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
Ramos
to Manila Archbishop Gaudencio Rosales - all praying for
courage and faith to lead the nation as the Philippines
faces an abysmal fiscal crisis.
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.
Tomorrow -Part
2:
Goodfellas, with Tagalog subtitles
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Oct 1, 2004
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