| 1. THE PHILIPPINE ELECTIONS |
| The Philippine Plutocracy | President Gloria Macapagal has comfortably won the Philippine presidential election over her main rival Fernando Poe Jr by over a million votes. In the vice presidential contest, which is separate from the presidential election so that it is possible to have opponents elected president and vice president, Arroyo's partner, Senator Noli de Castro, also won comfortably. In addition to that Mrs Arroyo's K4 Coalition (Koalisyon ng Katapatan at Karanasan sa Kinabukasan) won 85.4 percent of the seats in the House of Representatives, seven of the 12 new senators (giving it control of the Senate for the first time), 81 percent of the provincial governors and 69.7 percent of the elected city mayors. The opposition KNP coalition (Koalisyon ng Nagkakaisang Pilipino), dominated by the LDP (Laban ng Demokratikong Pilipino), led by Senator Edgardo Angara, was decimated. The LDP won only 15 House seats, 5 of the 12 senate seats contested and 14 governors. Within the K4 Coalition, the ruling Lakas-CMD (Lakas-Christian Muslim Democrats) won 91 or 42.9 percent of House seats making it even less dependent than before on its minor K4 partners, the Nationalist People's Coalition (58 seats), the Liberal Party (29, up from 20) and the Kabalikat ng Malayang Pilipino or Kampi (3), which was founded by Mrs Arroyo in 1998 when she ran for senator. | |
| Plutocracy | This overwhelming mandate and its parliamentary majorities, should, at least theoretically, enable Mrs Arroyo to tackle the reform policies she has often spoken about, especially those involving the national debt, long term economic growth and crippling corruption. However, at the heart of all these and many other problems is the structure of the Philippine polity which is dominated by an oligarchy of inward looking family dynasties and provincial warlords. Their concern at all levels of politics is solely to promote their own venal interests. There are no policy differences between them, only family quarrels. Few outsiders have been able to challenge the power of these often obscenely rich dynasties anywhere and as a consequence the nation is ossifying. In this Catholic country, some energetic reformers have looked to the Catholic Church in the past thinking it might want to challenge the system, if only in the interests of uplifting its own poor who run into the millions. Unfortunately they found that the Church establishment and its bishops are themselves either part of the dynasties or allied with them one way or another. Indeed, some observers see the Church establishment as one of the main protectors of the system. Other organised attempts to reform the system have been made at various times over the years, but the dynasties have always managed to find a way to undermine them. Mrs Arroyo, who understands all of this and knows more about Philippine politics than many people realise, should make another attempt. She should set out on a programme to turn the Philippines from a plutocracy into a social democracy. This does not require a direct war on the oligarchs but a long term indirect strategy in partnership with those political, religious, social, trade union, academic and other elements in society who can help move the country in this direction. She knows who they are and she should lead and protect them. But will she do it? Don't hold your breath. | |
| Seizing the bit | Thirty five years ago, the Philippines was the most prosperous nation in Southeast Asia, with a democracy the envy of the region. Its potential to influence, and indeed, lead the whole of Southeast Asia was impressive. Today it is struggling both economically and politically and the challenges are daunting. Unless Mrs Arroyo seizes the bit, it will continue to decline. | |
| Probably one of the first things she will want to do is change the Constitution in order to - introduce a national federal parliamentary system to replace the current US style congressional system, and
- help her attract greater foreign direct investment (FDI) and open up the economy generally.
