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Posts Tagged ‘Philippine Development’

The Social Weather Stations (SWS), on its August 24-27, 2012 survey, disclosed a major surge in President Aquino’s net satisfaction rating. From +49% in March 2012 and +42% in May 2012, it now reached +67% in August 2012. 77% or nearly four out of five Filipinos are satisfied with him while only 10% or one out of 10 Filipinos are dissatisfied. This is the highest he got during his entire term up to the present. The survey results cut across geographical areas and across ABCDE class boundaries.

This is very good news to the Aquino administration and bad news to his critics and opposition, especially at this time when the 2013 elections near and immediate decisions need to be made on the alignments and strategies of various candidates. The filing of candidacies on October 1-5, 2012 puts an additional pressure on these decisions.

To be sure, the sudden death of DILG Secretary Jesse Robredo last August 18, 2012 contributed a lot to the rise of presidential ratings, in terms of the tremendous sympathies it generated. However, it is not all a matter of bereavement and sympathy; it is also a matter of public realization that President Aquino’s reform agenda stands not only as a matter of rhetorics of “matuwid na daan” but is backed up by appointments to his Cabinet and administration of solid reformists such as Sec. Robredo.

The series of bold anti-corruption measures such as the filing of cases and arrest of the big fishes of the former Arroyo administration, the impeachment of former Chief Justice Corona, and the transparency and accountability policies in the bureaucracy has led to the people keeping faith with President Aquino through all the open and veiled attacks against him and his administration in the media and elsewhere.

In this light, the midterm 2013 elections promises to become an Aquino elections. That is, his political endorsement will stand out as a major, if not the decisive factor, in the victory of many candidates. Conversely, his critique of many candidates may well be the death knell of their own candidacies.

The SWS survey reaffirmed the people’s mandate for Noynoy Aquino’s presidency. However, it also reaffirmed the basis for the mandate–his continued trek on the road to reform both the traditional political and economic terms of reference of Philippine society towards democracy.

He has just been reelected.

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The nuances of the working visit of President Benigno S. Aquino III to Washington DC showed the intents on both sides more clearly than in the public statements on both sides. Some of them can be gleaned from the statements themselves while others are in the hosting itself.

Both President Aquino and President Obama affirmed the historic ties. President Aquino said that “Ours is a shared history, shared values, and that’s why America is just one of two that we have strategic partnerships with. Today’s meeting has really even deepened and strengthened a very long relationship we have, especially as we face the challenges that are before both our countries in the current situation.” 

President Obama, on his part, remarked that “[H]ow important the U.S.-Philippine relationship was, the historic ties, the 60 years of a mutual defense treaty, the extraordinary links between Filipino-Americans that have brought our two countries so closely together. And we pledged to work on a whole host of issues that would continue to strengthen and deepen the relationship for the 21st century.”

However, President Obama kicked off his remarks with economic issues, citing the Millennium Challenge Grant and the Open Government Partnership as their contributions to developing trade and commerce as well as to the anti-corruption campaign in the Philippines. President Aquino, on the other hand, touched only the strategic and historic ties.

In the official government statement later, Secretary Ramon Carandang would later stressed the “U.S. Government’s strong support for Philippine efforts to build a minimum credible defense posture…” Secretary of State Hillary Clinton only committed that “the United States will support the construction, outfitting, and training of a new National Coast Watch Center in the Philippines.”

Both are more in tune with regards to regional issues. According to Secretary Clinton, “[W]e do … have a clear interest in the maintenance of peace and stability, freedom of navigation, respect for international law, and unimpeded lawful commerce in the South China Sea.”

The visit did not answer the old question of the Mutual Defense Treaty, that is: Will the United States automatically come to our aid if we are attacked by any foreign power? It did not also provide an answer to the newer question, that is: Will the US help us if our vessels and aircraft are attacked in disputed territories of the West Philippine Sea?

The message is clear: The United States will still follow its own national interests in the Southeast Asia region and will only act with or in support of the Philippines if these are consistent with its own interests. Granted, there is a wide latitude of common interests at the moment, particularly in the areas of “the maintenance of peace and stability, freedom of navigation, respect for international law, and unimpeded lawful commerce in the South China Sea.”

