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Patricio N Abinales
A picture of Philippine President Gloria Macapagal-Arroyo huddled with US President George W Bush at dinner during the 12th Asia-Pacific Economic Cooperation was immediately cited by her defenders as yet further evidence of her standing as an Asian leader. For there she was, easily regaining the goodwill of Bush who, a few months back, expressed strong disappointment over the Philippine decision to withdraw its diminutive force in Iraq after a Filipino worker was kidnapped by insurgents.
Arroyo badly needs such spin these days. When she flew to Chile for the APEC meeting, she left behind a country in its most serious economic and political mess since the 1980s. By the end of 2003, the total debt had reached US$60 billion (roughly 78 per cent of the gross domestic product), while the national budget deficit is forecast in 2004 to be around US$3.5 billion as the government struggles to generate revenues and improve its tax collection under new measures being implemented.
When Arroyo declared on 3 November that the country's fiscal crisis was over after the legislature promised to pass a 'reform bill' that would raise between 30 and 40 billion pesos from taxes on liquor and cigarettes, a Catholic archbishop wryly commented that, 'for something that dramatic to happen is either impossible, incredible or miraculous'. Anti-Arroyo forces in civil society likewise dismissed this as mere grandstanding.
Pulse Asia Incorporated revealed that Arroyo's popularity had declined to its lowest level in three years. It pointed to increases in the price of consumer goods as the main reason behind the decline in popularity from 14 per cent in September 2003 to 7 per cent in October-November this year. The country's leading poll group noted that despite her May election victory, Arroyo's rating continued to drop - an unusual decline given that presidents earn some amount of popular goodwill after every election.
Things have also gone from bad to worse with her coalition. The institution that protected her during the transition when she completed the term of her deposed predecessor Joseph Estrada has been badly tarnished by massive corruption. The Armed Forces of the Philippines' (AFP) comptroller, Major-General Carlos Garcia, was recently charged with allegedly having amassed around 140 million pesos of unexplained wealth during his tenure in charge of the allocation of the military's resources.
The investigations have further created strains within the AFP senior leadership, a group already deeply divided by a troublesome past. This generation of AFP officers is dominated by the Philippine Military Academy's class of 1971 whose ranks include many of the coup plotters of the 1980s. Its most infamous member is former Senator Gregorio Honasan, who was last year once again implicated in another badly planned coup against the government.
But the AFP senior officers corps also comprise those from the same PMA Class who defended the government and subsequently became major players in future political coalitions. This group is now under criticism for nurturing the likes of General Garcia (himself a PMA class of 1971 alumnus).
With her military allies in retreat, Arroyo has only her congressional allies left as a stable source of support. The latter has obliged her but also demanded that Arroyo retreat from her promise to rein in the fiscal crisis by cutting legislative 'pork' - i.e. budget allocations given to each legislator for him or her to spend as he/she wishes.
This mutual accommodation has not been received well by a public that is already reeling from one economic hardship after that other, and whose cynicism has been further stoked by more tales of corruption. It comes as no surprise therefore that more Filipinos are leaving for work abroad or to live elsewhere, or that the Communist Party of the Philippines - thought to have receded into irrelevance in the 1980s - is back in business.
WATCHPOINT: Will the expected passage in Congress of some of the eight tax measures proposed by President Arroyo bring some improvement so as to help avoid a potentially costly sovereign credit rating downgrade of the country; and also help to bolster flagging support for the Arroyo government?
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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