| |
| Proponents of constitutional change, or Cha Cha, argue that a federal parliamentary system with proportional representation will serve the national interest rather than the family dynasty interest by decentralising power and giving rise to stronger, more independent and more policy oriented political parties. | |
| Constitutional change, it is said, is also necessary if the country is to open up economically, encouraging more FDI, lower tariffs and trade liberalisation generally. FDI, which brings not only capital, but technological know how and managerial innovation leading hopefully to a surge in national creativity, totalled only $US161 million in 2003. The current Constitution bans majority foreign equity in "strategic sectors" such as mining and resources, publishing, media, transport and energy and all foreign investment in areas where the Philippines is deemed to have a "competitive advantage". This is crazy constitutionally and economically. Constitutionally because in the immediate post Marcos years, the Constitutional Convention wrote detailed policy rather than general principles into the Constitution across many areas. Economically, because the Philippines is a mining and resource rich country and a maritime nation of thousands of islands which depends for its growth and development on international trade. Very few Filipinos understand this. Protectionism for such a trading nation is a disaster. It has also hindered its industrial development. For example, but for anti-American protectionism over the past forty five years, the Philippines might have become the 'Detroit' of Asia, assembling and producing American cars for the region with all of the jobs, subsidiary industries and exports that would have gone with that. | |
| Narrow nationalism | This narrow xenophobic protectionism has been the result of demands from both the greedy dynasties and oligarchs on the one hand and those on the Left of Philippine politics, Marxist and otherwise, who have campaigned over the years against Western capitalism and multinationals in the name of Philippine 'nationalism'. In the end, all the Left has achieved is to aid the oppressive oligarch cause and seriously limit, if not destroy, the country's economic growth thereby condemning the nation's millions of increasingly urbanised poor to endless misery. Never mind that many of the middle and upper class leaders of this so-called 'nationalist' cause own property in the US and send their children to be educated in the US and/or to work for the very multinational corporations they denounce in the Philippines. Some of them even hold American passports while many of them end up working for oligarch conglomerates in the Philippines because there is simply no where else to go. | |
| Tax Laws | Among other reforms we can expect from Mrs Arroyo are attempts to increase government revenue through changes to tax laws. She says she wants to "simplify" tax collection by taxing gross income rather than net income because corporation (including incorporated family dynasties) and self-employed professionals and others are ripping off the nation through corrupt practices abetted by taxation officers. The Philippines has one of the lowest revenue to gross domestic product (GDP) ratios in Asia. Tax reform is expected to be her first move in tackling out-of-control budget deficits and a national debt running at over 100% of GDP. Boosting foreign direct investment (FDI) is also essential in this battle. Mrs Arroyo says that by taxing gross income she hopes to be able to lighten the tax burden on low to middle income salaried workers whose taxes are automatically deducted from their salaries. However, taxing gross income has its problems which may well render it unworkable. For example, if companies and professionals can't deduct genuine business expenses, they will just pass them on to consumers in higher prices thereby generating serious inflation. We look forward to seeing how the economist in Mrs Arroyo manages this and many other things. | |
| In foreign and defence policy, we can expect Mrs Arroyo to make moves for closer co-operation with the US (especially in view of the Iraq hostage fiasco in which al Qa'ida linked terrorists have humiliated her and the Philippines internationally). The Philippines on its own is practically defenceless and today it looks immediately north at the growing military strengths of both China and Japan and the uncertainties of the Korean peninsula. It also has a major Jemaah Islamiah and al Qa'ida connected Islamist terrorist problem based in Mindanao which is a threat not only to every Filipino, but to the region and the US (some of the key 9/11 terrorists once operated out of Manila where in the early-mid 90s they plotted to hijack 12 jetliners flying across the Pacific and crash them into US targets). On top of that, Mrs Arroyo will want to make some sort of contribution to the maintenance of the regional balance of power and the protection of the sea lanes of communication (SLOCs) in the South China Sea upon which the Philippine economy is almost totally dependent - as is that of most East and Southeast Asian nations. | |