A working visit is one rank below a formal state visit. It can be construed as one befitting a strategic ally–for the moment. It is definitely not in the same league as the state visits of real strategic allies such as Britain, Japan, Australia or even Israel. The Philippines still does not qualify.

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The Supreme Court–in an 8-6 decision–decided to have the Cojuangcos paid only PhP 196.6 million as compensation for the distribution of a major portion of Hacienda Luisita. The minority opted for referring the matter to a special agrarian court. Those who voted for the majority postion are Chief Justice Renato Corona and Associate Justices Presbitero Velasco, Jr., Teresita Leonardo-De Castro, Arturo Brion, Roberto Abad, Martin Villarama, Jr., Jose Perez, and Jose Mendoza. Those who voted for the minority position are Associate Justices Diosdado Peralta, Lucas Bersamin, Mariano Del Castillo, and Pres. Aquino’s 3 appointees: Maria Lourdes Sereno, Bienvenido Reyes, and Estela Perlas-Bernabe.

On its face, the farmers won this round. They will get the land and will pay a smaller amount to the government for it. However, there still several hurdles they need to overcome:

One, the probable motion for reconsideration by the Cojuangcos;

Two, the inevitable problem of developing the land; and

Three, the wherewithals to pay the government.

The situation is complicated because of the highly-charged politics around the issue. One thing that should be done is for the Aquino government to firmly exercise political will to execute the SC decision and help the farmers face the problems.

How it will handle this case will impact on its whole agrarian reform policy and program even as it will be a prism for judgment on Aquino’s promise to ensure that, under his term, the people will enjoy the full benefits of democracy.

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[My column in the Catalyst]

The Supreme Court, by a unanimous vote of 14-0, recently canceled the Stock Distribution Option (SDO) in Hacienda Luisita and ordered the distribution of more than 4,000 hectares of land in the Hacienda to more than 6,000 farmers. Though the Cojuangco clan may still move for reconsideration, it is now almost sure that the distribution would take please. This is a landmark victory for the cause of genuine land reform in the Philippines.

The call for putting the Hacienda Luisita under the Comprehensive Land Reform Program is correct. This is not only because the constitutional and legal requirements are fulfilled but also because the Hacienda has become a politically-sensitive issue that will have a bearing on the entire government land reform policy and on the Aquino administration’s popularity itself.

To be sure, the Aquino government, through the Department of Agrarian Reform (DAR) and the Presidential Agrarian Reform Council (PARC), has put forward a position for redistributing the Hacienda Luisita. The President himself divested his meager share in the hacienda. However, it is now incumbent on these bodies to ensure the implementation of the SC order follow the spirit as well as the letter of the decision.

The call for redistribution of individual plots to farm workers and peasant-tillers may not necessarily be correct however. The hacienda falls under the category of an enterprise farm–its main crop is sugar–that is best planted and managed on a large scale. CARP itself–and for that matter even the agrarian revolution program of the Communist Part of the Philippines–recognized this characteristic of a large plantation and recognized the retention of the plantation. Chopping off small plots (less than a hectare) for individual farm worker or peasant family will be an impractical proposition.

The first issue then in the distribution stage is: how to apply the concept of a large farm enterprise within a regime of the land reform program. Obviously, redistribution is an option, although not a viable one. The other options are to maintain the enterprise farm as a corporation or to establish as a cooperative with the farmer/peasant together with the former owners (who have their own shares) acting as stockholders and jointly deciding on the management of the farm.

The second issue is what compensation to pay the Cojuangcos and what to do with the reportedly PhP 2 billion debt of the Hacienda Luisita. There is the landowners’ contention that they should be compensated based on fair market value rather than the assessed value and that the asset (land) and the liability (debt) shall both be passed on to the farmers. They want the government to compensate them in the range of more than PhP 5 billion.

The government, through the Department of Agrarian Reform (DAR, has indicated that the government will not do this. The farmers, for their part, definitely do not want to pay what they think is the Cojuangco debt.

