carlos
36. Tranquilino Carmona
37. Nanette Castello-Daza
38. Fredenil Castro
39. Arthur Celeste
40. Antonio Cerilles
41. Edgar Chatto
42. Leonila Chavez
43. Erwin Chiongbian
44. Solomon Chungalao
45. Eufrocino Codilla Sr.
46. Mark Cojuangco
47. Guillermo Cua
48. Junie Cua
49. Antonio Cuenco
50. Rodriguez Dadivas
51. Samuel Dangwa
52. Simeon Datumanong
53. Del de Guzman
54. Jose de Venecia
55. Arthur Defensor
56. Matias Defensor
57. Raul del Mar
58. Antonio Diaz
59. Baisendig Dilangalen
60. Abdullah Dimaporo
61. Victor Dominguez
62. Mauricio Domogan
63. Jack Duavit
64. Faysah Dumarpa
65. Tomas Dumpit
66. Ramon Durano VI
67. Consuelo Dy
68. Faustino Dy
69. Glenda Ecleo
70. Eileen Ermita-Buhain
71. Gerardo Espina Jr.
72. Amado Espino Jr.
73. Edgar Espinosa
74. Emilio Espinosa
75. Conrado Estrella III
76. Peter Paul Jed Falcon
77. Catalino Figueroa
78. Eduardo Firmalo
79. Antonio Floirendo
80. Orlando Fua Jr.
81. Albert Garcia
82. Vincent Garcia
83. Janette Garin
84. Ernesto Gidaya
85. Raul Gonzalez Jr.
86. Oscar Gozos
87. Eduardo Gullas
88. Joey Hizon
89. Gregorio Ipong
90. Nur Jaafar
91. Eladio Jala
92. Cecilia Jaloslos-Carreon
93. Cesar Jalosjos
94. Exequiel Javier
95. Uliran Joaquin
96. Josefina Joson
97. Simeon Kintanar
98. Jose Carlos Lacson
99. Danilo Lagbas
100. Edcel Lagman
101. Marcelino Libanan
102. Teodoro Locsin
103. Jaime Lopez
104. Mikey Macapagal-Arroyo
105. Benasing Macarambon Jr.
106. Emilio Macias II
107. Sunny Rose Madamba
108. Amang Magsaysay
109. Ma. Milagros Magsaysay
110. Corazon Malanyaon
111. Suharto Mangudadatu
112. Alfredo Marañon Jr.
113. Rodante Marcoleta
114. Roger Mercado
115. Florencio Miraflores
116. Anthony Miranda
117. Abraham Kahlil Mitra
118. Rafael Nantes
119. Francis Nepomuceno
120. Reylina Nicolas
121. Ernesto Nieva
122. Prospero Nograles
123. Arrel Olaño
124. Ernesto Pablo
125. Pedro Pancho
126. Jacinto Paras
127. Remedios Petilla
128. Prospero Pichay
129. Arthur Pingoy Jr.
130. Monico Puentevella
131. Herminia Ramiro
132. Isidoro Real Jr.
133. Jesus Crispin Remulla
134. Victoria Reyes
135. Miles Roces
136. Isidro Rodriguez
137. Antonino Roman
138. Jesus Jurdin Romualdo
139. Eduardo Roquero
140. Gerry Salapuddin
141. Joey Salceda
142. Federico Sandoval
143. Rizalina Seachon-Lanete
144. Hans Christian Señeres
145. Lorna Silverio
146. Eric Singson
147. Jose Solis
148. Nerissa Corazon Soon-Ruiz
149. Danilo Suarez
150. Victor Sumulong
151. Mary Ann Susano
152. Wilhelmino Sy-Alvarado
153. Judy Syjuco
154. Emmylou Taliño-Santos
155. Gilbert Teodoro
156. Herminio Teves
157. Acmad Tomawis
158. Generoso Tulagan
159. Aurelio Umali
160. Renato Unico Jr.
161. Edwin Uy
162. Reynaldo Uy
163. Edgar Valdez
164. Florencio Vargas
165. Rene Velarde
166. Eduardo Veloso
167. Luis Villafuerte
168. Ma. Amelita Villarosa
169. Eleuterio Violago
170. Laurence Wacnang
171. Antonio Yapha
172. Eduardo Zialcita
173. Juan Miguel Zubiri
Negative votes:
1. Henedina Abad
2. Nereus Acosta
3. Benjamin Agarao
4. Mario Aguja
5. Juan Edgardo Angara
6. Darlene Antonino-Custodio
7. Agapito Aquino
8. Benigno Aquino III
9. Teddy Casiño
10. Alan Peter Cayetano
11. Justin Marc Chipeco
12. Francis Escudero
13. Roilo Golez
14. Teofisto Guingona III
15. Mujiv Hataman
16. Ana Theresia Hontiveros-Baraquel
17. Ruy Elias Lopez
18. Renato Magtubo
19. Manuel Mamba
20. Imee Marcos
21. Rafael Mariano
22. Liza Maza
23. Florencio Noel
24. Saturnino Ocampo
25. Rodolfo Plaza
26. Gilbert Remulla
27. Etta Rosales
28. Rolex Suplico
29. Lorenzo Tañada III
30. Joel Villanueva
31. Joel Virador
32. Ronaldo Zamora
Abstention:
1. Joseph Santiago

Reforming The Political Economy According To Neri

Posted by: Alecks P. Pabico | February 19, 2008 at 4:50 pm
Filed under: The Economy, Governance, In the News

CALL it pragmatism, plain naïveté or a total cop-out, but former socioeconomic planning secretary Romulo Neri thinks the reforms in the country’s political economy that he has been advocating since he joined government service in 1990 would be better led by no less than Gloria Macapagal-Arroyo herself.

“The reason I have stuck it out with the Cabinet is because I feel there is hope within the Executive,” declared Neri at a hastily organized press conference in Malacañang yesterday. “I cannot see hope coming from a coup d’état. I cannot see hope from any Church-led type of movement…I cannot see it coming from Senate investigations alone. I cannot see it coming from the Black and White [Movement] and civil society alone.”

“To me, the President will have to lead in this whole reform process,” he stressed.

Neri was at the press conference, along with Executive Secretary Eduardo Ermita, to deny what his friend and the Senate’s key witness in its ongoing investigation on the scrapped national broadband network (NBN) deal, Rodolfo Noel ‘Jun’ Lozada Jr., reluctantly revealed to senators yesterday — that he had referred to Arroyo as “evil” during a supposedly confidential meeting he had with opposition legislators Panfilo Lacson and Jamby Madrigal in December last year.

That meeting, claimed Neri, had little to do with the $329-million NBN project with the Chinese firm, ZTE Corporation, as it was more a discussion on the nature of the political economy and the whole oligarchic structure of the Philippine state.

“I gave my usual lecture on political economy and, to shorten it, I just put one brief framework. And I think we all agreed that this is the nature of the Philippine state and the oligarchic state,” he explained. Neri added that it was similar to the lectures he used to give to legislators and Cabinet officials when he was still head of the Congressional Planning and Budget Office of the House of Representatives.

In such lectures, Neri often referred to the Philippine state as a “booty capitalist state,” a term derived from “booty capitalism” which was popularized by American scholar, Dr. Paul Hutchcroft. Such a state, Neri said, is dominated by powerful business groups who finance electoral exercises and use politicians and the machinery of government to further their economic interests. In effect, they “use the powers of the State to enrich themselves at the expense of everybody.”

Describing the vicious cycle of booty capitalism, Neri wrote: “When their candidates win, the vested interest groups are able to add political power to their already vast economic power. This oligarchic elite is able to influence policies to the point of distorting them. And their very ability to distort policies allows them to capture economic rent, economic rent being extraordinary profits which make them extraordinarily rich. This gives them greater economic power which in turn allows them to finance our election.”

For the political economy to be reformed, Neri advocated no less than a change in the system characterized by the “domination by the oligarchic state (influencing policy and political appointments), which results in policy distortions and weak institutions.”

“Unless the system is changed, it will continue to have negative impact on the poor,” he said, as evidenced by a “weak state, poverty and social chaos, giving birth to high unemployment, low income, poor education, poor health, and low respect for law.”

But judging from his pronouncements yesterday, critics are saying that the reformist in Neri may have already been compromised, as he now prefers to “sleep with the enemy.”

For Tet Gambito of Maritime Watchkeeper, Neri’s apparent change of heart was already evident in his Senate testimony on the NBN deal last year, after he acknowledged his “hidden agenda” in going along with the project despite being contrary to conditions set out by Arroyo in a board meeting of the National Economic and Development Authority in November 2006 — that it be a “pay for use” facility undertaken via a build-operate-transfer (BOT) mode, and with no government subsidies.

This, Gambito said, has shown that Neri has been “merely and simply mouthing some academic mumbo jumbo, or cowed out of his professed stand that booty capitalism is doing the country much harm. Faced with a situation where he could have brought down the whole cabal of ‘booty capitalists’, he turned his tail and ran!”



REFORMING THE POLITICAL ECONOMY

According to Dr. Paul Hutchcroft, a scholar from Yale University who wrote his doctoral thesis on the political economy of the Philippines, “Booty Capitalism” exists where the state is dominated by powerful business groups who finance electoral exercises and use politicians and the machinery of government to further their economic interests. The vicious cycle of booty capitalism starts when vested interests including powerful business groups, finance their own candidates during elections. When their candidates win, the vested interest groups are able to add political power to their already vast economic power. This oligarchic elite is able to influence policies to the point of distorting them. And their very ability to distort policies allows them to capture economic rent, economic rent being extraordinary profits which make them extraordinarily rich. This gives them greater economic power which in turn allows them to finance our election.

The impact of policy distortions and having weak state institutions make it very risky for investors to come and invest in the country. And if you have low investments, you have low economic growth. The impact on the poor is high unemployment, poor income, poor education, poor health, and low respect for law. On the State side, if there is a corrupt bureaucracy because of weak state institutions, the sale of rules occurs as well as the diversion of expenditures to graft and corruption. Social services are therefore limited and the bribery tax to the poor is very high. The cost of doing business here also becomes very high.

Political economists, both local and international, have blamed our lack of economic and social progress on the Philippine political and economic elite that fostered restrictive trade, fiscal and exchange rate policies. These policies entrenched oligarchic families while impoverishing the rest of the country. These policies favored capital over labor and import-substituting industries over agriculture, and led to underinvestment in the human capital of the poor.



Dr. Paul Hutchcroft’s Matrix

Dr. Paul Hutchcroft said that a state is either a rational-legal state or a predatory state. A rational-legal state makes rules for the good of everybody, while in a predatory state, those in power make rules to enrich themselves.

We have a rational-legal state, as in the case of a Laissez Faire Regulatory State (Quadrant 1). Supposedly, the best condition is the laissez-faire regulatory state where business is greater than the state but where rules and regulations are enacted and enforced for the good of everyone. Laissez faire means to let business do its thing, but with very good regulations.

Another rational-legal state is the Developmental State (Quadrant II) where, on the other hand, the state is greater than business. An example of this is Singapore where the government is involved in a lot of activities, and also Japan, Korea and Taiwan in their early stages.

Among the Predatory States, one can have a Bureaucratic Capitalist State (Quadrant III) where bureaucrats are very powerful and enrich themselves at the expense of everybody. Or one can have the Philippines — an Oligarchic or Booty Capitalist State (Quadrant IV) where it is the oligarchs who determine policies — who in effect use the powers of the State to enrich themselves at the expense of everybody.

Now investors would like to invest in a Bureaucratic Capitalist State rather than a Booty Capitalist State because the former at least would be able to deliver and has enough powers to do so. In the latter, even if you bribed a bureaucrat, it would be very, very costly to do so, and you may still not get what you want if there was someone you had forgotten to deal with, or if an oligarch decides to get involved and so on.

Countries with good economic policies

A World Bank study shows that in countries with weak state capability and poor economic policies, income per capita grew by only 0.4 percent. In contrast, income per capita in countries with high state capability and good economic policies grew by 3.0 percent. These differences in income growth have made a huge difference to the quality of people’s lives.

Index of Bureaucratic Capability

The effectiveness of a state is in part dependent on the capability of its bureaucracy. Good policies will go to naught if the institutions that will implement them have very low capabilities. A highly capable bureaucracy can contribute so much in policy formulation and can promote growth and poverty reduction through efficient delivery of services.

A World Bank study has determined that the Philippine government has become the largest employer in the country. In terms of bureaucratic capability, however, the Philippines lags behind its Asian neighbors. While the average index of bureaucratic capability in East Asia is 0.6, the country’s index is at 0.2.



Depth of Political Appointments

Political intervention in the recruitment process, which is based mainly on connections rather then on merit, has further aggravated the situation. This is visible in a review of the depth of political appointments where the Philippines has more political appointees in its bureaucracy compared to other East Asian nations.

High and unpredictable corruption

Another study has showed that it is both the risk and high level of corruption that really deters investors. When corruption levels are low and predictability of payments and outcomes is high, there results a high liquidity ratio of gross investments to GDP — but if the level of corruption is high, the predictability is low even if you paid — then the ratio is significantly lower. This explains the Philippines’ low ratio.



Good government helps explain the income gap

The importance of having strong and capable state institutions can not be ignored in promoting economic development. It can be clearly seen in the experience of countries in Sub-Saharan Africa and East Asia as reported by the World Bank. In the 1960s, personal incomes in East Asia were only slightly higher compared to those in Sub-Saharan Africa.

In the mid-1990s, however, the difference in incomes between the two regions had increased.

The World Bank report pointed out that the difference could be explained by the good economic policies adopted by the East Asian states and the effectiveness in the implementation of these policies. Another reason is that government consumption in the Sub-Saharan states grew to one-and-a-half times compared to East Asia. This experience shows that good policies and strong and capable state institutions to implement them produce much faster economic development.

Strengthening State Institutions

Strengthening our state institutions is necessary for greater economic development. Discouraging TROs and judicial intervention in business decisions is important because investors will shy away from countries where the judiciary system is unpredictable. Moreover, a sound judiciary is essential to a properly functioning market economy. Meanwhile, giving a higher pay to judges will help reduce the risk of corruption.

Strengthening the political party system entails, among others, allowing for State financing for political parties. This will help ease “money politics” and minimize the influence of interest groups — and increasingly, of drug gambling syndicates — on public policy.

The limiting of political appointments and the establishment of a credible merit system for appointments and promotions are requirements for a strong bureaucracy. We urgently need to insulate the administrative service from political influence and to enhance its accountability, transparency and efficiency

Fat Salaries, Big Allowancwes and Other Perks of Lawmaking

22-24 MARCH 2004
by YVONNE T. CHUA

--------------------------------------------------------------------------------
Our latest series summarizes some of the key findings of a two-year-study conducted by the PCIJ on Philippine legislatures which are published in an upcoming book called, The Rulemakers: How the Wealthy and Well-Born Dominate Congress.
Congress has remained a notoriously unaccountable institution, its members flouting government auditing rules. As Part Three shows, congressmen actually earn much more than what most Filipinos think. The take-home pay of each representative is close to P250,000 every month. Most of that is tax-free.
--------------------------------------------------------------------------------

CONGRESS formally opened on July 23, 2001, when his secretary handed him the cash equivalent of his very first paycheck as a member of the House of Representatives.

The legislator had not looked at the amount on the check when he asked his secretary to cash it for him. Like most members of the public, he had assumed lawmakers aren't paid all that well.

But his secretary had returned from the bank with a bulging envelope, and when the congressman counted its contents, he was astounded: The total amounted to P247,500.

"Why is this so much?" he recalls asking his secretary. She replied that although his salary was actually just P26,000 a month after taxes, there was also an "allowance" for his trips back to his district, plus other sums meant to cover the rent of a house in Manila, consultations fees, and research expenses. He was getting all these at one go.

The secretary also told her incredulous boss, "If you don't want to spend it, that's up to you. You don't have to account for it."

But that was only the beginning. More money would be coming his way fairly regularly, leaving the congressman with the surprising realization that he was practically rolling in cash. He has since realized that the salary and perks he gets can match those of executives in medium to large companies. But legislators are even better off than most business executives: Only a fraction of their monthly take - the P35,000-basic monthly salary - is taxed. All the rest is not. It is public money spent much like personal funds.

The entitlements to public funds and the lack of financial accountability of members of Congress have long been a source of real worry to the public and even to sectors within the government. Even though the average legislator is already wealthy, he is assured that such wealth would not be diminished by his years in public service.

From the Eighth to the 10th Congress, each lawmaker received a basic salary of P17,000 a month, or P204,000 a year. The basic pay has since been adjusted twice: to P26,000 a month in 1998 and to P35,000 the following year. Yet just by being present at the plenary hall can already earn a congressman thousands more as "appearance fee."