| A final point on the election result: We hope that the fact that the opposition was decimated in this election does not lead to there being no opposition. History suggests that a lot of opposition politicians are likely to jump ship and join the governing coalition. It would be unfortunate if the country became in effect a one party state, even temporarily. It needs a strong opposition motivated by more than greed and vested interest. If Mrs Arroyo fails in the tasks mentioned above, it might come from a seriously disillusioned middle class. | |
| IRAQ |
| The famed British military historian, Sir John Keegan, recently wrote that with few exceptions, all wars end messily. So it is with Iraq. In APR48 before the war and APR52 immediately following it, we said that greatest problem the US and its allies would face in Iraq would be in winning the peace following the overthrow of Saddam and that establishing law and order and effective democratic institutions there would take 5-6 years. We see no reasons to alter that judgement and just hope that the pro-democracy forces have the patience and resilience to see through a difficult time. | |
| We also said that the war against terror would involve a protracted counter urban revolutionary guerrilla war waged on a global battlefield. We are seeing that in different ways in a number of parts of the world and notably Iraq where it seems that al Qa'ida, or at least elements of it, have decided to concentrate and make a stand against the US in conjunction with Iraqi Ba'athist elements. There seems to be an argument going on within al Qa'ida as to whether or not this is a good tactic - that is, they seem to be debating how far they should concentrate in Iraq against dispersing their attacks on US interests around the globe.1 That Iraqi Ba'athist forces should be co-operating with foreign al Qa'ida insurgents in Iraq comes as no surprise. We have known from our own experiences in Asia that there has been cooperation in the field over a number of years between senior al Qai'da terrorists and Iraq Ba'ath Party political and intelligence operatives in places like the Philippines, Thailand and Malaysia (see, for example, APR50). Some of these Ba'ath Party operatives even spent time in Australia where, among other things, they offered election campaign financing to the Australian Labor Party and were hosted by prominent ALP politician and Saddam admirer, 'Baghdad Bill' Hartley. It is now apparent, in the opinion of some observers, that Iraq has become the 'frontline' in the war against al Qa'ida2 and that success or failure there could constitute a major turning point in the global war against Islamist terrorism and armed revolutionary struggle for it could lead gradually to great political changes in the Middle East generally. | 1 For more on al Qa'ida's the debate within al Qa'ida, see the transcript of Trevor Stanley's talk, Al Qa'ida's Revolutionary Model
2 See for example, Iraq now the Frontline in War on Terror |
| As we have indicated elsewhere, we remain on balance optimistic about the outcome and believe that, despite all of the American mistakes, we're still slowly getting there. The US handover to the Iraqis was a milestone and if the Iraqis can make it to successful elections in January 2005 - and that will be difficult - there will be even more room for optimism. | |
| Before leaving the subject of counter insurgency in Iraq, it is our opinion that the US could have and could still reduce their military casualties if they ceased patrolling in vehicular convoys making themselves vulnerable to roadside attack and bombings. Instead, they should engage in day and night foot patrols - as is the usual practice of Australian counter-insurgency forces of any kind. | |
|
| While discussing Iraq we should say that we view with concern the current policy of the Australian Labor Party (ALP) under its new leader, Mr Mark Latham. Mr. Latham's policy is to withdraw Australia's minimal troop commitment by Christmas 2004 irrespective of what is happening on the ground in Iraq. This would constitute a remarkable betrayal of those Iraqis fighting for a more liberal and democratic polity and an equally remarkable act of appeasement of al Qa'ida - the movement responsible for the Bali bombings - for the logic of Latham's position is that he believes the US and all 32 nations in the coalition of the willing should also withdraw their various commitments in Iraq. The background to this policy seems to lie not just in the usual knee-jerk Left anti-Americanism in the ALP but to a belief in wider ALP circles that (a) Iraq has nothing to do with terrorism and (b) that there is no real war against terrorism anyway, it being a phoney construct designed to get Bush and Howard re-elected. The so called war against terrorism, they say, is more akin to the wars on AIDS and poverty than to a real war. Real wars, they say, are fought between nation states, men in uniform and have clearly defined front lines. Mr. Latham has a long way to go. (His recall of the former leading of the ALP, Mr Kim Beazley, to the front bench as shadow minister for defence, might be useful first step.) | |
