Btalk 2012 Midyear - 20120712

Birdtalk
MIDYEAR 2012:
Economic and Political Briefing
Exclusionary Economics, Elite Politics
July 12-13, 2012 Balay Internasyonal, UP Diliman, Quezon City
IBON Foundation 114 Timog Avenue Quezon City 1103 Philippines Tel. Nos: +63 2 927-7060 to 62 Fax: +63 2 929-2496 www.ibon.org
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IBON Economic and Political Briefing
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n the second year of the presidency of Benigno Noynoy Aquino III, his administration continues to unravel as brandishing more of the same elite governance defined and motivated by the narrow agenda and interests of the few. This was evident in the impeachment of Corona which was sold to the public as part of his daang matuwid agenda but soon enough was perceived as an effort to control the entire bureaucracy for selfserving political and economic reasons. As is the nature of traditional politics, the Aquino presidency has played along the agenda of the US, the long-time patron of the countrys elite, in exchange for its continued patronage and support. By serving as the agent of increased US military presence in the region, Aquino has stoked the tension with China over disputed territories, in the process risking regional stability and further undermining national sovereignty. As is the nature of traditional politics, the Aquino presidency has promoted an economic regime that excludes the poor while creating the most favorable environment for big business through public-private partnership (PPP) or the intensified corporate takeover of various economic sectors and activities from utilities and social services to the exploitation of natural resources. Its claim of inclusive growth is being belied by increasing poverty and social restiveness that even massive doses of conditional cash transfer (CCT) dole outs could not pacify. Meanwhile, the human rights of those who dissent against the enduring social injustice and lack of real reforms continue to be abused with impunity by alleged state forces. Thus while still enjoying relative popularity, the Aquino regime is finding it increasingly difficult to continue selling an image of a presidency that is transformative and reformist. And after two years in office, the people are starting to question whether or not Aquino has the capacity and interest to institute genuine reforms in the countrys economic and political system that will serve the welfare of the majority.
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Is inclusive growth happening?
he government claims to seek inclusive growth in its development plan. In the last few months it has played up rapid economic growth, positive outlooks or upgrades from credit rating agencies, and the country supposedly attaining creditor nation status with the International Monetary Fund (IMF). Yet while these may boost investor confidence they do not indicate that growth is inclusive or that conditions have improved on the ground. On the contrary, growth has been far from inclusive and the people have become more marginalized. There has been relatively high growth but poor job creation, large infrastructure projects amid increasing demolitions of communities, increased land grabbing in the middle of landlessness, and record-high corporate profits even as the toiling people make do with poverty wages. Amid claims of sound economic fundamentals, fundamental problems of backwardness and underdevelopment remain. The poor development performance of the economy disproves claims to sound economic management ushering in development and inclusive growth. The Aquino presidency is not yet in its midterm but the democratic image it seeks to project and its claims to adhere to the straight path are already much diminished.
Shallow and Unsustainable Growth

Official government statistics report 2012 first quarter growth that was the fastest in a year-and-a-half. This has made economic officials confident to say that full-year growth will be markedly improved from growth in 2011 which was well below target and a drastic drop from the year before. Shallow sources The gross domestic product (GDP) expanded 6.4% in the first quarter of 2012 which is 1.5 percentage points faster than the 4.9% growth in the same period last year. The sources of growth however do not indicate that chronic weaknesses of the domestic economy have been resolved. From the demand side, growth was apparently led by a surge in government spending and public construction. After 2011s lacklustre economic growth which was in part due to a contraction in government expenditures, the Aquino administration implemented a catch-up plan which led to government consumption growing by 24% from a 15.8% contraction in the same period last year.(See Table 1) Public construction likewise increased greatly and grew 62.2% in the first quarter of 2012 from a 37.9% contraction in the same period last year. This was however not enough to offset the fall in private construction which contracted by 9.9% from 23.0% growth last year and overall construction grew a tepid 0.3% in the first quarter of 2012. Durable equipment similarly slowed significantly to 3.6% growth from 17.2% last year. Fixed capital formation which shows the flow of investments in fixed assets used repeatedly, or continuously, for at least a year in the process of producing other goods or services then slowed to 2.8% in the first quarter of 2012 from 12.5% in the first quarter of 2011. (See Table 1) Overall capital formation actually contracted significantly by 23.5% in the first quarter from 36.1% growth last year. These contractions and slowdowns are more consistent with a cautious private sector rather than widespread business confidence. Exports of goods and services grew at a faster 7.9% in the first quarter of 2012, mainly driven by a recovery in services exports with only slightly faster growth in goods exports. This is not a reliable source of growth though and it will be recalled how exports fell for two straight years in 2008 and 2009.