What a Representative Can Receive

PURPOSE AMOUNT
Salary P35,000 a month

Published expenses P200,000 a month

Allowance from the Speaker P50,000-100,000 a month

Christmas gift from the Speaker P100,000-200,000

Occasional gift from Malacañang (Christmas) P100,000-150,000

Election for the speakership as much as P200,000

Attendance in a plenary session to vote on selected national bills P50,000 (can go up to 500,000 for urgent, controversial measures)

Special occasions (e.g. barangay elections) P50,000

Foreign travel $300 per diem

As officer or committee chairman Varies, depending on expenses

Pork barrel (Priority Development Assistance Fund and Public Works Fund) P65 million a year

*Salaries are fixed by law. Foreign travel per diem is set by the House leadership. Pork barrel fund is fixed by the General Appropriations Act. The other amounts are based on interviews with former and current congressmen and House staff members.

A congressman can also count on other sources of funds, including the House speaker himself. Bills incurred as a result of official activities, including trips abroad, are footed by the government as well.

Government auditors point to two provisions in the General Appropriations Act (GAA) that, when invoked, often unleashes a flood of money headed straight into the pockets of legislators and their staff. As a result, what congressmen and their personnel take home are way above the published amounts of what they are supposed to be receiving.

One of these provisions authorizes the Senate president, with respect to the Senate and the Commission on Appointments, the speaker, with respect to the House of Representatives, and the respective chairmen of the Senate and the House electoral tribunals "to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations."(Without this provision, such acts would be tantamount to fund juggling, according to government audit rules.)

The other provision authorizes the same set of congressional officials "to formulate and implement the organizational structures of their respective offices, to fix and determine the salaries, allowances, and other benefits of their respective members, employees and consultants… and whenever public interest so requires, make adjustments and reorganization of positions in the regular personnel with the corresponding transfer of items of appropriations or create new ones in their respective offices…"

Although the two provisions have never been vetoed, they have always merited special mention as one of the "observations" in the president's veto message. Without fail, the president each year has had to affirm his or her trust that the leadership of Congress would "faithfully observe, particularly on the aspect of compensation, the letter and spirit of the constitutional principle of salary standardization which Congress itself enshrined as a state policy" and ensure that its operations are "circumscribed by the salary rates, allowable level of allowances and other benefits prescribed or authorized by law."

Indications are that Congress leaders pay little heed to this declaration of trust. According to some observers, part of the reason for this is because they are too busy trying to run a fractious House of Representatives.

The speaker himself has to find ways to please members of the House in order to remain in power. One legislator's chief of staff even says that one of the first perks a congressman gets is a "payoff" during the race for the speakership. In one previous contest, sums reached as high as P200,000 for every vote, discloses the legislative staff member.

And once the speaker is in place, more money begins pouring out of the so-called speaker's discretionary fund.

Sources of the fund are said to include items in the House budget, such as its savings, although the money can come from elsewhere. Drawn from it are sums for the Christmas and other bonuses of congressmen, as well as their monthly allowances, which supposedly vary in amount, depending on the legislator's closeness to the speaker.

Congressmen who do not belong to the ruling coalition and party-list representatives are said to receive P50,000 a month, while "favored" congressmen reportedly get double or even triple that.

As with the other money that comes their way in Congress, there is no need to liquidate any amount coming from the fund. This is even though Article 25 Section 6 of the Constitution provides that "discretionary funds appropriated for particular offices shall be disbursed only for public purposes to be supported by appropriate vouchers and subject to guidelines as may be prescribed by law."

The speaker's fund is nothing new. In the 1960s, its size was estimated to be equivalent to the total budget for the House of Representatives minus those for salaries and personnel. Today, it is believed to be roughly equal to the total budget for the House of Representatives minus those for salaries and personnel and regular expenses of its members and committees. Although the exact amount is hard to estimate, the fund could easily be in the hundreds of millions.

Aside from the monthly allowance, congressmen also receive a bonus from the speaker before the Christmas break. This ranges from P100,000 to P200,000. (Occasionally, legislators receive a Christmas bonus from Malacañang or a business tycoon.) Another bonus lands on their laps before they go into a long recess.

The idea, say legislators, is so they would have something to spend in their districts during the long vacation. A party-list representative says, "I accepted the regular Christmas gift and gave it to my constituents."

The party-list representative recalls that they were initially left out of the speaker's list in the 11th Congress and had to demand their inclusion among the beneficiaries of the allowances. Some succeeded in getting paid on a cumulative, retroactive basis, the legislator adds.

One young congressman says he takes what the speaker offers, but he says he had to do some soul-searching in the beginning. "What we have is an underground governance structure," he says. "Congress is largely a private-based sphere where you outsmart the system of laws. Gift giving validates the fact that nakisama ka (you tried to be with the group). Every congressman expects bonuses. You walk the tightrope daily. You have to know if you should succumb."

The representative justifies accepting money from the Speaker's discretionary fund, saying members of the House spend from 50 to 80 percent of their time in their districts. "I have a big overhead," he says, pointing out that he has a staff of three at his central office and even more in the district.

A chief of staff who has had various lawmakers as boss also talks of "constituents who look at congressmen as if these were bank on wheels, ATM machines." Fiesta time alone can be very expensive, he says, noting, "If you have 300 barangays, you give P5,000 per fiesta, that's P1.5 million a year. And even then they'd curse you and call you a skinflint."

Some of those who expend a lot of effort getting into "choice" congressional bodies also cite their need to fulfill their constituents' demands as their main motive for a committee seat.

Take Iloilo Rep. Augusto Syjuco, who chose to be the vice chairman of the subcommittee on agriculture of the committee on appropriations rather than chairman of the agriculture committee in the 12th Congress. Syjuco says the subcommittee on agriculture is powerful because it has influence in the 29 agencies of the Department of Agriculture. That means his constituents would be better served, he says.

"Sa 'yo dumadaan ang pera; binibigyan ka ng proyekto (The money goes through you, you get the projects)," he explains. "As vice chair, I could get about P200 million a year (in projects) for my district; as agriculture committee chair, I could bring home at most P100 million a year."

But many observers and House insiders say legislators are also enticed by the more personal benefits of congressional committees. According to several members of the House, a congressman can draw about P20,000 to 30,000 more for expenses each month as chairman of a committee. The chairman of the powerful appropriations committee is said to draw an even bigger amount.

The appropriations committee is one of the most contested bodies in the House. The others, says a two-term congressman, are the committees on ways and means, accounts, franchises, games and amusement, and transport and communication. Their attraction lies not only in the extra allowances of the chairmen - as well as the members - but also in the other perks, most of which are monetary in nature, too.

The committee on public works and the subcommittee on public works of the appropriations committee are on equal footing, though. Many congressmen strive to get into the committee or the subcommittee not only for the projects for their districts, but also for the contracts they can lay their hands on, says a chief of staff of one congressman. More than half of representatives are engaged in property development and real estate, and a tenth in construction. The contracts they get can only assure business for their firms.

Also coveted are slots in the committee on transportation and communication and the committee on games and amusement. Both screen applications for franchises, some of them involving millions of pesos.

It is no wonder then that P50,000 is sometimes not enough to lure congressmen to the session hall whenever an important bill is tabled for voting. Apparently preoccupied largely with local interests, few legislators show up to constitute a real quorum in plenary sessions. This has forced the speaker to occasionally resort to giving "appearance fees" to those who attend and stay long enough to be counted.

A quorum is needed to pass a bill or vote on a resolution. There is a quorum only if there is a majority of House members present, or a minimum of 115 congressmen. But Syjuco says, "We have the worst quorum problems in the House now. Sometimes they even list as present those who are not there. They are listed as present even when they had already left."

A potential lack of quorum is feared most by the House leadership when it is time to vote on important bills of national application, such as those on the budget, absentee voting, power reform, money laundering, and electoral reform. "To be credible," says the party-list representative, "these measures have to be passed with a real quorum."

Yet even with the promise of a P50,000-fee, many congressmen still fail to make it to the session hall. Says one legislator: "When the time for voting comes, bells start ringing like those for ice cream. Nagtatawag ng quorum. The ringing lasts for one or two hours."

The appearance fee, however, has been known to escalate in proportion to the urgency of the measure. In the 11th Congress, members openly talked about the P500,000 many of them got to show up during the voting on the Electric Power Industry Reform Act (Epira). The money supposedly came from the speaker's kitty as well, although it was sourced from another government agency. - With additional reporting by Avigail Olarte

The findings of the PCIJ's study of Congress are published in the book, The Rulemakers: How the Wealthy and Well-Born Dominate Congress.

An Expensive -and Unaccountable- Legislature

22-24 MARCH 2004
An Expensive -and Unaccountable- Legislature
by YVONNE T. CHUA
--------------------------------------------------------------------------------
Our latest series summarizes some of the key findings of a two-year-study conducted by the PCIJ on Philippine legislatures which are published in an upcoming book called, The Rulemakers: How the Wealthy and Well-Born Dominate Congress.
Part Two of the series describes how expensive Congress has become. In 2002, taxpayers spent nearly P1 million every month on each senator and close to P500,000 on each congressman. Moreover, even as most government agencies tightened their belts, Congress continues to legislate increases for itself. On the average, the upkeep of legislators has risen 10 percent every year since 1994. In 1999, this leaped to as high as a 60-percent increase in the House and a 72-percent increase in the Senate compared to the previous year's.
--------------------------------------------------------------------------------

IN 2002, taxpayers spent P939,472.47 every month on each senator and P429,601.79 on each congressman, based on published reports.

Shocking as these amounts may sound, they reflect only part of what Filipinos pay for their legislators' upkeep. Government auditors themselves say they are in the dark over how Congress spends most of its money, in part because there is hardly any paper trail to help them scrutinize how lawmakers use public funds.

What they do know is this: On the average, the upkeep of legislators has risen 10 percent every year since 1994. In 1999, this leaped to as high as a 60-percent increase in the House and a 72-percent increase in the Senate compared to the previous year's.

The hefty rise was due to the fact that lawmakers gave themselves a raise. Their basic salaries were upped that year. In addition, there were significant increases in the budget for foreign travel in both chambers as well as in local travel among congressmen.

Even as allocations for basic services such as education and public health have increased by only small increments in the last decade, Congress has used the power of the purse to put much more money into its own coffers.

The Rising Congress Budget

Since the early 1990s, it has legislated generous increases for its own budget, which includes not only the basic pay of the lawmakers and their staff, but also their travel expenses, allowances, expenses of various congressional bodies, as well as the salaries of officers such as the Senate president and speaker of the House and the budgets of their respective offices.

From 1994 to 2003, the General Appropriations Act or GAA, which sets the national budget for a fiscal year, increased annually by an average of seven percent. In comparison, the House budget had an 11-percent average yearly increase; that of the Senate posted an average 13-percent rise.

In 2002, when the total national budget shrank by 14 percent, Congress raised its own budget -by 10 percent in the House and four percent in the Senate.

Yet the increasing sums for the legislature have not been matched by a rise in the number of laws passed. Since the 11th Congress, the legislative mill has churned slower and slower. Congress's efficiency hit an all-time low in the years 2001 to 2004, when the legislature approved a measly 76 bills, compared to an average of 400 to 500 laws enacted in previous three-year congressional terms.

The slide began in the 11th Congress, although it is the 12th Congress that deserves the slacker's prize. It boasts of a record low not only in the number of laws approved, but also in terms of the total number of bills filed. In addition, the percentage of bills filed to the number of bills passed is a mere one percent, compared to the three percent chalked up by earlier legislatures.

Before martial law, the Constitution fixed the annual compensation of senators and congressmen at P7,200 each, unless otherwise provided by law. The amount included per diems and other allowances, excluding only traveling expenses to and from their districts of congressmen, and to and from their places of residence of senators, when attending sessions of Congress.

There is no similar provision in the 1987 Constitution. Instead, the charter leaves it to the law (meaning the lawmakers themselves) to determine the salaries of members of Congress. It only prohibits any increase from taking effect until after the full term of all members of the Senate and the House approving such a raise has expired.

There is, however, a provision in the constitution that is supposed to guarantee the public access to information regarding the other sums legislators get from the government. That is why every last quarter of each year, the Commission on Audit (COA) publishes an "itemized list of amounts paid to expenses incurred" for each senator and for each congressman in a leading daily.

But the published COA lists apparently fall short of real Congress figures. The lists from 1994 to 2002, for example, represent only 47 percent of the total House budget published in the GAA and 26 percent of the Senate budget. Where the rest of the budgets went is unclear, because COA provides no such details.

Various reports and legislators themselves talk about amounts congressmen receive as officers or chairs of committees and "allowances" from the speaker, as well as cash advances and reimbursements for official activities. But these items are nowhere in the list of expenses of the House.

In the Senate, amounts received by senators for similar duties are indistinguishable from other expenses such as advertising. According to a state auditor assigned to that chamber, these are lumped under the heading "Other MOE (maintenance and operating expenses)."

The auditor says though that the expenses of senators in the performance of their duties as officers and committee chairs are incorporated into COA's published itemized list of amounts paid to and expenses incurred for each legislator.

But this does not seem to be the case. For instance, the amounts that appear in the Senate records for the senators' settled MOOE (maintenance, operating, and other expenses), including foreign travel in 2002 were, on the average, 112 percent more than the figures published by COA. In short, the COA list reflected only about half the senators' MOOE that year, when the government paid a total of P77.5 million for the overseas travel of 173 congressmen and 11 senators.

COA's published list also showed that Senate President Franklin Drilon spent P6 million in MOOE that year. But the Senate's ledger showed he accounted for P21 million or 250 percent more than what COA released to the public. The COA list also did not state the Senate president's expenses for foreign travel in 2002, which added up to P1.3 million.

Moreover, Senate records pinpointed certain committees for which some senators drew additional MOOE. This means the discrepancy between the COA list and the Senate accounts was even bigger for these lawmakers.

Outgoing senator Ramon Revilla, for example, was given P21 million in additional MOOE in connection with his functions as chairman of the committee on labor, employment and human resources development. The late senator Renato Cayetano drew an extra P19 million as the Senate's representative to the Joint Congressional Power Commission of the two chambers of Congress.

In 1997, the Presidential Commission Against Graft and Corruption (PCAGC) observed that many items in the Congress budget "are not liquidated and audited in the same manner as expenses of public funds by all other government officials where proofs, documents, receipts, contracts, vouchers, and other pertinent documents required by law, rules and regulation are submitted to justify these expense before COA would pass them in audit."

"There is no mechanism," continued the PCAGC, "by which they (members of Congress) are made to account for funds they received in the same manner as all other government officials are periodically made to account for the funds entrusted to them, either through the regular or special audit of COA or by Congress during budget hearings or in the committee investigations conducted 'in aid of legislation.'"

As a general rule, the law demands that public officials submit receipts, contracts, and other documentary proof when they liquidate cash advances or ask to be reimbursed for expenses. There are exceptions, of course, among them the representation and transportation (local) allowances or RATA given to certain public officials - chief of division up - for official functions.

Given as direct payment to the official concerned or as a cash advance drawn by the cashier and supported by an approved payroll listing the officials entitled to RATA, these are considered "commutable," therefore nontaxable and not subject to liquidation. All COA demands is a certification that the public official spent the money for the purpose.

Another exception, although not as all-encompassing, are "extraordinary and miscellaneous expenses" authorized under the GAA for activities ranging from meetings, official entertainment, or public relations, to membership in government associations, contribution to charitable institutions, or office equipment and supplies. Unlike RATA, these expenses are supposed to be paid on a reimbursement basis.

COA does allow public officials to submit either receipts and other documents as proof of disbursement or a certification by the public official before he or she is reimbursed. The rule, however, applies only to national government agencies. And extraordinary and miscellaneous expenses cannot be used for salaries, wages, allowances, and intelligence and confidential expenses.

Intelligence and confidential funds are paid through a cash advance to the agency head. To pass in audit, the project officer is simply required to submit a liquidation voucher directly to the COA chairman. The rules allow the voucher to be supported only by a photocopy of the paid disbursement voucher of the cash advance, a certification of the agency head, and approval of the president (plus the Special Allotment Release Order and Allotment and Obligation Slip in the case of a national government agency). No receipts, contracts, or other proof are demanded.

Because the bulk of the published MOOE of representatives is consolidated with the basic pay in the payroll, they are no longer required to liquidate the lump sum of more than P200,000 released to each of them at the start of every month. They simply acknowledge receipt of the money. They do not even sign a certification the money was used for the purposes for which it was meant for, says a senior COA auditor.