The only viable option within the context of the present administration, I think, for both sides to the controversy, is for the state to buy out the hacienda, give the Cojuangco family their share of the land, compensate them on the land to be distributed, and run the latter as a single cooperative enterprise. The debt should be subtracted from the Cojuangco share.

The Aquino administration has the opportunity to make a grand gesture for land reform in the country. How it will handle the Hacienda Luisita issue will have repercussion on the other and more problematic cases of privately-owned haciendas all over the country. It will also have an implication on whether or not it can create a wide enough domestic market for a sustainable economic development for the country and our people.

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[My forthcoming column in Catalyst].

The predicament of Philippine Air Lines, the nation’s flag carrier essentially parallels the problem of the Philippine National Bank, the erstwhile government’s own bank (which is in the process of a merger with Tan’s own Allied Bank). In both cases, the cause of the problem was named Lucio Tan.

The essence of the Tan strategy was to buy into the government asset at a minimum share percentage to establish a bridgehead, cajole the government (or as some put it, put forward an offer some key public officials cannot resist) into deciding for the privatization of the asset. When the asset is sold to the Tan group, the most profitable components of the asset are stripped away or transferred to a similar Tan-controlled company. Then, the now-unprofitable government asset is left withering on the vine and eventually dies.

Or, if it can still be cajoled further, the government infuses more money into the asset and the asset redirected to new markets (with the big advantage of having the government on its side). Eventually, the asset is still merged into a Tan-controlled company and is left to die.

PAL has always been a problem for the TAN group because it has been milked before by the past managements and it miscalculated the effects of the Asian crisis of 1997 and the rising oil prices. It has also to contend with various new competitors, notably the Cebu-Pacific Air. Its own Air Philippines languishes.

Tan has an additional problem with PAL. As a national carrier, it has certain advantages in the international routes, such as preferential treatment for national carriers, first choice in newly-opened routes, and as official government carrier. However, these advantages cannot be carried over to Air Philippines in a merger, and if Tan continues to operate PAL, it would only compete against Air Philippines and cause losses for both. Additionally, it has to contend with stricter requirements for air travel as a national carrier, suffer stricter government supervision (it is still partly owned by government), and cannot compete favorably against the new king of the sky—the budget airlines such as Cebu-Pacific Air.

Tan’s solution is to squeeze PAL more within these limits while attempting to convince government to assist it in its merger plan (straightforward or de facto) and to transfer the national carrier status to Air Philippines. This is the context of the move to emasculate PAL’s independent capability for various services such as catering, maintenance, and other ground operations by outsourcing these to other TAN companies (which also service Air Philippines). At the end of the day, the two TAN airline companies will have been indistinguishable from each other.

In the meantime, the 2,600 PAL ground-based workers are forced into early retirement or re-hired into TAN’s service companies at reduced benefits. The fate of PAL’s pilots and air stewards and stewardesses is not far behind.

PAL should not have been outrightly privatized and should have remained under government control, not only for economic reasons but also for political and security reasons. Tan himself is heavily investing in China and has partnered with prominent Chinese businessmen identified with the Chinese government. Just like in the ZTE-NBN case –in which security concerns have been raised—the PAL case also has a security angle, especially in the light of tensions in relations with China.

The PAL case demands a longer-term solution from government. So far, the Aquino administration has sided with Lucio Tan. What magic does Tan have to inveigle Philippine presidents, all the way from Marcos, into agreeing with his schemes?

Remember, in PAL’s case, greed does not fly planes.

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So far, the China visit of President Aquino has produced agreements on the economic and business side but minimal on the political and boundary issues. There is a definite toning down of expectations regarding the latter although much hype has been done on the former.

Of course, this is as it should be, given the complexity of the territorial claims issue, intertwined as it is with strategic geopolitical ones and the prospects of huge gas and oil deposits in the areas being claimed. To the extent that they can play down the tensions associated with widely-varying positions on the claims, the two sides evidently relegated the issue to future negotiations, including the latter’s terms of reference.