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By industrial origin, agriculture, fishery and forestry and manufacturing slowed down in the first quarter of 2012. Agriculture slowed down from a growth rate of 4.4% in the first quarter of 2011 to only 1.0% in the first quarter 2012. Industry also slowed down from 7.3% in the first quarter of 2011 to 4.9% in the same period in 2012. The manufacturing subsector slowed down from 8.1% to 5.7% over the same period; mining and quarrying contracted by 11 percent. (See Table 2) The share of agriculture in the economy continues to fall and was down to 11.6% of GDP in the first quarter; manufacturing was at 22.9% of GDP in the first quarter of 2012 which is as small as its share in the 1950s. Yet manufacturing and agriculture are important sectors for creating jobs, have the greatest potential for high productivity, and should be the main drivers of economic growth. As it is, the domestic agriculture sector remains largely backward and local manufacturing still grossly underdeveloped. In contrast, the services sector was the fastest growing with the largest contribution to growth. Services as a whole grew 8.5% in the first quarter of 2012 from 3.6% in the same period last year. The biggest contributors because of their rate of growth and their size were trade (8.9% growth), other services (10.5%), real estate, renting and business activities (7.9%) and transport, storage and communication (9.0%). (See Table 2) First quarter economic growth has not been broad-based the agriculture and most industrial sectors for instance have slowed and has been concentrated in service sectors of generally low productivity and with weak linkages to the rest of the domestic economy. The contraction in investment could auger even slower growth in the future if there is no reversal in the rest of the year.
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Reliant on the global economy The economy continues to rely on volatile external sources of growth amid a global economy currently experiencing weak demand from a protracted economic and financial crisis. The economic crisis of the global capitalist system manifests in weak consumption, lackluster investments and retrenchments . For the Philippines this means weaker exports, volatile foreign investments and more difficult prospects for overseas Filipino workers. Exports of commodities only grew by 5.5% in the first three months of 2012 from 8.1% in the same period last year. (See Table 3) Moreover, remittances from overseas Filipinos are no longer growing as fast as before and are even falling relative to the economy. Remittances only grew 5.4% in the first quarter of 2012, compared to 5.9% in the same period in 2011 and 7.0% in 2010. However they are falling as a percentage of gross national income (GNI) down to 6.8% in 2011, from 7.1% in 2010 and a record high 8.3% in 2006. (See Chart 1 ) This may indicate how remittances will become less and less able to prop up the domestic economy in the period to come as the crisis in the advanced capitalist countries worsens, opportunities for jobs abroad will become tighter and overseas workers earnings may fall as wages are driven down. At the same time it remains to be seen if declining average earnings are off-set by higher numbers of migrant workers willing to work for lesser pay. The danger is that slowing remittances and, at worst, contracting remittances will lower the spending capacity of remittance-receiving households individually and as a whole thus dampening domestic consumption and demand for goods and services.
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Total approved investments, both local and foreign, fell by 73% in the first quarter of the year (See Chart 2). Net inflows of foreign direct investment (FDI), meanwhile, grew in the first four months but slower than the growth rate in the same period in 2011. FDI inflows were mostly in January though (US$778 million) with investments drastically falling in consecutive months to a net outflow of US$13 million in April indicating that foreign investors still remained wary of the country at least over that period.
These recent remittance and investment trends highlight how chronically relying on sources of growth outside of the domestic economy is problematic especially amid the worsening crisis of the global economy and poor prospects for recovery. Weak growth in the advanced capitalist countries impacts on the world economy through lower imports and investments, aside from the threat of further financial turmoil. The economic outlook of the capitalist world economy is dim. Problems persist across Europe especially but not only in the sovereign debt-ridden so-called PIIGS countries (Portugal, Italy, Ireland, Greece and Spain). Several countries are in deep recession from as far south as Greece and Portugal to as far north as the Netherlands and Belgium, which impacts on the world economy through lower imports and investments. Over 1 trillion in European aid so far and drastic austerity measures have not been able to resolve the crisis in the Eurozone growth is weak, industrial production is below pre-2008 levels, and unemployment is the highest in at least 15 years. The United States (US) economy likewise remains deeply troubled despite massive bailouts and government attempts at pump-priming. There is slow growth, a severe jobs crisis and employment levels no better than a decade ago, and still rapidly growing public debt. The Japanese economy remains stagnant with virtually zero growth amid steadily rising government debt. Growth is slowing even in China which is facing lower exports to Europe, the US and Japan, weakening public investment, and the end of a long real estate boom. Consumption meanwhile has been repressed by decades of low wages, depressed agricultural earnings and diminished benefits for hundreds of millions of the Chinese working class. Other supposed alternative growth centers like India and Brazil are also already facing slowdowns and poor medium-term outlooks.