Apparently to go around the liquidation and taxation requirements, the House avoids classifying MOOE as "cash advances" or "allowances," even if this is the way members of the chamber commonly see them. Instead, the House classifies them as "monthly allocations" or "outright expenses." As a result, congressmen get away with not having to submit any document to account for these funds.

They are not expected to submit a payroll of their district staff or report their functions, salaries, and withholding taxes. No one starts asking if they do not produce a report on the research their offices should supposedly undertake. There is no demand for them to produce the list of consultants they have hired, as well as the contracts they draw up for those whose services they need. As far as the current rules go, how the legislators spend their public affairs fund is their business, and their business alone.

In the Senate, maintenance and operating expenses or MOOE are released through separate vouchers. But the only supporting document that is often demanded is a certification signed by the senator or his chief of staff that the amount was spent in the discharge of official function.

The sums are based on a voucher signed by the senator or his chief of staff, supported by an approved expenditure program for the month and a certification by the senator concerned that the budget for the previous month had been spent. "Extraordinary and miscellaneous expenses" are also lumped together in the MOOE and released as cash advances, not on a reimbursement basis.

COA personnel acknowledge that the standard rule in all other government offices is to liquidate cash advances that are sourced from MOOE, including petty cash, as well as travel and field operating activity expenses. Except for salaries, they say, the rest of the money paid to a representative should fall under this rule. But since these objects of expenditures are disbursed as "monthly allocations" or "outright expenses," and not as cash advances, to a congressman, the government auditors say this frees the lawmaker from the obligation to liquidate the expenses.

An auditor who has been detailed at the House defends the setup: "The concept is, they (the congressmen) will spend the MOOE. How they operate their offices is up to them. They have the discretion because of the peculiar demands of their (district) office."

COA, says the auditor, presumes good faith on the part of the congressman and regularity in the use of his monthly allocations. He adds that state auditors can only assume congressmen will abide by government rules on hiring, procurement, travel, meetings, and activities or projects.

But a supervising auditor of COA insists that the arrangement at the House is not sanctioned at all by law. No law or COA circular authorizes a representative's expenses for supplies and other items for the maintenance of his or her office as "outright expenses" to be paid through payroll, he says. Other COA personnel, including auditors assigned to the House, admit as much. (The Senate, unlike the House, does not consider MOOE as "outright expenses.")

"The system is defective," laments the supervising auditor. "These are clear lapses in accounting and auditing procedures. How do we know if the congressman spent the money if he doesn't account for it? What if he pocketed it?"

"If you really want transparency, congressmen must liquidate all the money that is released to them," a veteran legislative officer remarks. "But they don't. Well, even if they did, we know a lot would be fabricated."

One auditor, though, is more forthright regarding why COA essentially leaves the House of Representatives alone. "The House is a political body," he says. "We don't want to get into trouble."

Many of his colleagues agree. For instance, they point out, while COA is a constitutional body, the appointment of its chairman needs to be confirmed by the 25-member Commission on Appointments consisting of legislators from both the House and the Senate.

COA also finds itself at the mercy of Congress when budget time comes: The legislature wields the power of the purse. Horsetrading becomes inevitable, especially in the assignment of auditors. One senior congressman, for example, threatened to bypass the COA chairman's appointment unless an auditor, who turned out to be a personal friend, was reinstated in a Metro Manila town. COA caved in.

Another auditor is even more blunt, saying, "We're scared of congressmen, we're scared of the system. Babalikan kami (They'll seek revenge). We don't want to tolerate corruption, but nothing happens to our reports. We just become subjects of harassment, and other people even make money out of our reports."

Auditors who question irregular or corrupt practices in the agency — which is part of their work - are often quickly reassigned. — With additional reporting by Avigail Olarte and Booma Cruz

The findings of the PCIJ's study of Congress are published in the book, The Rulemakers: How the Wealthy and Well-Born Dominate Congress.

How Representative Is Congress?

22-24 MARCH 2004
How Representative Is Congress?
by SHEILA S. CORONEL

--------------------------------------------------------------------------------
Our latest series summarizes some of the key findings of a two-year-study conducted by the PCIJ on Philippine legislatures which are published in an upcoming book called, The Rulemakers: How the Wealthy and Well-Born Dominate Congress.
The first part of the series deals with the composition of the legislature. We found that 18 years after the fall of Marcos, Congress has not become a more representative institution. Today?s legislators are richer now than ever before. While poverty levels since 1986 have remained at roughly between 30 to 40 percent of the population, lawmakers have become wealthier.

In 1992, the average net worth of congressmen was P8 million. By 2001, it was P28 million. In the Senate, the average net worth increased from P33 million in 1998 to P59 million in 2001. A quarter of all senators today have a net worth of above P100 million.

Today's legislators are also older and better educated and tend to stay in office longer than their predecessors. Moreover, the great majority of lawmakers come from political families. In the House of Representatives, two in every three members come from political families.
--------------------------------------------------------------------------------

EIGHTEEN years after the fall of Marcos, Congress is not becoming a more representative institution. In fact, today's legislators are richer now than ever before. While poverty levels since 1986 have remained at roughly between 30 and 40 percent of the population, lawmakers have become wealthier.

They are also older and better educated. As the results of a two-year PCIJ study of legislatures since 1898 show, members of the post-Marcos Congress tend to stay in office longer than their predecessors.

Moreover, most lawmakers come from political families, meaning that they have relatives who are currently holding or once held elective posts. In the House of Representatives, two of every three are members of political clans. The vast majority of these are second- and third-generation politicians with parents and grandparents who had been elected to public office.

In less than two months, Filipinos will be voting for a new set of legislators. Senatorial candidates have been campaigning since February. This week, they will be joined by those vying for seats in the House. If the results of previous elections are a guide, then the likelihood is that most of the legislators who will assume their seats in July would be so unlike the people who voted them to power.

The typical representative or senator cannot be more unlike the typical Filipino. The legislator is likely to be male, middle aged, and college educated, most likely with a degree in law. He has previously held a local government post and there is one chance in two that he is related to a former member of Congress.

He is also into business and has multiple income sources. He has property for rent, earns salary from a profession, and has investments in company shares. He is well off, with a net worth (most likely understated in his statement of assets) in millions of pesos. And the likelihood is that the longer he stays in Congress, the richer he becomes.

In 1962, only 27 percent of representatives were classified as upper class. In 1992, it was 44 percent. Over time, the assets of legislators have grown. In 1992, the average net worth of congressmen was P8 million. By 2001, it was P22 million. In the Senate, the average net worth increased from P33 million in 1998 to P59 million in 2001. A quarter of all senators today have a net worth of above P100 million.

The typical Filipino, meanwhile, is likely to be below 35, with a few years of high-school education, and an annual income of about P150,000 in 2000. The demographic profiles couldn't be more unmatched.

Legislators are Getting Richer

Five congresses — the Eighth to the 12th — have been constituted since the fall of Ferdinand Marcos in 1986. The legislators elected to these bodies have hardly been representative of those they represent. In that sense, they have not been different from the past, when members of Congress were drawn from a narrow elite in terms of property, education (since 1898, they have been trained mainly in law) and social standing.

There have been changes, though. There are now many more women in Congress than there have been in the past. In the current House, there are 40 women, about 18 percent of the body, compared to only one percent in 1946, six percent in 1965, and 11 percent in 1992.

Today's legislators are also better educated than their predecessors, with 27 percent of all representatives boasting of postgraduate degrees, compared to only 18 percent in 1965.

The sources of their wealth are more diverse, indicating that many more business interests are represented in Congress, which can no longer be described as "landlord-dominated" legislature. The caciques of old have been replaced by real-estate developers, bankers, stockbrokers, and assorted professionals and businesspeople.

The changes reflect the changes in the Philippine economy, with the decline of agriculture and extractive industries (logging, mining) and the increasing importance of manufacturing, trade, and services. The changes have been obvious since the 1960s, when new men from business and the professions were elected to the legislature.

The rise of these new legislators mirrored the increasing political assertiveness of new sections of the business elite and the upper professional class that emerged in the 1950s and 60s. That period saw the birth of a manufacturing sector that produced previously imported goods for the local market. While many of those who became part of the manufacturing capitalists were large landowners, there were also those from the professional middle class and local traders who joined the ranks of the new rich and then sought seats in Congress.

Philippine legislatures have been hospitable to the entry of the newly affluent. Their ranks have been open to the constant infusion of new blood. The post-Marcos Congress is even more diverse in composition than its predecessors. It includes, aside from the old landowning families that have been in legislatures for 100 years, also new entrepreneurs, especially those in construction, real estate, and services that emerged among the fastest-growing economic sectors in the late 1980s and 1990s; middle-class professionals, especially lawyers from leading law firms; and leaders of nongovernmental organizations.

The legislature also has local officials or government bureaucrats able to build a base in their districts even if they are not backed by old wealth. In addition, the halls of Congress have recently accommodated celebrities from the movies, the mass media, and sports.

The legislature has traditionally opened to its members a world of privilege that enables the enterprising among them to take advantage of moneymaking opportunities and to accumulate wealth. A Congress seat can be used as a passport to the land of dealmaking, allowing aspiring politicians entry to the bastions of great wealth and privilege. In this sense, the legislature can be said to be an agent of mobility, allowing talented aspirants from the lower and middle classes entry to the narrow corridors of power and the most exclusive enclaves of the very rich.

Such mobility, however, is still limited to a narrow range of Philippine society. For sure, the more occupationally diverse membership from the more modern sectors of business, the mass media, and civil society means a wider range of perspectives and interests than at any time in the past. The trend toward increasing diversification that was noted in the 1960s continues today.

Moreover, the entry of party-list representatives in the 11th and 12th Congress enlarged that range, as it gave representatives of marginalized social sectors seats in the legislature. Despite this, however, Congress remains a fortress of privilege, its gates open to the new and aspiring rich, but closed — except for some narrow openings — to the poor and powerless.

The route to Congress, for the most part, is still via local government posts. Although recently, some have taken a shortcut, either through the media or the movies, or inherited their posts directly from a relative facing the three-term limit, the usual route is still for prospective legislators, even those who come from political families, to vie for "lesser" elective posts.

This trend was evident from the start. Political office in the Philippines has always been hierarchical: Aspiring politicians went up the political ladder from local to national office, from the House to the Senate, and from the Senate to the presidency. The upheavals caused by martial law disrupted this flow. The formula no longer works for those aspiring for the Senate and the presidency. But the path from local office to the House remains well trodden, although it has been fast-tracked for many because of the three-term limit.

In the 12th House that assumed office in 2001, 138 representatives — 61 percent — had been in public office prior to their first election to a post-Marcos House. Fewer representatives now come from the executive branch. Most of them — 49 percent of all representatives or 81 percent of those who had held public posts — had been elected to local office.

This shows the importance of a local political base in winning a House seat. Political families have the edge, because they can mobilize local patronage and political networks for their electoral forays. The same is not true of the Senate, however, because name recognition is more important in that chamber, allowing celebrities from the media and the movies to win hands down in national races even if they don't have a base in their districts. There are fewer celebrities in the House, although that is changing.

The passing on of a legislative seat from one generation to another provides evidence of the caste-like structure of the legislative elite. Four in every ten representatives in all the post-Marcos Congresses had relatives in previous legislatures. A third had parents who were in public office.

These are unusually high percentages and are an important index of the extent of real "democratization" that has taken place. But they still show, though, that Congress is not closed to those who do not come from powerful families. The flipside of the equation — six in every 10 representatives are not related to former legislators and seven out of 10 do not have parents who were in public office — should not be overlooked.

Once in Congress, however, legislators tend to stay there. The pattern since 1946 is for the number of first-termers in the House to decrease as time goes by, as congressmen hang on to their seats, using the perks and the powers available to their office to perpetuate themselves in power. Conversely, the number of those with multiple terms increases with time.

The trend is evident in the post-Marcos House as well, where the turnover rates would have been faster, as shown in the steep decline in the number of first-termers from the Eighth to the 10th House. By the 10th Congress, only 17 percent of representatives were on their first term, compared to 72 percent in the Eighth House.

This rapid decline was stemmed by the constitutional prohibition on more than three consecutive terms. The impact of the ban is evident in the sudden rise to 60 percent of the number of first-termers in the 11th House, only to decline again when a new House came to power in 2001.

Taken altogether, however, the turnover rate in the post-Marcos Congress is slower than that in pre-martial law years, despite term limits. From 1946 to 1961, an average of 51 percent of all members of Congress were new. The average for all the five post-Edsa congresses is only 46 percent. It would seem that there is less mobility in the post-Edsa legislature.

Looking at the history of the Philippine legislatures from the 1898 Malolos Congress, it would seem that families, not parties, are their most enduring feature. Regimes come and go but the families remain. Political parties are formed and disbanded but the clans that make them up stay on.

Families survive wars, dictatorships, and uprisings. The most enduring political families are the best evidence of this: The Aquinos and Cojuangcos of Tarlac, the Osmeñas of Cebu, the Romualdezes of Leyte, and the Marcoses of Ilocos Norte, among others, have been in Philippine legislatures for four generations. Some families eventually go into decline after successive electoral defeats or the death of a powerful patriarch, but others, stronger and more resilient, hang on and flourish.

Data gathered for the PCIJ study show the persistence of political families since the fall of Marcos. The reality is still that politicians are elected largely by mobilizing their kinship networks and family assets (e.g. money, name recall, connections). Once in office, they pave the way for other relatives to be either appointed to the bureaucracy or elected to government posts. Within a few years, a newly elected legislator will likely have kin in local office, various government agencies, and state-owned corporations. Before long, the next generation takes over.

Two-thirds of the legislators in the post-Marcos Congress are members of political families. Of these, 70 percent are second and third-generation politicians. Nearly all of them also have multiple relatives in public office.

In the Eighth Congress, the first post-Marcos legislature, 61 percent or 122 of 198 representatives were from political clans. The proportion has remained pretty much the same since then, despite the entry of party-list representatives in the 11th and 12th House. In the 12th Congress, which was elected in 2001, 61 percent or 140 of 228 representatives came from political clans. In the 11th House, it was 62 percent. If the percentages are computed without the party-list representatives, however, the numbers increase to 65 percent for the 11th House and 66 percent for the 12th.

The figures indicate that term limits set by the 1987 Constitution, which banned representatives from seeking more than three consecutive terms, did not make a dent on clan power. Representatives who were elected in the Eighth House, for example, could sit only up to the 10th Congress. And yet, the number of political family members in the 11th House is not much different from the ones before it. In many cases, the clans simply fielded other family members to replace those who faced term limits. In other cases, rival clans merely took the place of the incumbent ones.
___________________________________________________________________________
The findings of the PCIJ's study of Congress are published in the book, The Rulemakers: How the Wealthy and Well-Born Dominate Congress.

Pork is Political, Not a Developmental Tool

6-7 SEPTEMBER 2004
Pork is Political, Not a Developmental Tool
by YVONNE T. CHUA and BOOMA B. CRUZ

--------------------------------------------------------------------------------
As the country debates the best ways of managing the current "fiscal crisis," the focus once again has shifted to pork-barrel funds, the discretionary funds allocated to members of Congress. While some legislators have agreed to a cut in their pork, many others defend pork and justify its usefulness as a developmental tool.
The PCIJ's investigation, however, proves otherwise. This two-part series says that pork is primarily a vote-getting vehicle and a source of political patronage. It is also a tool wielded by the executive to buy the support of Congress for the bills Malacañang wants passed. Pork, moreover, provides an opportunity for lawmakers to rake in bribes and commissions from contractors of pork-funded projects.

The series explains how pork allocations grew from P12.5 million per representative in 1990, when the practice of giving legislators pork barrel was reinstated, to the current P65 million per congressman. The first part of the series shows how pork is used to keep legislators in power. The second part examines more closely corruption in pork-funded projects.
--------------------------------------------------------------------------------

IN 2001, 108 congressmen gave P162 million of their Priority Development Assistance Fund (PDAF) — considered as the "main" pork-barrel allocation — for medical assistance to their constituents through the Department of Health and various government hospitals. The Philippine General Hospital, the country's biggest state hospital, received P30.8 million.

The amounts are significant, and this example is often used by legislators to show that despite criticism, pork-barrel funds are actually used for the public good. In a recent TV interview, Senator Manuel Villar cited the case of government hospitals, which he said would suffer from a proposed cut in pork.

It is true that pork subsidizes underfunded state hospitals. But it is also true that lawmakers often make sure that only their constituents benefit from their allocations. Thus, even while state hospitals are strapped of funds to buy equipment or medicines, they can seldom use pork unless it is to directly benefit a legislator's constituents even if these are not necessarily the ones who needed help the most.