What the two sides are doing is still in the confidence-building stage. Aside from the obvious business and economic benefits derived from the agreements so far, the visit conveyed to each party the other side’s willingness to talk over the territorial claim issue.

The Philippines, in addition, also offers its own incentive to include the possibility of a joint oil exploration in the contested areas outside of its own exclusive economic zone. China seems hesitant so far but the offer is tempting since it does not bind future arrangements.

China also tempts the Philippines with prospects of more economic ties, including a US$60 billion investment, a US$7.7 billion development investment loan, and a ten-fold increase in tourist arrivals. On its own, this economic package, if realized, offers a huge safety net in the face of the worsening global recession. If used wisely, this can stabilize and expand the domestic industries and lay the foundations for sustained economic growth, at least in the medium term.

The visit will not, of course, stop the current military, diplomatic, and political strategies being pursued by each party in relation to the claims in the South China Sea (also called West Philippine Sea). However, it should lead to a more manageable future negotiation and less tension in the area.

China has made a major move in the Chinese checkers game with the economic and business gambit. And it seems, the Philippines wants to be part of the play, rather than be a mere chip on the board. It wants to reconfigure its ties with China—as a friend and partner rather than as a perceived minor power with overweening ambitions.

How will the United States, a close Philippine ally with considerable interests of its own in the area, craft its reposté? Definitely, it will not let its own bargaining power weaken in the face of the success of President Aquino’s China visit. An official visit to the US perhaps?

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[My next Catalyst article].

The upcoming Beijing trip of President Aquino reminds me of the game of Chinese checkers. This game has the objective akin to Pacman where winner takes all by eating all opponents. Chinese checkers has the additional tactical moves such as by blocking an “eat” by positioning two chips in the path of the opponent’s chip or putting one chip with its back against the board border, by putting out or sacrificing one chip in a trap to eat two or more chips of the opponent, or by strategic positioning to set up a trap the opponent cannot but walk into.

The asymmetrical balance of political and resource factors between world power China and the Philippine puny state define the parameters of the Aquino state visit. There is, of course, the unseen-but-cannot-be-ignored superpower United States that has its own interests in Southeast Asia and elsewhere in the world that frequently clash with Chinese interests. It is this reality that pushed the Philippines, perhaps unwillingly, from local or regional diplomatic arena into the unfamiliar great-power plays that all-too-frequently crushes the small player.

The crux of the matter here is control or access to the potentially bountiful riches of oil and mineral resources in or around the Philippine territory, the control or access to strategic sea lanes which Philippines straddle, and the strengthening or breaking of the “containment ring” allied Western powers have put around China. Unfortunately, the Philippines is a key chip in this checkers game.

It is undoubtedly in the national interests of all parties involved to maintain their viability in the game. Most of the time, preserving the status quo suffices. However, there may come a time when there is a need to redefine the relationships of these parties and establish a new reality. Such, I think, is the present moment.

China, in this case, caused the changing of the balance of power not only in the region but globally. It is now entering the stage as a world power, second only to the United States. It is now flexing its muscle to have this recognized against a backdrop of severe economic stresses of the capitalist system centered in the Western developed economies. Ironically, China is looked upon by most of these countries as a possible savior to prevent a serious global recession because of its massive domestic market, strong currency and reserve position, and high technology base.

The downside to China’s growth is its insatiable appetite for raw materials and energy sources, huge foreign reserves and external holdings, and its export-oriented economy, making it a major competitor to the Western countries in terms of their own game. The Philippines is a classic case of a chip caught in the middle of powerful contending plays of dominant players.

How to survive or even profit from this situation is a political, economic and diplomatic challenge to President Aquino and his administration. The forthcoming visit therefore by a new president presents an opportunity to set up new plays and redefine China-Philippine relations according to principles of mutual benefit, friendship, and respect for each other’s sovereignty. This even as the Philippines needs to assure Western friends of its own respect for their interests.

Chinese checkers is a game of foresight and maneuver. Yet, at the end, one must lose and the other will win. Creating a situation where no one loses but everybody wins requires thinking beyond the game. Will PNoy and his foreign policy advisers deliver the goods?

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