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But the Eurozone is a key flashpoint to watch and an unexpected collapse of the Euro will have repercussions far beyond Europe. There will be an impact on the Philippines beyond our direct trade, investment and remittance ties with European countries. An outright collapse of the Euro, if not managed well, will at the very least greatly dampen demand and in a worst case scenario trigger a re-intensification of global economic turmoil even worse than in 2008 and 2009. It could be worse because unlike in 2008 and 2009 the global economy will be facing crisis in all its main growth centers covering the US, Japan, and now Europe. The financial implications are also worrying inasmuch as European banks reportedly have US$8.4 trillion in debt securities outside Europe. There are a number of scenarios for the Euro with different implications. The worst case is of a dramatic collapse of the Euro as a currency triggered for instance by a sudden exit of Greece from the Euro. This would be worse to the extent that Spain and Italy are also brought into turmoil. There is also a more moderate scenario of an expected or planned exit of Greece from the Euro over a year or so. In which case this would be expected and, if factored into by various financial and economic actors, could be much less disruptive than a sudden exit. The third scenario which for now seems very unlikely is that the European Union (EU) is actually able to manage the financial problems of its weaker economies. All these are signs of the deep problems of the world capitalist system. Measures taken so far to resolve these have involved bailouts to banks and big corporations amid austerity programs that hit working class populations the worst. Nevertheless, the profit of the worlds largest 500 corporations even increased by 70% since 2009. Yet the deep cuts in social spending only aggravate the problem aside from making the conditions of people deteriorate further. The impact of the capitalist crisis continues to be felt domestically. In June, Ford Philippines announced the closure of its Laguna plant which would lay off some 250 workers. Weak global as well as local demand and greater uncertainty have taken their toll on the export-oriented and foreign investment-dependent sectors of the domestic economy. Good economics? The government has set moderate targets for revenue and tax collections even as it seeks increased infrastructure spending towards high economic growth. As it is the national government (NG) had a deficit of Php2.9 billion in the first four months of 2012 which reverses the small Php61 million surplus in the same period last year. Revenues increased by 11.5% in the first quarter of 2012 compared to the same period last year primarily due to increase in tax collections. However, the government has set targets of only 14.4% revenue effort (revenues as share in GDP) and 13.2% tax effort (tax collections as share in GDP) for 2012, which are quite far from a decade high of 17.1% (2007) and 14.3% (2006), respectively. As it is, tax effort is posted at 12.5% in the first quarter of the year compared to 11.8% in the same period last year while revenue effort is at 14.9% in the first quarter of 2012 up from 14.4% in the same period last year. These are likely boosted by the deadline in April of tax filing and payments for the year. On the other hand, NG expenditures increased by 12.1% in the first quarter of 2012. The increase in expenditures is largely attributed to increase in interest payments by 12.2 percent. Interest payments are the single largest expense item of the government accounting for 22.2% of expenditures in the first quarter of 2012. (See Table 4) Social spending is evidently not a priority of the Aquino government which has implemented deep cuts in components of social services. In education for example, the budget of State Universities and Colleges (SUCs) was cut by Php146.6 million to Php21.9 billion for fiscal year 2012 from Php22.0 billion in 2011. The government did not allocate budget for capital outlay, reduced the budget for maintenance and operations of 45 SUCs by Php250.9 million, and cut the budget for employees salaries. In health, there was a Php80.6 million
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cut in the personal services of five specialty hospitals of the Department of Health (DOH) in the National Capital Region (NCR) and a Php29.2 million cut in that of 16 local hospitals nationwide. The special fund for enhancement of health facilities was cut by Php2.1 billion; the subsidy to indigent patients has zero allocation; and allocation for immunization was cut by Php618 million. There is diminishing access to social services by the poor as these are increasingly being commercialized. In academic year 2012-2013, 267 private colleges and universities increased their tuition, with an average per unit increase of Php76.25 in Metro Manila schools. SUCs such as Polytechnic University of the Philippine (PUP) and Mindanao State University (MSU)-Marawi and six SUCs in the Cordillera Administrative Region (CAR) also increased their tuition and/or miscellaneous fees by as much as 300 percent. Debtor nation The Aquino government hyped the countrys supposed creditor nation status upon a US$1 billion loan to the International Monetary Fund (IMF) which was a contribution to the IMFs Financial Transactions Plan (FTP), a facility that lends to other members of the IMF to solve their crises. The reality however is that the Philippines and the national government remain deeply indebted despite this. The countrys external debt still totalled US$62.9 billion as of March 2012 US$79.1 billion if other debt monitored by the Bangko Sentral ng Pilipinas (BSP) but relegated to a footnote are included. Up to 77% of this, or US$48.3 billion, is owed by the government including the BSP. And while the country stopped being a net borrower from the IMF in 2006, it still has US$11.7 billion in multilateral debt including US$3.3 billion to the World Bank and US$6.0 billion to the Asian Development Bank (ADB).