This example illustrates the dilemmas of pork. As the country debates how to deal with the current "fiscal crisis," pork-barrel funds are again in the eye of the storm. Legislators insist that pork is a developmental tool and cutting it as a means to address the budget deficit would have a negative impact on the countryside, which has traditionally been neglected by the national government.

The reality, however, is that pork is primarily a vote-getting vehicle and a source of political patronage. It is a tool wielded by the executive to buy the support of Congress for the bills Malacañang wants passed. Pork also provides an opportunity for lawmakers to rake in bribes and commissions from contractors of pork-funded projects.

Pork barrel, or simply, pork, refers to appropriations and favors obtained by a representative for his or her district. These funds are discretionary in nature, meaning it is up to each congressman or senator to identify the projects that will be funded by their pork-barrel allocation and the beneficiaries of the spending. Senators now get pork-barrel allocations of P200 million each, while congressmen are allotted some P65 million each.

Pork allocations have grown over the years-they were only P12.5 million per representative when pork barrel was reinstituted in 1990-as congressional leaders wangled bigger and bigger amounts from the executive.

Members of Congress say that pork fills a gap, as it addresses the needs of areas that are too remote or of social sectors that are too powerless, their plight is not heeded by the national government. They cite the sorry state of government hospitals as a case in point.

It is true that congressmen set aside chunks of their pork money for health care, but these sums are sometimes not used at all — despite the long queues of indigent patients at public hospitals and the stark lack of medicines and equipment in most of these facilities. The beneficiaries of legislators' largesse may be needy, but they are also politically well-connected. Those who have no access to their congressmen do not qualify for help.

The pork appropriation that a government hospital gets is stipulated as a "subsidy for indigent patients in the district" of a congressman, and cannot be used for other purposes, including the purchase of medicine or equipment that nearly all government hospitals need badly.

A state auditor assigned to the DOH recalls how the director of a big Quezon City-based specialty hospital, seeing that no one had availed himself of a congressman's fund, tried to persuade the lawmaker to allow the hospital to give the unused pork to patients other than those from his district. The year was fast drawing to a close and the unused money would soon revert to the National Treasury. But the congressman refused and instead asked the hospital director to transfer the amount to a trust fund so he could still use it the following year. This time, it was the hospital director's turn to refuse.

Some congressmen have made it a point to instruct government hospitals to use their pork only for patients bearing a "political ID" issued by their offices, says the auditor. Often, though, state hospitals are informed which patients are entitled to the pork funds through a letter of recommendation personally signed by the legislator.

The letter, which identifies the beneficiary and specifies the amount he or she is entitled to, is either submitted by the patient or sent by the legislator's office to the hospital. It's not only the poor who get a slice of pork, though. Because the congressman can nominate anyone, even nonindigents sometimes get into the list of beneficiaries.

But legislators want to please as many people as possible, so they dispense medical assistance of as little as P2,000 to P5,000 per patient. Considering the high cost of medicine, patients — especially those with serious or chronic illnesses — soon learn the pittance barely helps them get better. In government hospitals, pharmacies are so inadequately stocked they do not even carry paracetamol and other basic medicines. Patients are advised to use their own money and buy the medicine from private drugstores. In instances like this, the pork they get serves little use.

Congressmen, however, rarely see anything wrong with their role as patrons of their districts and implementers of projects. "Take that away, ano pang gagawin namin (what else would we do)?" asks Compostela Rep. 'Way Kurat' Zamora. "Of course, there's the national budget, naming of streets, but saturated na rin ang laws. And I think without that (pork), no one will run."

The practice, however, inevitably leads to patronage, where the challenge to incumbent congressmen becomes twofold: to raise funds for projects for his district and to ensure that a patron-client relationship between him and his constituents is sustained. Congressmen always make sure their constituents know exactly who a project's sponsors are. In the case of infrastructure, billboards prominently naming them as proponents are mounted at the project sites. Many legislators also have their names printed on medical kits or textbooks, or painted on service vehicles.

"We're prisoners of the game," says a congressman. "People are kept dependent and poor because that's how you want to keep them. You don't empower them, so they stay poor. You just buy people with project money."

The political fates of representatives are tied more tightly to pork barrel compared to those of senators. Unlike senators who are elected to national office on the basis of national issues and name recall, congressmen are voted by constituents due to the projects and other benefits they deliver to their districts.

"You see this in nearly all campaigns," says a veteran legislative hand who has served as chief of staff of several representatives. "The mayor or governor endorses the congressional candidate and keeps reminding voters that the candidate is the most qualified because he or she can bring back projects from Manila. The local officials don't even bother with the person's ability to make laws."

Senate President Franklin Drilon himself acknowledges the importance of the pork barrel for someone aiming for a House seat. This is why senators appear to be more open to a pork cut than their colleagues in the Lower House.

"I can still win (in a place where I do not have a pork-barrel project) if I am a champion of this or a champion of that," says Drilon. "But to a congressman, blighted 'yan. Kahit anong isyu sa Maynila, even if he runs naked in a hotel, that's nothing as long as he brings a project to his district. You let a senator run naked in a hotel lobby, do you think he can win in the next election?"

Even party-list representatives concede that they need pork for political survival. "We can't fight pork because it's institutionalized," said one who served in the previous Congress. "Hinahanap 'yan ng tao (People look for it). What we can do is just to look for projects that address the needs of our constituents."

But a congressman's constituents expect him to deliver more than just jobs or basic infrastructure like artesian wells, farm-to-market roads, barangay or social halls, basketball courts, classrooms or schoolbuildings, and health centers. Writes Lynda Jumilla, a senior reporter assigned to Congress: "The role of provider extends to, or overlaps with, that of a sympathetic friend or patron. A congressman is often asked to stand as wedding sponsor or baptismal godfather, and to do the rounds of wakes and burials. In political parlance, this is referred to as KBL — kasal (wedding), binyag (baptism), libing (burial). In most cases, the congressman is even expected to shoulder some of the expenses — a wedding or baptismal reception here, a coffin or a tomb there."

Assuming the role of patron thus entails a lot of money, and many legislators have conveniently parlayed their pork barrel into a steady source of funding for their patronage machine. "Ordinary people consider the congressman as the 'DSWD' — if someone is sick or dies, they run to him," a legislative officer says, likening lawmakers to the Department of Social Welfare and Development. "Some congressmen have limited means or nowhere to get the money for these extras so they put their pork in hospitals and save on out-of-pocket expenses except probably for the transportation."

There is, however, a limit on how pork barrel can be spent. Using public money for weddings and baptisms is definitely out of the question. The Commission on Audit (COA) also frowns on the use of pork to help defray the placement fees of constituents seeking jobs overseas.

COA, however, has no problem with pork being forked over for the sick, needy, or dead in a congressman's district. Thus, each year, the national government allows a substantial amount of pork barrel to be channeled to scholarships in state colleges and universities, subsidies to indigent patients in government hospitals, and funeral assistance to the poor.

Pork as a tool for political patronage, however, can extend as far as the executive branch. It is no accident, for instance, that the release of the allocations often coincides with the passage of a Palace-sponsored bill.

That pork funds have grown by leaps and bounds in the last decade can be traced to presidents in need of Congress support. The rise in pork was particularly notable during the Ramos administration, when the president and House Speaker Jose de Venecia Jr. used generous fund releases to convince congressmen to support Malacañang-initiated legislation. The Ramos era, in fact, became known as the "golden age of pork."

Through the years, though, congressmen have also taken care to look after their very own. More often than not, pork-barrel funds are funneled to projects in towns and cities where the lawmakers' own relatives have been elected to public office; thus, pork is a tool for building family power as well. COA has come across many instances where pork-funded projects ended up directly benefiting no less than the lawmaker or his or her relatives.

In Central Luzon, for example, money that ought to have gone to the purchase of a utility vehicle for rescue operations, disaster preparedness, and district operations of the provincial government was diverted instead to the purchase of a Nissan Patrol. The luxury vehicle also became the service vehicle of the congressman whose pork was used to buy it.

Down south, an engineering district never benefited from the motorcycle and photocopying machine acquired through a congresswoman's CDF supposedly for its use. These were transferred to the field office of the proponent right after their purchase.

But in the last three years, a new thinking on pork-funded projects and its capability to secure votes has emerged. As one congressman tells it, an increasing number of his colleagues now believe that more than government-funded projects, money spent to buy votes actually dictates their political fates. "At the start of the 1998 Congress, the talk was, what's your strategy, how are you going to win?" he says. "In 2001, there was no more talk of strategy. The question was, what's the going rate in your district?"

He says that in one of these tête-á-têtes, a congressman from an impoverished province claimed the going rate in his jurisdiction went as high as P1,500 to P3,000 per voter. "They don't just buy votes, they pay the antis so they will not vote," the legislator says.

Another congressman traces the irresistible lure of money to voters to the depths of poverty in the country. "During the final hour, the one who is going to give them P50, which they can use for their needs, is one they're going to vote for," he says. "What you did prior to that is glossed over. It is the immediacy of the need."

Vote buying as a tool to clinch an election victory is likely to change the way legislators use their pork barrel, says the legislator. "In our conversations, they say, 'you know, it's useless to have projects. Let's just save the money and then use it at the 11th hour… If you don't do that, when well-funded candidates come in, our projects will be forgotten. Don't count on utang na loob (debt of gratitude) from those you helped. They'll sell you out because it's the present that's important. Those projects, people don't see it as something they should thank you for personally.'"

A few months before the 2004 elections, a publicist of several members of the House estimated that more than half of all congressmen had not touched their pork for projects, saving it instead for reelection purposes. A legislator from Mindanao also describes politicians as having turned "desperate," with first-termers sweating the most in fear of losing their seats.

The problem with this new thinking is that the desperation among politicians can only breed and spread more desperation to the populace. As one lawmaker notes, "You have just one flashflood of money, you keep your people poor. It's like a time bomb and it's scary."



Part Two
Legislators Feed On Pork
by YVONNE T. CHUA and BOOMA B. CRUZ

IN THEORY and in law, the legislators' role in pork-barrel allocations remains limited to "consultation" to enable them to recommend priority projects. In practice, however, they have the final word on what projects should be funded.

The release of pork is based on the lawmakers' request to the Department of Budget Management (DBM), detailing the nature and location of the project they want, the implementing agency, and the funds required. This setup makes legislators the lords of pork-barrel funds. It also makes them natural magnets to contractors and suppliers who offer bribes so they can sell their goods and services.

No one knows exactly how much is lost to corruption in pork-funded projects. A long-time politician from the North who admits to accepting "small commissions" says that in a year, corruption in pork-barrel projects translates to about P12 billion in losses for the government.

In May 2002, Camarines Sur Rep. Rolando Andaya Jr. gave his own estimate of how much the government loses to wrongdoing. In a speech seeking to rally his colleagues' support for the procurement reform bill, Andaya, chairman of the House appropriations committee, said P21 billion or a fifth of the government's P104-billion procurement budget in 2001 went to the pockets of legislators, officials, and contractors alone.

The amount lost is about half of the 2002 budget of the Department of Public Works and Highways (DPWH), and bigger than the budgets of state universities and colleges (P16.8 billion), the Department of Transportation and Communication (P13.3 billion), and the Department of Health (P11.8 billion).

The procurement budget includes the pork barrel of senators and congressional representatives. Going by Andaya's estimate, about P4 billion or a fifth of the P20 billion allocated for pork this year was likely lost to corruption.

But this may be an understatement. In 1998, former finance and budget secretary Salvador Enriquez estimated that as much 45 percent of pork funds went to "commissions," particularly transactions involving medical supplies and educational materials. The kickbacks from infrastructure projects, which are traditionally more expensive, ran up to 30 percent of the total project cost, he said.

In 2001, Enriquez asserted that only about 60 percent of government funds goes to the implementation of development projects and activities. The balance lines the pockets of a "web of conspirators" that he said were "difficult to pinpoint." Following Enriquez's estimate, the bribes paid from pork funds this year would be in the range of P8 billion of P20 billion earmarked for pork.

One veteran legislator says that congressmen tend to be more tempted to accept commissions from pork-barrel projects than senators. That's because they have to worry about pleasing their constituents, he says.

"Contractors give me money, around five percent of the project cost, because they know I need it," says the congressman. "I don't demand, but I accept what they give me. I need it to help my constituents. This is common practice. It will be difficult to name a colleague who does not benefit from these projects."

As a rule, contractors are careful in dealing with senators. Senator Panfilo Lacson himself says many contractors have approached him to ask how big a cut he wants from his pork-barrel projects. But that may not have been a wise move, since Lacson, who has made a study of the pork-barrel system, has filed charges with the Ombudsman against people who, he says, had hands that were greasy with pork money.

In 2002, Lacson spent P147 million of his P150-million pork funds for projects that included building farm-to-market roads and supplying water to some towns. At least two of those projects, however, led him to file graft cases against two members of his own staff, as well as against a DPWH regional director, a district engineer, and a municipal mayor. According to Lacson, these people made money from the transactions, which made the government lose millions of pesos in the process.

Last year, the senator announced that he was giving up his P200-million pork barrel. He not only urged his colleagues at the Senate to do the same, but also called for the abolition of pork.

By his own estimates, Lacson says only less than half of the taxpayers' money actually goes to projects. He figures the breakdown of the kickbacks of the project proponents and implementers is something like this: 20 percent, or the lion's share, to the legislator who identified the project; 14 percent to the contractor; 10 percent to the district engineer and other DPWH officials; five to 10 percent to the governor or mayor; two percent to the barangay captain; and two percent goes to the Commission on Audit (COA) official who is supposed to be the watchdog of the people's money.

Even the billboards that advertise the projects and their proponents are overpriced, says Lacson.

A big-time contractor who handles public works projects of senators and congressmen confirms the continuing practice of legislators drawing kickbacks from pork. But he gives a different kickback breakdown: legislator, five to 10 percent; DPWH, five to 10 percent; DBM, one percent; COA, 0.5 percent. The contractor says the amounts have gone down slightly because the payment of VAT or valued added tax, a stipulation of the Bureau of Internal Revenue, has eaten into the usual share of legislators and DPWH personnel from pork. VAT accounts for 10 percent of the project cost.

A senator points to dredging, asphalt overlays, and farm-to-market roads as the most corruption-riddled infrastructure projects. "There is simply no way to monitor how well these are implemented," says the senator. "If they tell you they will dredge x cubic meters who will check where the hell that number of cubic meters went? The same with asphalt overlay. Whether it is one centimeter or 10 inches, nobody knows."

Another contractor adds that the public will never even know how many times a certain project has been approved for repair by how many agencies.

A COA insider confirms auditors partake of payoffs, but clarifies that the state auditing agency's total share is bigger than many assume. "Decisions (of auditors) are really for sale," says the insider. "You have the inspector who does the after-project report and gets 0.5 percent of the pork. You have the director who gives his opinion or approves the report. And you go up the ladder. For COA, that must be about 10 percent to 15 percent of the pork all in all. It's a small price to pay for politicians when you think of the possibility of going to court."

A 1998 PCIJ study showed that the biggest kickbacks of legislators come from the purchase of medical supplies and educational materials funded by the Countrywide Development Fund and the Congressional Initiative Allocation. With such purchases, grease money can take up from 40 to 65 percent of project cost. In comparison, commissions from infrastructure projects ranged from 12 percent to 20 percent.

Lawmakers get half of the cut as soon as the deal is struck; the balance, upon the issuance by the DBM of the Special Allotment Release Order (SARO) and/or the Notice of Cash Allocation (NCA). The SARO gives the implementing agency the authority to contract goods and services, while the NCA is an assurance that funds for the project are already available in the implementing agency's bank account.

Legislators, however, do not have a monopoly on the largesse from pork-barrel projects. One PCIJ study tracing the flow of pork, for instance, indicates that heads of implementing agencies get 10 to 12 percent of total project cost upon issuance of the SARO/NCA. Budget personnel are allotted one to two percent "to expedite the release" of funds to the implementing agency.

After the bidding and during the execution of projects by the contractors, local officials are given their share, too: seven percent to the mayor and three percent to the barangay captain, all paid after the issuance of the necessary permits.

During the Estrada administration, kickbacks from various items due to overprice, nondistribution, or cash conversion (in the case of National Food Authority or NFA rice for distribution) reached as high as 50 percent of total pork funding. A congressional staff member also recalls, "The rice subsidy was the favorite of many congressmen because they could give away just a few and then the rest they would then sell to rice traders. That became rampant until finally it was stopped because too many legislators could no longer explain where much of the rice was going."

Before the practice was halted, congressmen had poured P636.5 million of their pork into the rice subsidy programs in 2001. The amount accounted for 40 percent or the biggest share of the first tranche-amounting to P1.62 billion-of the Priority Development Assistance Fund or PDAF released that year.

But another congressional staff member says legislators found a way to go around this. Soon, the favorite pork project of wily lawmakers became funding "local government unit capability building"-which could be "almost anything," says the staff member. From 33 percent of the first tranche of the PDAF in 2001, the share of these types of projects leapt to 60 percent of the second tranche of the facility that very year.

Often, the project involved the distribution of educational materials, which, with the help of local government officials, could easily be faked. "The money could look used up even if there wasn't anything distributed," the congressional employee says. "All you need is the cooperation of the local executive."

This scheme remains popular. But lawmakers, contractors, and government regulators talk of different percentages and parameters, and give varying justifications for the practice.

Allegations of anomalies attending pork-barrel projects have prompted the DBM to limit the funds' use to areas that are less prone to corruption like scholarships and medical assistance. The DBM under the Arroyo administration has thus prohibited the use of pork funds to buy NFA rice, medicines, and textbooks and supplementary materials.

In 2003, Congress appended a special provision in the General Appropriations Act (GAA) allowing its members to use a maximum of 10 percent of their PDAF to procure rice and other basic commodities from the NFA. Such authority was included by President Arroyo among the items for conditional implementation in her veto message. Although spared from direct veto, the disbursement of funds to buy NFA rice required that appropriate guidelines first be drawn up.

Meanwhile, contractors say that while they are now wary of approaching Lacson, not all senators are above cutting deals with them. Unlike their colleagues in the House, members of the Senate are more discreet, say contractors and Senate insiders.

After a brief casual meeting, negotiations for commissions are coursed through coordinators, usually the senator's children, sibling, chief of staff, or project manager, says a contractor. Some congressmen adopt the same modus operandi.

The children of a former senator were said to be part of their father's multimillion-peso gravy train. According to some contractors, they committed projects and accepted the commissions on behalf of the senator. One contractor recalls advancing P5 million to the ex-senator's son for a P50-million project. When the project didn't push through, the contractor asked for either a refund of his "earnest money" or another project. The senator's son kept the money and the contractor was given another project.

The contractor says there are also cases where a legislator's close aide would cut a deal for himself without his boss's knowledge. The chief of staff of a senator known for turning down commissions, for example, once asked a contractor for a sports utility vehicle. But the aide failed to deliver the promised contract. The contractor, who had made sure the vehicle remained registered in his name, took back the P1.3-million car.

A Congress insider says some contractors are asked for commissions by the legislator's staff who assist them. In some instances, the contractors voluntary hand the staff "tips." And sometimes the liquidation of funds is padded. The insider says a few chiefs of staff band together and share tips on how to make commissions.

Contractors say they make up for the bribes by ensuring that these are covered by the overprice in project estimates. Some contractors also ignore project specifications to ensure bigger profit margins.

Once an understanding about a project is reached, the lawmaker instructs a member of his staff to write the head of the Senate finance committee or the House appropriations committee to identify the projects. The letter is forwarded to the DBM and the implementing agency.

For public works projects, the contractor then goes to the DPWH regional director with the legislator's letter. He proceeds to the engineering group, which prepares the specifications of the projects based on the contractor's requirement. After this, a bidding notice is announced through the newspapers and the contractor with the legislator's letter is expected to "win" the award.

Except for the amount of funds at the senators' disposal, transactions involving the pork barrel of congressmen follow almost the same pattern. Unlike in the Senate, though, suppliers and contractors openly trawl the Batasan complex, especially when the SAROs and NCAs are issued. Some of them seem to feel so at home at the House that they can be seen cooling their heels in the session hall or bantering with Congress personnel.

The same suppliers and contractors also visited the congressman's office carrying bulky bags or envelopes. Says the staffer: "You'd know right away if it was payoff time. The money would be inside an envelope or bag. Once the (supplier or contractor) came out, the envelope would be gone or the bag would suddenly look flat. And then we'd suddenly have free merienda."


Copyright © 2004 All rights reserved.
PHILIPPINE CENTER FOR INVESTIGATIVE JOURNALISM

Band of Brothers Finds Formidable Foes in Veteran's Bank

11-12 APRIL 2005
Band of Brothers Finds Formidable Foes in Veteran's Bank
by LUZ RIMBAN

--------------------------------------------------------------------------------
The PCIJ is releasing, in time for the 63rd anniversary of the Fall of Bataan last Saturday, a two-part series on the plunder of the Philippine Veterans Bank or PVB.
The two-part story shows how veterans are being deprived of their rightful benefits by the plunder of the PVB by its officers, the latest of whom is PVB director Romeo Roxas, who has been accused of illegal logging in Aurora.

The first part of the story details how Roxas, who allegedly faked papers showing he is the son of a World War II veteran, used his position in the bank to acquire controlling shares in the PVB and also to give his companies, including those accused of logging illegally in the Sierra Madre, preferential loans in the tens of millions of pesos.

It was also Roxas who made it possible for former Estrada crony and businessman William Gatchalian to acquire a dubious P500-million loan from PVB.
--------------------------------------------------------------------------------

WHEN THE country marked the 63rd anniversary of the Fall of Bataan last Saturday, Charlie Beloso was home, strapped to a wheelchair, and probably just watching the event on TV. But he often relives in his mind the year 1942, when he was among the thousands of brave, young Filipinos who refused to accept defeat in the face of a brutal enemy.

Sixty-three years ago, Beloso, a fresh college graduate, enlisted in the 62nd Infantry to fight the Japanese. When Bataan fell, his unit retreated but Beloso was ordered to return to Bukidnon to do intelligence work. He also took on a risky mission: to bomb his unit's ammunition and food supply in Dalirig town to prevent it from falling into enemy hands. The mission was accomplished, but Beloso had to run for his life, dodging a hail of bullets from a 25-caliber machine gun that trailed his every step.

Now 87 years old and suffering a variety of illnesses, Beloso is still fighting. In the twilight of his years, he faces a slew of adversaries — old age, disability, and what could be the most formidable foe he and other veterans have faced: a rich and powerful institution whose officials, the former soldiers and guerrillas say, have been committing abuses in the name of World War II veterans, many of whom are now impoverished.

That institution is the Philippine Veterans Bank (PVB), established by law as the repository of a $20-million trust fund intended for soldiers and guerillas who fought the Japanese. Beloso and his fellow veterans say, however, that some bank officials have been plundering the bank for themselves and their cronies, leaving those who fought valiantly in World War II out in the cold.

The veterans say rampant irregularities have gone on in the bank for decades. But the main object of these old soldiers' current campaign is PVB director Romeo Roxas, a lawyer and businessman who was recently in the news when a company he owned was accused of illegal logging in Quezon and Aurora provinces. Roxas, Beloso and several other veterans say, is not even the son of a World War II veteran — a charge Roxas has denied. The PVB's charter allows only veterans or their heirs to own stocks in the bank.

The charter also guarantees that all veterans, no matter their rank or assignment, would share equal status in the bank since no one can amass huge numbers of shares. Yet Roxas has managed to acquire at least 1.6 million shares, which now make him the bank's only major stockholder.

The original law put a limit of 20 shares per veteran. Over the years, this has risen with the issuance of various stock dividends. In an examination report, the Bangko Sentral noted the bank's ownership structure in 1998: "Ownership of the bank's shares of stock are limited to veterans, widows, orphans or compulsory heirs of a veteran who can own not more than thirty-six (36) shares of stock." By its 2001 examination report, the BSP was now saying, "Director Romeo G. Roxas is the only major stockholder owning 8.28 percent of the bank's common shares." Common shares give the stockholder voting rights in the bank.

Miguel Villa-Real, PVB assistant vice president for corporate communications, says that when the bank reopened in 1992 as a private corporation, it fell under the Corporation Code, General Banking Act and other related laws. "Under these laws, there are no limits as to what a single stockholder can own in terms of percentage share," Villa-Real says. But the law that reopened PVB actually recognizes and restores "the full force and legal effect" of the original charter.

At any rate, as the only major stockholder and director, Roxas holds sway over the affairs of the bank and the gold mine on which it sits. Aside from the veterans' trust fund, bank insiders say, the PVB handles deposits of government agencies like Philippine Health Insurance Corporation (PhilHealth), and is a trustee for P2 billion belonging to the pre-need company College Assurance Plan (CAP), now reportedly on the brink of bankruptcy.

Roxas's position in the bank has also enabled him to secure loans for his own companies as well as for other businessmen, veterans say. In January 2004, for instance, the PVB granted a P550 million loan to Metro Alliance Holdings and Equity, Inc, a firm whose majority owner is the Filipino-Chinese businessman William Gatchalian. Documents show that Metro Alliance failed to submit all the requirements needed to process its loan. At that time, too, another Gatchalian-owned company, Willex Plastics, had an unpaid loan from the PVB of P28 million. A small ordinary borrower with such a poor credit performance would have been immediately turned down.

Veterans believe Gatchalian got the loan through the help of Romeo Roxas. Listed as collateral in Gatchalian's loan application is real estate property in "Laurel, Cavite" belonging to Roxas's Green Square and Green Circle Properties. The loan remains unpaid to this day, a full year after it first fell due.

Meanwhile, Roxas himself has availed of DOSRI (directors, officers, stockholders, and related interests) loans as a bank director, borrowing more than what was allowable under banking rules. In a report in 1998, the Bangko Sentral ng Pilipinas (BSP) found that Roxas's Green Square Properties and Green Circle Property and Resources had outstanding loans with the PVB of P66.86 million. BSP examiners said this "exceeded the ceiling for an individual loan to DOSRI."

Roxas and PVB Chairman Emmanuel de Ocampo are also stockholders of a firm called Green Dreams Holdings, which was granted a P35-million loan, although the veterans say the value of its collateral was "bloated."

In a letter on February 16, 2000, then PVB President B. Teodoro Eusebio himself had reported to President Joseph Estrada about the rampant violations of BSP regulations being committed at the bank, including abuses made by directors like Roxas.

Eusebio wrote that he had met twice with BSP Governor Rafael Buenaventura to map out a plan to save the bank. "Following (Buenaventura's) advice," he said in the letter, "I have informed bank officials concerned to retire or resign to forestall a scandalous dismissal by the BSP Monetary Board. The Directors have been fined P34,500 each, and bank officials P69,000."

It seems the Monetary Board pressed on anyway. In a March 3, 2000 resolution, the Board required PVB directors and officials to sign a Memorandum of Understanding with the BSP. A BSP examination report released in 2001 also said, "The MOU includes the assignment of BSP Resident Examiners at the Bank to Monitor PVB's compliance with the MOU as well as check compliance with banking laws, rules and regulations, instructions issued by the Monetary Board, and observance of safe and sound banking practices."

Such action, however, apparently failed to discourage Roxas from availing himself of another DOSRI loan. In March 2001, he borrowed P68.1 million from the PVB for his Green Square Properties. When the loan became due a year later, it was transferred to sister company Green Circle, which agreed to assume the obligation.

But Villa-Real asserts in the bank's "official replies" to PCIJ's queries: "It is not true that Philippine Veterans Bank has given loans to Green Square Properties and Green Circle Properties. There are no outstanding loan balances from any of the said companies in our books."

The veterans know Roxas is an intimidating adversary. A graduate of the University of the Philippines College of Law, he is a member of the powerful and influential Sigma Rho Fraternity, whose members hold some of the most important positions in government. They include Ombudsman Simeon Marcelo, Senate President Franklin Drilon, and Supreme Court Justice Antonio Carpio.

Aside from his fraternity connections, Roxas has in the past boasted of support from the highest officials of the land. Roxas says his projects in Quezon and Aurora have had the blessings of then Presidents Fidel Ramos and Joseph Estrada, as well as the present chief executive, Gloria Macapagal Arroyo.

But despite having what seems like an invincible enemy and fighting what may seem like a lost cause, concerned World War II veterans are not giving up, and are confronting their foe on various fronts, a tactic they had employed in the 1940s.

Just last March 26, another 87-year-old wheelchair-bound veteran sought Roxas's disqualification from the bank in a suit filed with the Manila Regional Trial Court. The veteran, Auxencio Peñaranda, included in the case Roxas's fellow PVB directors who he says are condoning Roxas's actions.

Beloso himself has repeatedly written members of the House of Representatives and the Senate asking them to dig deeper into the alleged anomalies at the PVB. He has also filed plunder charges against PVB officials before the Office of the Ombudsman.

Philippine Veterans' Legion (PVL) officials have also written BSP's Buenaventura, asking him and members of the Monetary Board "to disqualify Atty. Romeo Galo Roxas, for the misrepresentation he made that enabled him to accumulate shares of stock of the bank that allows him substantial control over the affairs of the bank."

The veterans insist that Roxas has no right to own shares in the bank. Part of the PVB records is a thick listing drawn up in the 1960s of all soldiers and guerillas whose service in the war was recognized by the Philippine and U.S. governments. It took nearly six years, from 1963 to 1969, for the government to track down these veterans and award them or their heirs shares of stock.

Veterans say the name of Romeo Roxas's father Santiago was not on that list. Neither is it in the files of the Office of the Adjutant General (OTAG) of the Armed Forces of the Philippines in Camp Aguinaldo, the agency with the complete veterans list. A certification signed by Lt. Col. Narciso Erna, assistant adjutant general, dated January 3, 2005, says there is no record in the OTAG of Santiago Galang Roxas, Romeo Roxas's father.

"If the records do not list my father as a veteran and not an original stockholder of the Bank, it does not erase the historical fact that he was, indeed, a veteran," said Roxas in a Jan. 31, 2005 letter to Francisco 'Frank' Cedula, chairman of the Philippine Veterans' Legion. Roxas says his father was a food and supplies officer under Col. Wendell Fertig in Misamis Oriental during the war. "The responsible course of action to then take," said Roxas, "is to correct the records to conform to this unalterable fact."

Veterans say it is not that the records of Roxas's father are non-existent. Rather, they say, it is that Roxas appropriated the name and stock certificate number of another Santiago Roxas who he now claims to be his father.

In the suit he filed before the Manila RTC, veteran Peñaranda said the person recognized by the PVB is Santiago Roxas born in 1921. During the war, this Santiago Roxas was a sergeant in the Manila Barrion's Division, later issued Veteran's Bank Stock Certificate No. 412604, and whose name appears in the Master List of veterans. But records show that this Santiago Roxas hails from Meycauayan, Bulacan and was childless.

In the PVB database, Romeo Roxas is listed as compulsory heir and holder of common stock no. 412604. Yet veterans say his real father was born in 1899, was a former superintendent of the Bulacan School of Arts and Trades, and had 10 children, the ninth being Romeo.

In a letter to retired Judge Salvador de Guzman, who acts as PVL's counsel, Roxas says, "After the war, my father in 1947 went to Bulacan where he had an affair with another woman and thereafter kept a second family. Wary that he would be opening up himself to a charge of immorality for having an affair with another woman, he being a member of the civil service, he must have intentionally distorted his records in order to deflect this circumstance. This will explain the entry into the records of a Santiago Roxas from Mecauayan, Bulacan."

"In any case," he continues, "there are numerous instances where, due to clerical errors, the record of a veteran does not reflect his real and true circumstance and situation."

But veterans are puzzled that Roxas claimed veteran status for his father only years after the PVB came into being, and long after the bank had closed and then re-opened. Roxas and his siblings never appeared on the scene before 1990, when he was hired to help with the bank's rehabilitation. Only in 1993, when PVB reopened, and Roxas was already connected with the bank, did he begin saying he was a veteran's son.

The veterans have argued as well that the hiring of Roxas for P43 million in 1990 was illegal because the PVB was still closed at the time and thus had no legal personality to hire anyone. In a meeting of the House Committee on Veterans Affairs, Roxas explained, "It was not the bank who really retained my services. It was the Veterans Federation in their desire to reopen the bank. And I advanced all the expenses, Mr. Chairman, you know, necessary for the re-opening of the bank. For the record and all the veterans will affirm that. I was the one who financed the reopening single-handedly of the bank."

But a memorandum of agreement obtained by the PCIJ shows that de Ocampo had contracted Roxas in behalf of the bank. De Ocampo himself has also said that what financed the reopening of the bank was PVB's P750 million in cash and assets that were taken over by the BSP in 1985. Said the PVB chairman in a 2002 Senate hearing: "Before the bank closed, Your Honor, there was so much money deposited with the Central Bank and this was part of the money that earned interest so that there was now more than one billion to the credit of the Veterans' Bank. That is where we got the P750 million."