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Outstanding NG debt meanwhile has reached Php5.1 trillion as of April 2012 and Php2.1 trillion of this, or 41% of the total, is foreign debt. This huge debt is among the reasons why debt service is chronically the single largest expense of the government, for instance reaching Php738.6 billion in interest and principal payments in 2012. Moreover the international reserves are not really funds that the government has earned and can lend or spend in the same way as, for instance, its projected Php1.8 trillion in revenues for 2013. The international reserves are foreign exchange assets accumulated by the economy from various foreign exchange inflows but which are not like money held by the treasury. The Philippines has actually been lending to the IMF for decades now with an interest-earning reserve position that, for instance, rose from US$113.4 million in 2000 to US$516.83 in May 2012. There has likewise been billions of dollars in other lending to foreign entities. The BSP has long had interest-earning deposits in foreign banks and held interest-earning foreign securities including from the US. This lending rose from US$12.4 billion in 2000 to US$64.1 billion in May 2012. These have sensibly not been played up in the past because such lending of foreign exchange is a normal occurrence in the management of any countrys international reserves and are not equivalent to lending of surplus government cash.
Exclusionary Economics
The poor socioeconomic condition of most Filipinos worsened in the first semester especially upon their increasing marginalization from resources and entitlements. The conditional cash transfer (CCT) program has given a few temporary relief even as it has many serious implementation problems. President Aquinos so-called anti-poverty CCT continues to fail to uplift the people from conditions of hunger and poverty. Corporations on the other hand have been seeing rising wealth creation. Poor job creation An additional 1.02 million jobs were created in April 2012 or a 2.8% increase from the same period last year. There was an increase of some 752,000 wage and salary workers in April 2012 or a growth of 3.7% from last year. The biggest increase in wage and salary workers comes from private establishments with an additional 993,000 jobs created or 6.5% growth. However, there is also an increase in those who are self-employed by 183,000 and an increase in unpaid family workers by 134,000. (See Table 5) By number of hours worked, the number of fulltime workers decreased by 1.6 million to 20.9 million in April 2012. On the other hand the number of part-time workers or those who worked for less than 40 hours per week increased by 2.5 million over the same period to 16.2 million. The share of part-time workers in total employed then increased substantially to 42.8% of total employed from 37.1% in April 2011. Mean hours worked decreased by 2.4 hours weekly, at 39.2 hours in April 2012 compared to 41.6 hours in April 2011. This indicates less work hours and, in all likelihood, lesser earnings and pay. By occupation group, the biggest increase was in technicians and associate professionals (11.9%) and machine and plant operators (9.5%), but these sectors only accounted for some 9% of the employed. Meanwhile, the number of laborers and unskilled workers increased by 506,000 in April 2012 from the same period last year, or an increase of 4.2 percent. Laborers and unskilled workers accounted for 33.2% of the employed. Thus, jobs creation in this period while largely in wage and salary may be surmised as mainly part-time and unskilled work. There is also the matter of increasing numbers of unpaid family workers and those who are selfemployed which may be low- or non-paying and likely with no security. The Aquino administration surpassed its target of creating one million jobs annually but the quality of jobs still leaves much to be desired. By industry, the fastest growing sectors in job creation in April 2012 are in the Services sector posting net creation of 405,000 jobs. In particular Other Community, Social and Personal Services grew by 54.5%, Hotels
IBON Economic and Political Briefing 12-13 July 2012
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and Restaurants by 16.1%, and Mining and Quarrying by 15.2 percent. In absolute terms, the sectors with highest job generation are Other Community, Social and Personal Services with 521,000 jobs created in April 2012 from the same period last year; Agriculture, Hunting and Forestry with 349,000 jobs; Transportation Storage and Communication with 217,000 jobs; and Construction with 185,000 jobs. (See Table 6) Jobs in agriculture are oftentimes unpaid family work, seasonal and low-paying. The construction sector is also notorious for low-paying and highly seasonal work. These jobs are mostly insecure and with little or no benefits. Mining and Quarrying, Hotels and Restaurants, and Other Services while being the top growers