Indeed, despite its problematic history, the PVB continues to be flush with money. Aside from earnings that are supposed to benefit veterans, it also holds deposits of the national government and local government units. When the bank shut down in 1985, the national treasury still had some P1.4 billion in deposits with it. Senator Aquilino Pimentel has also said Cagayan de Oro had deposits with the bank that have yet to be accounted for.

Yet should the allegations of the veterans turn out to be true and Roxas is revealed as being a bogus soldier's son, it may be a case of history repeating itself. In his book Booty Capitalism: The Politics of Banking in the Philippines, Paul Hutchcroft writes that the Veterans' Bank "had most of its shares 'held in trust' by the veteran with all the bogus medals, Ferdinand Marcos."


Part Two
Banks Leaves Veterans in the Dark
by LUZ RIMBAN

--------------------------------------------------------------------------------
Part two of the series deals with the long history of plunder of the PVB dating back to the Marcos era and even before that. It weaves the story of the bank's plunder with that of the plight of veterans who until now, in the twilight of their years, are still fighting for what is rightfully theirs.
--------------------------------------------------------------------------------

LAST SATURDAY, members of the Philippine Veterans' Legion (PVL) broke tradition when they spent "Araw ng Kagitingan," or the Fall of Bataan in Fort Bonifacio. For years, these old men, easily recognizable by boat-shaped military caps, had traveled all the way to Mount Samat to hear the president speak of war and the veterans' forgotten exploits. But they are growing weaker, and physically and financially incapable of making the trip to the place that marked Filipino surrender to the Japanese. Besides, says PVL chairman Frank Cedula, the veterans feel "the government isn't doing anything to help" them, especially now that they are facing a different kind of enemy.

Sixty years ago, a grateful nation honored Filipino soldiers and guerillas for defending the country against Japanese invaders. Cedula himself says his personal story is the stuff war movies are made of, having been a 17-year-old reservist who endured seven stabs from a Japanese bayonet in the Sierra Madre mountains in 1941. For their heroism, the Philippine and U.S. governments promised them, their widows and orphans financial compensation and other rewards.

It took ages before many of those promises came true; some remain unfulfilled. What did materialize early on was the creation of a trust fund for World War II veterans and their heirs that would come from the $20 million payment by Japan for the losses and damage it inflicted on the Philippines. Known as the reparations fund, the money was given in 1956. It eventually went into the creation of the Philippine Veterans Bank (PVB), whose stockholders were supposed to be the veterans and their heirs.

To the veterans, the bank is the most tangible tribute of the nation's gratitude, a financial monument to their service during the war, an edifice of honor built in their name. For all that, though, the veterans and their heirs remain mere titular stockholders of PVB, with little say in the running of the bank. In truth, they also know little about the bank's operations, as well as that of its affiliates, largely because these suffer from a lack of accountability and transparency.

This has made it possible for politicians, their cronies and bank directors to treat the PVB as their personal piggy bank, dipping their fingers into its coffers without much fear of getting caught. Worse, veterans say that one of their own, who eventually became bank chairman, seems to have failed to watch out for them. At the very least, they fear he let others abuse the bank's considerable holdings — as well as those of related institutions.

The PVB had been designated as a depository of government funds. Thus, the bank has been holding money belonging to government agencies and local governments; the Philippine Health Insurance Corporation (Philhealth) is one of those currently with huge deposits at the PVB. In addition, the bank holds some P2 billion in trust for the pre-need company College Assurance Plan (CAP).

Such holdings help justify the generous P650,000 that PVB Chairman Emmanuel de Ocampo gets each month in compensation for running the bank, an amount de Ocampo admitted to receiving in a Senate hearing in 2002. De Ocampo also described the work he was doing to merit such a salary: "I had to do some marketing, I have to do some management, I have to help, Your Honor. And besides, the P650,000 includes expenses in the board which I have to sign as chairman."

But veterans say that for the huge salary he gets, de Ocampo has failed to protect their interests at the PVB. They cite the fact that de Ocampo — himself a war veteran who retired a colonel — was already a bank director prior to its closure in 1985, when cronies of then President Ferdinand Marcos, like Herminio Disini, were running away with the bank's money. Behest loans to such Marcos friends led to the bank's closure.

Nothing much changed when the bank was rehabilitated and then reopened in 1992. The plunder continued, even after the Bangko Sentral repeatedly warned bank officials to stop abusing their powers and privileges. In a February 16, 2000 letter to then President Joseph Estrada, then PVB President B. Teodoro Eusebio wrote, "Many…violations of BSP (Bangko Sentral ng Pilipinas) regulations, diversion of bank's income to personal accounts, dishonesty and inefficiency have been discovered." Eusebio pledged to "clean the bank" but found himself out of the PVB presidency not long after. At that time, the directors of the bank included Estrada's sister, Pilarica Ejercito.

Veterans say that among those who are currently taking advantage of the bank's assets is a director who allegedly falsified his credentials as a veteran's son to get himself into the PVB and to secure huge loans for his companies. Last year the bank hastily granted a P550-million loan to a company owned by a Filipino-Chinese businessman with close ties to presidents past and present, even if the firm failed to comply with the requirements. The loan remains unpaid a year after it fell due.

Veterans trace part of the problem to de Ocampo and his all-encompassing financial and political power over the bank, as well as over related organizations that control it. Aside from being PVB chairman, de Ocampo also heads the Veterans Federation of the Philippines (VFP) and the Board of Trustees of the Veterans of World War II. A founding member of the Hunters' ROTC, de Ocampo took part in daring guerilla actions during the war. One of these was the raid on the Bilibid prisons in Muntinlupa in 1943 to free Filipino prisoners of war. De Ocampo was then head of the 47th Regiment.

His fellow veterans now fear he has looked the other way as other raids have gone on, this time at PVB and its affiliates. De Ocampo was unavailable for interview, but Miguel Villa-Real, the bank's assistant vice president for corporate communications, says that contrary to his fellow veterans' belief, de Ocampo has been active in pursuing the cause of veterans at the bank. De Ocampo helped press for the increase in the veterans' monthly pension from P1,000 to the present P5,000, says Villa-Real. He also says de Ocampo's being a key figure in the bank's reopening in 1985 is a major contribution to the veterans' cause.

Yet it has certainly not helped de Ocampo any that the PVB, the VFP and the Board of Trustees all suffer from the lack of transparency even as all three sit on a huge amount of cash. For instance, the PVB, which was initially meant to be a public corporation under the defense secretary's supervision and control, is a private bank accepting government deposits and exempt from transparency and scrutiny.

Veterans say they also have no idea how money given to it is handled by the Board of Trustees, an entity established by Republic Act 3518, the law that created the PVB. The Board was designated as custodian of 20 percent of the PVB's earnings, an amount that was supposed to be made "available for 'grants-in-aid' to veterans, their widows, orphans or compulsory heirs, for educational, social, charitable and rehabilitation purposes, to organizations doing service for the veterans." The composition of the Board, the law said, was to be determined by the Supreme Council of the VFP.

Created by another law in 1956, the VFP is an umbrella group of various veterans' organizations. These include not only World War II groups but also those made up of former soldiers who took part in the Korean War in 1950. Its cash income is collected from the veterans' pension, automatically deducted by the PVAO. In the past few years, the VFP has been getting one percent from each veteran's annual pension, or P500 per veteran a year, supposedly for its operations. Many say they were not consulted when the VFP and the PVAO agreed upon these deductions. This is why Philippine Veterans' Legion national adjutant Manuel Reyes has argued that veterans could get back that P500 collected from them yearly, provided they formally request the PVAO in writing to stop the deductions.

The VFP is estimated to be collecting a total of about P50 million annually, including the veterans' pension deductions. But its books have never been scrutinized by the Commission on Audit (COA).

Here actually lies a problem, and a divergence of attitude among government agencies toward the PVB and the VFP: The Supreme Court, in a labor case involving former PVB employees, maintained that the PVB is a private entity because it is owned by World War II veterans and not by the government. The Department of National Defense (DND), meanwhile, cites the original law that put the bank and the VFP under the supervision and control of the defense secretary. In fact, when Charlie Beloso, chairman of the Crusade to Reform Veterans' Organizations (CREVO) and a wartime soldier who fought under war hero Macario Peralta, filed plunder charges against the PVB officials in 2002, the DND legal department endorsed the suit to the Ombudsman for the military, because it considered the bank's officers public officials.

The COA, for its part, maintains that there is no government money in the VFP, hence it cannot be audited. Yet the law that created it clearly called it a public corporation. Besides, says a DND official, there are several pieces of property belonging to veterans and under the control of the Foundation, for which the VFP refuses to pay taxes because it has cited its being a government entity.

And then there is the VFP's disqualification from the party-list election because it was an "adjunct of the government." In 2001, the VFP fielded two candidates in the House of Representatives who won. Beloso had also run in the same race, under a party called the Veteran Care Organization. But the VFP sought his disqualification, because it said the VFP was the "only veterans' organization in the Philippines." Beloso countersued, seeking the VFP candidates' disqualification. He argued that the VFP is a government corporation and cited the law saying the "VFP shall be non-sectarian and non-political." The Commission on Elections sided with him, disqualifying VFP's candidates.

More than its affiliates, though, it is the Philippine Veterans' Bank that preoccupies the minds of those who fought in World War II, because of the meaning it has for them. The bank is often the subject of discussion among members of Cedula's Philippine Veterans' Legion, which is composed of soldiers and guerillas that signed up with the USAFFE (United States Armed Forces in the Far East).

The Legion meets regularly at the old Philippine Veterans' Affairs Office (PVAO) compound in Arroceros, Manila. But its meetings are now fewer and far between, because the members are getting too old or are too ill to make the trip to the old PVAO. They fear there might be one member less every meeting, either because of death or illness. Earlier this year, Legion members put up a sign on a wall at the PVL office that reads: "This is our last hurrah (probably)."

Indeed, moving about is a taxing and tiring activity for many veterans. Mostly in their 80s, Legion officials are just ghosts of the young men they were in the 1940s, when their able bodies could still take a stab from a bayonet. Cedula, who endured five days of pain, thirst and starvation before fellow Filipinos found him bleeding from his stab wounds more than half a century ago, is an exception, and is still quite sprightly at age 82.

Most veterans are like Miguel Marcos, who signed up as a USAFFE volunteer in 1941 and saw action as a guerilla in 1942, along with Cedula. Marcos was a tall high school student when the war broke out. Now he is thin, gaunt and walks slowly, with a stoop. But he still takes public transportation to his home in Valenzuela City.

There is also Manuel Reyes, another former guerilla and now the Legion's director for Luzon. Reyes's eyesight is failing, and he needs a magnifying glass to read the papers and readings that other veterans share with him.

Medical assistance is what these veterans need most now. In fact, the PVL has been trying to scrape up funds to build the Angel Suarez Convalescent Home, where they hope members can take refuge in their old age. Angel Suarez was a guerilla and former PVL leader. A notice at the PVL office in Makati says that the convalescent home will rise on that site, but there is hardly any indication of that happening anytime soon. By the time it does, the veterans may no longer be around to use it.

Beloso says World War II veterans are an endangered species. Based on PVAO statistics, they are dying at the rate of 20 a day. If only 5,000 members of the USAFFE and 17,000 recognized guerillas remain, Cedula says, that makes some 22,000 World War II veterans still living. But at the rate they are dying, they might all be gone in four years.

De Ocampo himself is in his 80s. But unlike him, many of his fellow veterans live in poverty, says Braulio Bumanglag whose own father fought as a guerilla in Isabela during the war, and who counts himself among the veterans' sons and daughters supporting their cause. That is why he, Beloso, Cedula and the rest of those in various veterans' groups are fuming over how they say bank officials have been enriching themselves.

For sure, the niggardly P80 cash dividend check each veteran gets annually as a PVB stockholder barely covers transportation when they claim pension checks, or apply for medical assistance, which at their age is their most pressing concern.

Villa-Real says, however, that the veterans can avail of free medical and dental care at the VFP Outpatient Center in Taguig that gets support from the bank. Also among the bank's "substantial assistance to World War II veterans," says Villa-Real, are pension loans of P24,000, payable in 12 months, or P40,000, payable in nine months, at interest rates ranging from nine to 12 percent. In addition, veterans can maintain a passbook account with only P100, and a minimum balance of P500 to earn interest.

Whenever it is time for the veterans to collect their pension checks, Villa-Real says, "Oplan Beterano" kicks into gear. This is when bank provides tents for shade, brings out chairs and serves water and biscuits to the former soldiers. Portable toilets are set up and an ambulance is put on standby. Villa-Real says "Oplan Beterano" was named the joint winner in the customer service category in the 2004 International Asian Banking Awards.

But perhaps the bank and the VFP should not expect any award from the veterans, who have grown disillusioned over what they had perceived as the reward for their bravery in war. CREVO's Beloso has even been writing members of Congress and the media to express his outrage that the Federation has somehow managed to skirt election laws.

In the last elections, another party using similar initials and affiliated with the Federation fielded a candidate and won. The Veterans Freedom Party is now represented in Congress by Ernesto Gidaya, former chairman of the PVAO. Said Beloso in a statement: "The Veterans Freedom Party was organized only sixteen days and not one full year before the date set to apply for accreditation under the Party List System. This act of the Veterans Federation Party is a gross and flagrant violation of the Party List Law."

Many of the men like Beloso who once defended the country against the Japanese feel that no one seems to be listening to them anymore, however hard they scream. Although they are willing to fight against what could be their last adversary, they say they are fast being sapped of the little strength they have left — and running out of time.

Major Players Eludes Government 's Anti-logging Drive in Aurora

31 JANUARY - 1 FEBRUARY 2005
Major Players Eludes Government 's Anti-logging Drive in Aurora
by LUZ RIMBAN

--------------------------------------------------------------------------------
As the debate on logging heats up, the PCIJ is releasing a two-part article that shows how difficult it is for the government to cut down on "illegal loggers." This report tells the story of two big-time loggers in Aurora and Quezon, provinces recently devastated by floods and mudslides linked to deforestation.
The first part of the report reveals that DENR Secretary Michael Defensor recently stood as ninong to a member of a wealthy family with logging operations in Aurora. The DENR, during Secretary Gozun's time, suspended the logging operations of that family. But Defensor ordered their resumption when he came into office.

The report reveals how legal loggers have violated the terms of their licenses and agreements with the government and are cutting into huge swathes of forests beyond their concession areas; they are therefore logging illegally. But they have not been included in the government's anti-illegal logging campaign. Instead, the campaign is directed at medium-sized local culprits who should have been identified, stopped and penalized long ago. As a result, the campaign is turning out to be a quick fix largely made for media mileage, than an actual long-term solution to a festering problem.
--------------------------------------------------------------------------------

AT A wedding of a wealthy Filipino-Chinese family late last year, the bride and the groom became the privileged godchildren of a high government official who was one of their many sponsors. The event would have passed unnoticed, except that the padrino was Environment Secretary Michael Defensor and the family involved owned a company that had its tree-harvesting operations suspended by Defensor's immediate predecessor at the Department of Environment and Natural Resources (DENR).

The suspension was imposed on Toplite Lumber Corporation, owned by the Chua family, in 2003, after an investigation revealed that it had been cutting trees beyond its designated area. Earlier, Toplite had been granted an Integrated Forestry Management Agreement (IFMA), with a permit to cut trees on 8,000 hectares of land in Aurora province.

No action had been taken on Toplite's appeal for a lifting of the suspension order until the time of Defensor who, after he became DENR chief last September, had agreed to stand godfather at the wedding. Sometime after the Chua nuptial, a disaster that was later linked to logging hit Aurora and its neighboring provinces, leaving towns buried in mud, hundreds of thousands of people homeless, and some 1,500 people either dead or missing.

Toplite is one of only five firms holding timber and forestry permits in Aurora. It has appeared in environmental groups' lists of alleged violators of forestry laws. Yet it has so far escaped investigation for its complicity in the recent tragedy, which many people, including government officials, have blamed on "illegal logging."

DENR veterans say the lack of official interest in Toplite does not surprise them. Wood is big business, after all, and lumber and logging families have for decades tried to establish more than just formal ties with politicians and bureaucrats who can open the gates to the country's vast forest land. The perception, at least within the DENR, is that such ties come in handy whenever the department decides to implement rules by the book, or when government decides to crack down on errant loggers-something that seems to happen seasonally and selectively, but usually after a disaster and a significant loss of lives.