in jobs generation in April 2012 actually accounted for a small share in employment generation. At any rate, the services sector which has been absorbing increasing numbers of workers in the past decade or so has actually been slowing since 2009. On the other hand, the share of agriculture and manufacturing in employment has remained virtually stagnant since April 2010 at 33% and 8.4%, respectively. The number of jobs created by the supposedly growing economy barely lifted the employment rate from 92.8% in April 2011 to 93.1% in April 2012. Top sources of growth such as Electricity Gas and Water, Trade and Repair, and Financial Intermediation did not create jobs as fast as they grew in the first quarter of 2012. Electricity, Gas and Water grew by 9% but jobs creation only grew by 5.9% in the first quarter of 2012; Trade and Repair grew by 8.9% but jobs in Trade even contracted 2.6%; Financial Intermediation grew by 8.8% but jobs created only grew 2.2 percent. The sources of record-high economic growth failed to create jobs and reflect the shallowness and unsustainability of jobs generation. Essentially, there is unreliable and poor jobs generation in the economy because of the underdevelopment of the sectors with the most potential for jobs generation and increase in productivity. Even the lack of jobs keeps Filipinos with higher level of education from being productive members of society. The number of unemployed college graduates increased by 300,000 from April 2011 to April 2012 and their share in the unemployed increased. Three out of five jobless have college level education. In fact, two of 10 college graduates are unemployed. More than a skills mismatch which the Department of Labor and Employment (DOLE) offers as an explanation, the problem lies in the economys lack of ability to create quality and meaningful jobs. What the government does now is facilitate the search for employment opportunities in other countries instead of harnessing the countrys human resources to develop the economy. Official government estimates show a small improvement in the employment rate. But this is still not enough to indicate a turnaround from historically high unemployment rates. In April 2012, there were officially 2.8 million unemployed with an unemployment rate of 6.9% compared to 2.9 million (7.2% unemployment) in April 2011. This however does not reflect the true state of unemployment, the definition of which has been changed in April 2005. This has caused a reduction in the number of unemployed by some 1.5 million and the unemployment rate by around 3.4 percentage points. (See Table 7) Still, and not taking into account this discrepancy, there are actually some 20.02 million who are unemployed and in poor quality work that may be low- or non-paying, with little or no benefits and insecure (i.e. those who are self-employed, in private households and in unpaid family work). The Philippines has the highest unemployment rate among its neighbor countries in Asia, such as Malaysia, Indonesia, Thailand, Singapore. In 2010, the Philippines registered an unemployment rate of 7.33% while Malaysia was at 3.31%, Indonesia at 7.14% and Thailand at 1.04 percent. The exodus of Filipinos to find jobs abroad is the worst ever under the Aquino administration. This only highlights how the jobs crisis has unfolded and remained unaddressed. In 2011, the average number of Filipinos leaving daily reached 4,559, the highest deployed on record and 17% higher than President Arroyos labor export record of 3,898 daily in 2009. (See Table 8) The nature of jobs being pushed by the DOLE also reflects what the government perceives as solutions to the chronic jobs crisis. In the DOLE fair in May this year, out of the reported 361,000 vacancies available, 284,000 were overseas-based jobs.
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Wages Wage levels in the country are far below what is needed to support decent living. Nominal daily wages in the country currently range from as low as Php199 in agricultural areas in Region IV-B (MIMAROPA) to Php446 in the NCR as of June 2012. In May this year, the National Wages and Productivity Commission (NWPC) approved a Php30 additional Cost of Living Allowance (COLA) in the NCR and integrated the Php20 COLA given last year into the minimum wage. The increase is being implemented in two tranches: Php20 of the additional COLA was implemented in June while the remaining Php10 will be given in November. Wage increases are happening in the NCR while in the regions, wages are kept low. Aside from NCR, there are increases in the minimum wage in CAR, Region II, Region IV-A, Region V, Region VI, Region XI, and Region XII in 2012, but these are mostly paltry increases which are as little as Php2 to only as much as Php23. Any wage increase is welcome, including the incremental Php20 increase in the COLA last year, which nonetheless came too late to have cushioned the poor from the price spikes that have been happening since 2008.