In the current anti-illegal logging campaign, for example, Defensor has so far zeroed in mostly on those found in possession of "hot logs" or illegally cut trees, mostly medium-sized local perpetrators who lack the permits required for logging. In reality, however, the violators include big well-connected companies with government-approved operations covering thousands of hectares of forestland or wealthy families who use valid permits to cut trees to log in areas they are not supposed to touch.

By definition of the Forestry Management Bureau, an illegal logger is anyone who cuts and harvests trees in violation of forestry laws, rules and regulations. This then includes those who may hold legal concessions to cut trees but violate the terms and conditions of their tree-cutting permits.

DENR bureaucrats say this was exactly why Toplite's harvesting activities were suspended almost two years ago. A team of foresters from Manila and the regional office had found the company to have committed various violations, including the cutting of trees beyond its borders in Dipaculao town, Aurora, encroaching on land that was already part of neighboring Quirino province.

The team even recommended that the DENR consider the "eventual cancellation of the Industrial Forest Management Agreement (IFMA) of Toplite" which had been issued just months earlier by then Secretary Elisea Gozun's own predecessor at the DENR, Heherson Alvarez. The IFMA is an agreement between the government and private entities allowed to exclusively "develop, manage, protect and utilize" a specific piece of "forest land of the public domain" for a period of 25 years (renewable for another 25). Under it, the government and the private company or individuals agree to share the fruits of the land.

DENR insiders say that although the foresters' report put Toplite in an unflattering light, the company later found support higher up in the bureaucracy. In August 2004, a memorandum to Gozun signed by one DENR undersecretary, one assistant secretary and two directors disputed the foresters' findings, and even reproached them for commenting on matters that were supposedly outside their area of concern. The four officials were soft on Toplite, and yet played safe. "We find no serious ground that would warrant the cancellation of IFMA 2002-02...In the same vein, we find no reason to lift outright the order suspending the harvesting operations of Toplite," they said.

The officials said Toplite's suspension could be lifted after a review of its Comprehensive Development and Management Plan or CDMP. Any IFMA should be based on such a plan, which is drawn for the area approved by the DENR.

A DENR insider, though, says Gozun sat on the officials' memo and decided to leave the matter for her successor, which turned out to be Defensor, to resolve.

All this time, the company had continued cutting trees since only its harvesting operations had been suspended. Toplite owner Belen Chua, however, says the firm decided to move away from the area near Quirino province, which she describes as a complicated boundary dispute. Chua adds that they complied with the requirements for a lifting of the suspension, including revising the company's CDMP.

"Before Gozun left, we fulfilled all the requirements," says Chua. "She just didn't want to sign it because it would appear to be a midnight deal."

She denies that her company is logging illegally. Although Toplite has been in the wood-processing business for the past 18 years, Chua says that it was only three years ago that her family decided to cut and harvest logs themselves in Dipaculao town in Aurora.

Chua notes that Toplite has provided employment to some 100 local residents since it started operations in 2002. "Kailangan ng mga probinsya 'yan (Those provinces need the jobs)," she says, pointing out that provinces like Aurora are among the poorest in the country. Otherwise, Chua says, local residents resort to theft and crime, including illegal logging.

Chua says Toplite is being dragged unjustly into the issue of illegal logging, and that the crackdown has adversely affected the wood-and-lumber business. Because of the nationwide suspension of cutting permits ordered recently by President Gloria Macapagal-Arroyo, wood has been harder to come by. Chua reveals that lumber is now 30 percent more expensive, and the illegal loggers who defy the president's orders have been selling their produce for as much as P32 per board feet when it used to be just P26. Prior to the suspension on cutting, lumber cost P18 per board feet. According to Chua, foreign firms from countries like Malaysia and Indonesia are the ones now reaping the benefits of a dearth of local wood, and are stepping up lumber exports to the Philippines to fill the vacuum.

Chua denies reaping benefits from any ties with any official; she says that Defensor was not present at the wedding that had taken place before the most recent tragedy traced to logging. But the environment secretary himself admits it, and even explains that he stood as ninong there because one of the Chua sisters, Pauline, is his neighbor at an exclusive village in Quezon City.

He says, however, that there was no wedding gift from the DENR. "Toplite was never allowed to operate," Defensor says.

Still, the situation has improved for Toplite under his watch. His subordinates argued for the full resumption of Toplite's activities. Regional officials recommended, as a prerequisite to the lifting of the suspension, approval of Toplite's Comprehensive Development and Management Plan for its IFMA area.

Defensor admits having signed the CDMP but says he withheld approval on the number of trees — called allowable cut — the company is authorized. As far as he is concerned, though, the issue is "moot and academic," since the president has imposed a suspension on the permits to cut trees all over the country.

Chua, for her part, says that Toplite was able to secure a lifting of the suspension on harvesting activities, but that such operations are now at a standstill. She also says her company has stopped cutting trees as well, in compliance with the president's order.

In theory, holders of timber and forestry permits who violate the terms of their permits are supposed to be the easiest to catch. This is because, Defensor says, "they have clear agreements with the government, and definite areas of operations." Besides, they are supposed to follow definite procedures when obtaining such permits.

But DENR officials are not always alert for such violations, and some even help logging companies commit these.

In early 2003, the same team of foresters who discovered the violations on Toplite's boundaries had also recommended the filing of formal charges against the regional, provincial and community environment officers who oversaw Toplite's IFMA application. The foresters said that for failing to fulfill their duties, these officials became responsible for "rampant illegal logging."

Apparently, these local and regional environment officers had either missed or turned a blind eye on Toplite's failure to hold consultations with the community as required by law. A public meeting on the Toplite IFMA was held in Barangay Dinadiawan, Dipaculao town only on April 29, 2003, several months after IFMA had already been approved by Secretary Alvarez.

The minutes of that meeting show local leaders asking environment officials why the application of Toplite was approved without public consultation. The provincial environment officer's response: "There were resolutions passed by barangay officials… and the municipal government of Dipaculao showing support to the application (of Toplite). As duly elected officials they have the right to decide regarding the issue and this was the basis used by the DENR in approving the IFMA application of Toplite."

The foresters, however, discovered that the resolutions from the three barangay councils concerned appeared to be identical in number and the wording. "The team concluded that DENR employees together with Toplite Lumber prepared them," the foresters said in their report. "They had with them the prepared resolutions when they went around and consulted the barangay council members and got the respective signatures regarding the endorsement of the LGUs (local government units) for the application of Toplite for IFMA, which should not be the case."

Toplite's Belen Chua insists, "We have complied with the conditions of our IFMA." This includes reforesting some parts of her company's logging area. With cutting activities suspended, she says her company is keeping itself busy planting gemelina trees, whose wood is popular among furniture makers.


Part Two
This Developer Burns Money and Cut Trees
by LUZ RIMBAN

--------------------------------------------------------------------------------
As the debate on logging heats up, the PCIJ is releasing a two-part article that shows how difficult it is for the government to cut down on "illegal loggers." This report tells the story of two big-time loggers in Aurora and Quezon, provinces recently devastated by floods and mudslides linked to deforestation.
The second part of the report tells the story of another politically well-connected logger in Aurora, Romeo Roxas, a banker who parlayed his connections to obtain a logging permit in the areas most severely affected by last year's flooding.
--------------------------------------------------------------------------------

OF ALL the companies cutting trees in the Quezon and Aurora provinces, Green Circle Properties and Resources Inc. (GCPRI) stands out. For one, GCPRI is not a wood-based company. For another, its president Romeo Roxas burns money literally.

At public meetings, Roxas shocks crowds of peasants, environment activists, community leaders and local government officials each time he sets fire to crisp cash, sometimes a P50 bill, other times bigger denominations. It's just to make a point, and the point is, according to those who've heard him say it, is this: "It's easy to make money, and easy to find funding for development projects. Money is not a problem."

Considering that Roxas is also a director of the Philippine Veterans Bank, it's obvious where he's coming from. Indeed, he does not seem to run out of funds for a variety of enterprises that range from real estate and construction to banking. He could very well have a green thumb when it comes to business, because his companies are all lushly named: Green Circle, Green Square, Green Dreams and Green Earth.

Perhaps the biggest of all his businesses is Green Circle, which has a Special Private Land Timber License (SPLTL) covering 28,000 hectares in Aurora and Quezon, an area much bigger than Quezon City and bigger even than Batanes. It is the biggest privately owned land in what Roxas has called the country's "wild, wild east." Green Circle's timber area is spread out over the towns of Dingalan, Aurora and General Nakar, Quezon, and is one of only five timber license holders in Aurora province.

An SPLTL is just like a timber license agreement but involves private land, alienable or forest land, or disposable land covering a huge area. Among the privileges or conditions given to SPLTL holders is that they are allowed to harvest hardwood trees.

Green Circle has become the object of ire of lawmakers and environment groups for what they say is its role in the denudation of the forests of Dingalan and General Nakar, which they believe is partly to blame for the massive flooding and loss of lives in the aftermath of four killer typhoons that hit Eastern Luzon last December. To them, Roxas's activities in his Green land are yet another proof that the current anti-logging campaign is nothing more than a quick fix largely made for media mileage, rather than an actual long-term solution to a festering problem. Critics of the Department of Environment and Natural Resources (DENR) and its head Michael Defensor have also noted that the department's much-publicized raids have managed to nab not big-time players, but only medium-sized local illegal loggers.

Judging it by its owner alone, it is understandable why many see Green Circle as one of the big-time players. Roxas is a well-connected lawyer and entrepreneur, who has brokered deals and done business with various agencies of government since the 1970s. His latest venture is the deal he made with the pre-need cash-strapped company College Assurance Plan, where he is putting in 3,000 hectares of Green Circle land in exchange for CAP shares of stock.

But Roxas has repeatedly said, "I am not a logger. I am just clearing my land!" He says he cannot understand why he and his company have become the subject of public wrath when in fact his endeavors were all endorsed at the highest levels of government. "My project has been declared a national flagship project by two presidents: Fidel Ramos and Joseph Estrada," he says. "I don't know why I am being branded an illegal logger. Government knows what I am doing. They know that I am cutting trees. How can they not know when they approved it themselves?"

The project he is referring to is a gargantuan infrastructure venture called "New Pacific Coast Cities," which is being sold as an alternative to Metro Manila. It will include an industrial city, a government center, housing and tourism sites, as well as a university town, all of which will rise on 20,000 hectares of Roxas's land. In January 2000, Estrada himself also signed a proclamation declaring a Special Economic and Tourism Zone in the very areas where Green Circle land is-the Umiray area, both in Dingalan, Aurora, and in General Nakar, Quezon. This whole swath is to be known as the "Pacific Coast City Ecozone."

How Roxas managed to wangle approval from high places may not be so surprising if one looks at his background. A member of the University of the Philippines College of Law Class of 1961, Roxas counts among his classmates the banker Manuel Zamora, one of Estrada's key supporters, as well as Magdangal Elma, who has been part of government since the time of Ferdinand Marcos, continuing on to the administrations of Corazon Aquino, Ramos, Estrada and even Gloria Macapagal-Arroyo. Another former classmate is Andres Gatmaitan of the top-drawer Sycip Salazar law firm. Elma and Gatmaitan, along with John C. B. Go of Equitable Bank, are in fact listed as stockholders of Green Square Properties and Resources Inc., which owns part of Green Circle.

Roxas is also a member of the influential Sigma Rho Fraternity of the UP College of Law, whose members are spread out over various branches and levels of government and the private sector. They include Senate President Franklin Drilon, Senator Juan Ponce Enrile, Senator Edgardo Angara (whose family is the new political force in Aurora), Ombudsman Simeon Marcelo, and Supreme Court Justice Antonio Carpio, to name just a few.

It was Estrada's Environment Secretary, Antonio Cerilles, who granted Green Circle SPLTL No. 5, a permit to cut and transport trees. The document granting the permit was undated, but released sometime in late 1999. Green Circle had waited three years for that SPLTL. Cerilles's predecessor Victor Ramos had hesitated approving the application, since the company did not just plan to cut and harvest trees. It wanted to clear some parts, develop it, even build a theme park.

Residents in and around Umiray in Dingalan and General Nakar, however, fear that Roxas's project will destroy their environment, and are asking the DENR to revoke Green Circle's SPLTL, because of, among others, "its grave threat and effect to the livelihood and culture of the indigenous people." A 2001 study done by the NGO Integrated Rural Development Foundation (IRDF), says Green Circle's area is Dumagat land, and its operations encroach on ancestral domain. The study adds, "Soil erosion and siltation are also evident as shown by the brownish color of the river. This condition proves that there are ongoing activities in surrounding mountains and hills which caused landslides and movement of the top soil that rainwater carries to the Umiray River."

Green Circle is only the latest in a line of companies that have been logging in Aurora province. Green Circle's land used to be owned by Don Andres Soriano, before it fell into the hands of Roberto Gopuansuy, owner of the South Eastern Timber Corporation, from whom Roxas eventually bought the property. After nearly 40 years of commercial logging, the big hardwood trees are gone and what remains is mostly residual forest. Says the IRDF study of Green Circle's area of operations: "The actual site investigation revealed that there are not enough forest trees of allowable size within the Operational Plan sites. There is no basis for the approval of SPLTL No. 5 by former DENR Sec. Antonio H. Cerilles because most of the forest trees in the area did not reach the minimum 60 centimeters dbh tree size as required under DENR Administrative Order No. 12 issued on April 1, 1992."

But Roxas believes that all these laws and regulations do not apply to Green Circle, since he is turning the land into real estate development, and not cutting trees for wood. "They are applying forest laws on me, but I am not within the framework of any of these laws," he says. "I am not covered by any existing forestry law."

As Roxas sees it, he is only being used as a scapegoat for the government's anti-illegal logging crusade, because the DENR has been unable to make much headway in its campaign. In fairness to the DENR, though, running after loggers is a difficult and often dangerous task. Since the martial law years, when logging-legal and illegal-was at its peak, logging magnates have been roaming the corridors of the department, seeking and giving out favors. Out on field, foresters could find themselves facing armed goons who stand guard along dark and desolate logging roads, protecting logging areas against intrusive outsiders, especially earnest agents of government.

It is also an open secret that some of the country's richest families built their fortunes on logging. The family of Senator Jamby Madrigal, current nemesis of Defensor, was among these, as were the Moratos, Plazas, Antoninos, Alcantaras and Consunjis.

All over the country, those who dream of similar wealth go into logging. Illegal loggers encountered by DENR foresters include politicians and military officials in far away places like Mindanao, while in other parts of the country, businessmen act as financiers encouraging impoverished local residents to cut trees and buying whatever they harvest. Apart from the wanton deforestation, such practices also result in government losses because forest fees are not levied on these loggers.

Yet pinning illegal logging charges on Green Circle and making those charges stick may be a huge challenge, since Roxas and Defensor are looking at the problem from different points of view, and largely because Green Circle had been given the green light by various administrations, including the present one.

Even his entry into the Philippine Veterans Bank (PVB) had government support, Roxas says. During the Ramos administration, Roxas was tapped to revive the bank that went bankrupt in 1985. "I financed the opening of the bank," Roxas points out. He even cites the P4,000 monthly pension World War II Veterans now receive, which was a paltry P500 when he first got on board. "We lobbied, we worked for that," Roxas states.

But a group of veterans who have organized themselves into the Crusade to Reform Veterans' Organization (CREVO) believes Roxas used the bank to expand his businesses. CREVO members have charged Roxas and other bank officials with plunder and violation of the Anti-Graft and Corrupt Practices Act. They said in their complaint filed before the Ombudsman: "Board member Romeo Roxas established two companies, the Green Square Properties of which he is a director, and the Green Circle Properties of which he is president as well as director. The total paid-up capital of these corporations amounted to P600,000. Yet these undercapitalized corporations were granted loans by PVB as approved by (its president Emmanuel) de Ocampo to the tune of a staggering P66.8 million."

CREVO also cited another Roxas company, Green Dreams Holdings, where both Roxas and de Ocampo are directors, as having secured another P35 million for a real estate project in Cavite "whose collateral has likewise been bloated."

In addition, the group says, Roxas is not really a dependent of a veteran, his father being a former education superintendent. Therefore, the veterans argue, Roxas has no legal right to sit in the Veterans board. Roxas, however, says his father was indeed a veteran, and that he is doing his father's fellow soldiers a service by his work at the bank.

Included in the case against Roxas is Pilarica Ejercito, sister of former President Joseph Estrada, who was appointed Veterans Bank director sometime in 1999. It was during that time that the Central Bank was conducting an examination of the PVB's practices. The Central Bank's report made note of certain unauthorized expenses and questionable practices but on the whole gave the Veterans Bank a clean bill of health.

CREVO says its case is gathering dust at the Ombudsman since it was submitted there in 2002.

Copyright © 2005 All rights reserved.
PHILIPPINE CENTER FOR INVESTIGATIVE JOURNALISM

Despite Hard Times, GMA Hires Pricy Foereign Consultants For Charter Change

13 SEPTEMBER 2005
by MALOU MANGAHAS

--------------------------------------------------------------------------------
The PCIJ's latest story, a one-part report by Malou Mangahas, a member of the PCIJ board of editors, uncovers a million-dollar contract signed by the Arroyo government to retain the services of an American law firm to lobby for charter change in the U.S. government.
The contract was signed by National Security Adviser Norberto Gonzales Jr. on July 25, the same day that Mrs. Arroyo delivered her State of the Nation Address and announced that "it is time to start the great debate on charter change."

The PCIJ has copies of the contract and other disclosure documents filed with the U.S. Department of Justice by Venable LLP, the U.S. law firm that will get paid $75,000 per month plus expenses for one year.

We got in touch with Venable, who confirmed the contract's existence but declined to give details. None of the government officials we talked to, however, have any knowledge of the contract, which was apparently made in great haste and secrecy.


--------------------------------------------------------------------------------

ON THE same day that she delivered her State of the Nation Address and summoned the nation to start “the great debate” on charter change, President Arroyo awarded a million-dollar lobbying consultancy contract to an American law firm to “secure grants and (US) congressional earmarks” for her initiative to “reshape the form of government…into a parliamentary federal system.”

On July 25, 2005, Mrs. Arroyo hired the lobbying and representation services of US-based Venable LLP, one of America’s top 100 law firms, for a substantial sum of $75,000 a month, or $900,000 (P50.4 million) for 12 months.

The amount excludes “costs for travel, telephone, fax, copying, etc.” and “professional services” of up to $720 per hour for Venable’s senior associates. These expenses, for which no ceilings were mentioned, could double the contract cost.

The contract was signed at a time when the government is reeling from a gaping budget deficit and calling for belt-tightening measures.

Former President Fidel V. Ramos, who inspired Mrs. Arroyo’s charter change initiative on July 8, the day the Hyatt 10 group of secretaries bolted the Cabinet, thinks the idea of getting foreign consultants is not good. "There is no need to spend government money for that purpose because we must do it all ourselves and persuade ourselves genuinely and truly without foreign participation, " he said.

The contract does not state why US support for constitutional change is needed at all. Nor does it say what specific charter amendments the President needs US support for. The contract also includes lobbying for loans and grants from the US government, especially assistance to upgrade the capabilities of the Philippine military and police.

The US law firm confirmed the contract exists but none of the Philippine officials contacted for this report, including Executive Secretary Eduardo Ermita, whose job is to scrutinize contracts authorized by the President, know about it.

In disclosure documents it filed with the US Department of Justice, Venable listed “Maria Gloria Macapagal-Arroyo” and the “Republic of the Philippines” as “the client” that contracted its services to “represent the interests of the Philippines in the United States.” The PCIJ has copies of the contract and other disclosure papers submitted by Venable to U.S. authorities.

National Security Adviser Norberto Gonzales Jr. signed the three-page agreement as “the authorized representative of the President of the Philippines,” while lawyers James T. Pitts and James George Jatras signed for Venable. Pitts is a transport sector expert, while Jatras’ experience is in homeland security and Eastern Europe affairs.

The contract was apparently done in precipitate haste and shrouded in secrecy. Apart from Gonzales and Mrs Arroyo, senior executive officials and legislators did not know about it.

Two months after the contract’s signing, these officials have not yet been informed of its existence by either Mrs Arroyo or Gonzales.

The contract does not specify which government agency is footing Venable’s bill. For sure, the National Security Council that Gonzales heads could not afford it. The NSC’s entire budget for 2005 is just P49 million. The agency’s approved confidential, intelligence fund is a measly P2 million.

The contract is a big expense item given Mrs Arroyo’s fresh calls for citizens and civil servants to tighten their belts amid surging oil prices. She said she herself has had to make do with using her hair dryer just once a day to save on electricity.

Why Gonzales, and not the President or a full-fledged Cabinet member, signed the contract with Venable is a big question. Venable’s contract lists the NSC office on V. Luna in Diliman, Quezon City, as the address of its “foreign principal” — “The Republic of the Philippines.”

Gonzales could not be reached for comment, even via his mobile phone. He flew last week to an undisclosed country in the Middle East, and for days now has shut off his mobile phone. Even his staff could not contact him. He is expected to return to Manila Tuesday night.

In phone calls and a questionnaire sent by email, Venable lawyers Pitts and Jastra were not forthcoming either.

In a joint mail, they stated: “Thank you for your inquiry. As we have indicated to you by telephone, for reasons of attorney-client privilege, we must decline to answer your questions regarding our representation of the Government of the Republic of the Philippines in its relationship with the United States.”

“We suggest that any other inquiries be directed to the appropriate authorities of the Government of the Philippines,” they added.

As national security adviser, Gonzales also serves as director-general of the National Intelligence Coordinating Agency (NICA). Before the NSC, he was Presidential Adviser for Special Concerns from February 2001 up to January 2004. He chairs the Partido Demokratiko Sosyalista ng Pilipinas, and Kaunlaran ng Magsasaka Inc.

A policy review and staff unit under the Office of the President, the NSC’s mandate in law is to coordinate “the formulation of policies relating to or with implications on the national security.” Whether such a mandate includes contracting a US law firm to lobby for charter change is questionable.

The NSC has no offices or personnel in the US that could enable it to monitor Venable’s work for the Philippine government. It has about 80 personnel, all based in the country.

The scant details of Venable’s engagement with the Philippine government come from a copy of the contract it appended to disclosure documents it filed in compliance with the US Foreign Agents Registration Act or FARA.

Apart from Gonzales, few knew about Mrs. Arroyo’s deal with Venable.

Those kept in the dark about the contract included the President’s legal counsel Merceditas Gutierrez, the most senior foreign affairs officials, the Philippine ambassador to Washington, and even Gonzales’s deputies and staff in the NSC.

Ermita was at first incredulous, insisting that all contracts authorized by the President should pass through him, as a matter of course. Told that Venable lawyers had confirmed the authenticity of the contract, Ermita said in jest, “Tatanungin ko si Bert (Gonzales). Sasabihin ko, ikaw pala may tinatago ka, ha!” (I will ask Bert. I will tell him, so you are hiding things from me now.)

Even without reading the contract, Ermita explains that it’s normal for governments to seek the assistance of foreign experts, given that Mrs Arroyo has declared charter change as one of her priorities.

All documents and issuances for signing or release by the President must pass the legal scrutiny of Gutierrez. Venable’s contract was a singular exception. On her request, PCIJ faxed Gutierrez a copy of the contract that she says she knew nothing about.

“We don’t know anything, we have no participation in that contract,” says Foreign Affairs Undersecretary for Policy Franklin Ebdalin. DFA Spokesman Gilbert Asuque adds, “I’ve asked those in charge in the DFA and our records show we have no information about that contract.”

Another official in the DFA’s Office of American Affairs says even the Philippine ambassador to Washington DC is clearly “out of the loop.” Not a single piece of paper has moved from Washington advising head office that such a contract existed, the source says.

Retired General Victor Mayo, NICA deputy-general who keeps house at the NSC during Gonzales’s occasional trips in-country and overseas, has not read nor seen the contract with Venable.

“Nobody in the NSC could give you answers. The DG (director-general) could have done it without us,” Mayo explains.

Gonzales “sometimes does things by himself, nagugulat na lang kami (we are just taken by surprise).”

Mayo recalls, however, that sometime in July, “he asked me in a very casual tone if there is anything wrong with him signing up a PR firm, and I told him maybe none.”

“I did not see anything wrong with it but after that, I was not privy to what he signed, when he signed,” Mayo adds.

This is not the first time that Mrs Arroyo acquired the services of expensive foreign consultants.

Since 2002, Burson-Marsteller, a leading global communications firm with expertise in crisis-issues-reputation management and media relations, has helped Malacañang’s public-relations team spruce up Mrs. Arroyo’s public image.

Secretary Rigoberto Tiglao, Presidential Management Staff chief, had acknowledged that Burson-Marsteller’s 12-month contract fee was $800,000, an amount supposedly paid by pro-Arroyo businessmen.

But the contract Mrs Arroyo assigned to Venable goes beyond personal makeover. On top of Venable’s multiple tasks for the Philippine government is “securing grants and congressional earmarks for charter change,” even before the President could spell out what provisions she wants amended.

In addition, under the contract Venable is also expected to lobby for and represent the Arroyo administration in facilitating the Philippines re-inclusion in the credit facilities of the Overseas Private Investment Corporation, secure a Philippine credit ratings upgrade in the US Eximbank, “create a capability enhancement program for the Armed Forces” and acquire up to $800 million in credit under the US Defense Loan Guarantee program, and “achieve a similar upgrade program” for the Philippine National Police.

But before Venable could do this, Mrs Arroyo has to deal with both critics and supporters back home.

Opposition Sen. Sergio Osmeña III deems the contract with Venable flawed for various reasons — “lack of transparency” in the negotiations, “lack of due diligence” in getting the best value for “an unauthorized expenditure,” and the questionable capability NSC’s Gonzales to monitor Venable’s compliance with the contract’s provisions.

“Congress has not appropriated funds for this,” Osmeña avers. The secrecy surrounding the contract’s signing could not be justified because, “charter change does not fall under national security.”

In Osmeña’s mind, the biggest irony of all is, “the American people know about it but the Filipino people who are paying do not.” — with additional reporting by Sandra Aguinaldo, GMA 7

Up to 70% of Local Health Funds Lost To Corruption

2-4 MAY 2005
Up to 70% of Local Health Funds Lost To Corruption
by AVIGAIL M. OLARTE and YVONNE T. CHUA

--------------------------------------------------------------------------------
The PCIJ's latest investigation is a three-part series that exposes widespread corruption in the provision of health care. The investigation points the finger at local governments, to which healthcare services have been devolved by the Department of Health since 1993. This series explains that the discretion local officials now have to determine health budgets has resulted in the "decentralization of corruption."
While there are some bright spots, evidence gathered for this report suggests that a culture of waste, corruption and patronage pervades health care in many local governments. Doctors, suppliers and local officials and employees interviewed by the PCIJ estimate that kickbacks from the purchase of drugs given to local officials range from 10 to 70 percent of the contract price.

Moreover, local officials give low priority to health, preferring more visible public works projects that they can boast of during election time. The result: a system that can barely answer the needs of the poorest one-third of the population who rely on local-government-funded health care centers.

The series also looks at how such large-scale corruption has demoralized the ranks of doctors working for rural health units, causing many of them to flee in droves and opt for private practice instead. Health, the series asserts, has become politicized, with health services, including medicines, provided as a form of patronage. In some cases, mayors want to distribute the medicines themselves, so they would get personal credit for services paid for by taxpayers.
--------------------------------------------------------------------------------

With the devolution of healthcare services to LGUs in 1993, the budgets of rural health units have been at the discretion of local officials.

THE YOUNG mother was frantic. A seven-month-old baby was burning with fever in her arms, barely able to breathe. The doctor at the rural health unit quickly attended to the child, who was suffering from serious respiratory tract infection. But she had no medicine to give the baby: her supply of Ventolin or salbutamol, which would have given the infant instant relief, had run out.

The doctor, who ministers to the needs of residents of a poor municipality in Bulacan, could only wring her hands. It took two weeks before the poor mother could scrape together P50 to buy the drug. Fortunately, the baby survived, although it had to suffer the fever and cough longer than it should have.

The doctor sees 90 to 100 patients a week and the medicines the local government buys for her clinic always run out. Worse, she says, the drugs she is supplied with are overpriced by sometimes over 100 percent, with the difference lining the pockets of local officials.

Since the Local Government Code devolved public health centers and other health programs and facilities from the Department of Health (DOH) to local government units in 1993, local officials have had more discretion on how health budgets should be spent. While there are some bright spots, evidence suggests that a culture of waste, corruption and patronage pervades health care in many local governments.

Doctors, suppliers and local officials and employees interviewed for this report estimate that kickbacks from the purchase of drugs — also known as standard operating procedures (SOPs), rebates, internal arrangements and "love gifts" — given to mayors, governors and other local officials range from 10 to 70 percent of the contract price.

The result: a system that can barely answer the needs of the poorest one-third of the population that relies on local-government-funded health care centers.

"Before the devolution, all the corruption was happening in Manila," says Juan A. Perez III, who was a DOH official when Juan Flavier was still secretary. Transferring resources to local governments should have directly helped communities, he says, but in far too many instances, corruption has thrived instead. Devolution, says Perez, seems to have resulted only in "democratizing corruption."

"Increases in discretion enjoyed by local governments lead to increase in local-level corruption," says a 2000 study on decentralization in the Philippines by the U.S.-based Center for Institutional Reform and the Informal Sector (IRIS). "When officials enjoy more discretion, they have greater opportunities to demand bribes."

Decentralization was expected to reduce corruption, especially in drug procurement. Yet for the most part, such practices as overpricing, rigged biddings, short and ghost deliveries, and the purchase of substandard drugs remain pervasive.

These problems are demoralizing the ranks of doctors assigned to the more than 1,600 rural health units (RHUs) and urban health centers. Too often, these doctors find themselves battling with local officials who divert precious resources to corruption and patronage. "The doctors are leaving," says a municipal health officer from the Calabarzon region.

Problems have dogged the devolution of health services from the start. Unprepared local governments had trouble paying for the salaries and benefits of about 70,000 health workers and to run local health centers and hospitals now under their jurisdiction. The problem persists, but the national government and international agencies have come to their aid.

All these imperil the delivery of frontline health services. The 2003 National Demographic and Health Survey found more Filipino households visiting public health facilities than private clinics and hospitals. Barangay health stations, which are supervised by the RHUs and urban health centers, had the most clients, followed by the RHUs and urban health centers themselves.

A survey done by the Social Weather Stations for the World Bank in 2001 also shows the country's poorest 30 percent seeking help mostly from the local health units for their aches and pains.

These health centers are the poor's primary source of medicines as well. Yet many local governments are allotting less money for health services, choosing instead to spend tax money on fancy municipal buildings, basketball courts and waiting sheds.

Moreover, many local officials see health as another source of illicit income and demand hefty shares from suppliers of drugs and hospital equipment. Of the nearly P1 billion allotted in 2003 for the maintenance and other expenses of all rural health units, P100 million to P700 million could have been lost to graft.

Such amount could have been used to purchase at least 100 million pieces of 500-mg. tablets of paracetamol, which is prescribed for simple fevers and aches, or more than 62,000 tablets per health unit.

Today most RHUs and urban health centers have little or no medicine for their patients. Too often, the deliveries — if they were made at all — fall short of what had been promised, in both quality and quantity. A municipal health officer in Laguna recalls an instance when she issued a prescription, only to be told by her staff that their RHU had run out of the needed medicine. Yet the doctor knew that two weeks before, there had been a delivery of supplies.

"I went to the supply closet, and there was indeed no medicine," she says. "So I went to the police (and told them), 'Papuntahin mo 'yung ahente dito at ihatid ang gamot ko kung ayaw niyang maghalo ang balat sa tinalupan (Get that agent to deliver my medicine if he doesn't want the sh__ to hit the fan)!'"

The doctor who had no medicine to give to the feverish baby recalls that in the past, she would order 10 boxes of assorted medicines every two months. But there came a time when only four boxes arrived at her office. When the confused doctor was asked to sign the payment voucher, she noticed that the prices had been "adjusted."

The doctor says she had copied onto the requisition voucher the prices of the medicines based on the handwritten list given by the medical representative. Later, she saw a typewritten copy of that list with figures twice the actual price. This served as the basis of the payment voucher. Since then, the doctor has been leaving the price column blank, reasoning, "They'll just change it anyway."

Heidi Mendoza, auditor at the Commission on Audit (COA), says overpricing of supplies is the most common form of fraud. "One city mayor told an auditor casually that where price difference falls within the range of 50 percent to 100 percent, that is not overpricing," Mendoza says. Drugs can be overpriced by as much as 700 percent, COA records show.

A drug distributor admits having sold to a local government in northern Luzon the antibiotic amoxicillin for three times more than its actual price of P280 per box of 100 tablets. "Does it affect the health system?" she asks. "Yes, because I can sell it for P380 per box. I'm already okay with that P100 markup. Even P50 per box is fine. So that (should have been) 300 boxes instead of (just) 100."

According to the supplier, 30 percent of the contract went to bribes, or P256 per box. But she says the share of the contract price going to "love gifts" now starts from 50 percent up. Other suppliers and health officers, meanwhile, say