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Even the wage increases are still not enough to meet the living wage that the government itself defines. IBON estimates the family living wage, which the NWPC had stopped computing in September 2008, to be at Php1,017 in May 2012 in NCR. This means that the current minimum wage covers only 44% of the family living wage. This is even worse than in 2001 under President Arroyo when the minimum wage was 52% of the family living wage. (See Table 9) Wage increases have not kept pace with price increases. From 2001 to 2011, the nominal minimum wage increased by 61% but prices of commodities increased by 67 percent. Average daily basic pay increased by 45% while prices increased by 67% which eroded the value of wages by 11 percent. As a result, real wages are still basically flat in the last decade. In real terms, or taking away the effect of inflation, the minimum wage in NCR is only worth Php361.43. (See Chart 3) Wage increases have also not kept up with the increase in productivity. From 2001 to 2009, NCR workers productivity increased from Php343,000 to Php676,000 or an increase of 97 percent. However, wages only increased by 44% in the same period, from Php265 in 2001 to Php382 in 2009. The Philippines, among its peer Asian countries, has the slowest increase in wages and the biggest gap between productivity and wages, according to a study by the ADB. The Aquino government opposes a wage increase because it argues that the Philippines has the highest wage rates in Asia. However, the countrys legal minimum wage is just average or even below average compared to other countries in Asia and the Pacific. As it is, a 2012 study of the International Labor Organization (ILO) has placed the countrys wage as the third lowest among 72 countries. The ILO has pegged average monthly wage in the Philippines at US$279 or only 19% of the worlds average. Workers long-time demand for a Php125 across the board, nationwide and legislated wage increase is just if only to cope with inflation and increased productivity. The economy can easily absorb the proposed wage hike if firms collectively accept a 12% decrease in their profits. This will not translate to increases in the prices of
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commodities nor result in retrenchments if the wage hike is absorbed by firms from their profits rather than passed on to consumers or to workers. Further, a Php125 wage increase would increase the workers purchasing power which could increase demand in the domestic economy. High prices aggravating High prices of basic commodities continue to burden the people. In fact, price monitors from the Department of Trade and Industry (DTI) reveal more price increases for basic goods in the first three months of the year. Prices of food being consumed by the ordinary Filipino increased, such as sardines by an average of 5%, coffee by 12%, bread by 5%, and condiments by up to 10 percent.
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Utilities rates increases continue unabated. The largest electricity distributor, Meralco, implemented power rate hikes, apparently due to an increase in generation charges from its own power plants. Meralco hiked its generation charges in April by 33 centavos from Php5.33 per kilowatt-hour (kWh). On average, in the first five months of 2012, Meralco rates increased by 30 centavos per kWh or at least an additional Php47 per month for those consuming 150 kWh. In Mindanao, households have been burdened by rates increases 50-80 centavos in April and May because of the rates increases of privately-owned barges to supply electricity. This translated to at least Php100-Php160 increase in bills for those consuming at least 200 kWh. The inflation rate for household essentials, such as housing, electricity, gas and other fuels is high at 4.8 percent. This has implications in the prices of the rest of the commodities. Transport costs likewise are directly affected by increases in petroleum prices, which while experiencing rollbacks in the second quarter (these have recently been recouped in all-time big-time oil price hikes) have seen the pump prices increasing 29 times in the first semester. At any rate, IBONs computations of price movements of Dubai crude versus the local pump price indicate that gasoline is overpriced by anywhere from 6%-53% over the January 1999 to January 2011 period. Poverty and hunger Existing poverty estimates a lower figure than the previous one, are one of the bases of the Aquino governments confidence in achieving its inclusive growth target. Government estimated that in 2009 there were only 23.14 million Filipinos or a poverty incidence of only 25.6 percent. These estimates are based on a revised methodology, the third to date, of measuring poverty beginning December 2011 by revising the menus in the estimation of the food threshold. The revision has brought down the standards of diet and nutrition of Filipinos by removing several viands and items in the menu, thus arbitrarily resetting poverty at subsistence levels. Poverty estimates in the Philippines are defined at the barest physical existence without outside help and without providing for social needs such as education, health and nutrition. Thus, according to the Philippine government, a Filipino with Php32.02 can complete all his or her dietary requirements in a day, or with Php46.10 can complete all his or her dietary requirements with enough for minimal mobility and transportation, sanitation and some form of cover from natural elements. Thus, lower poverty levels under the Aquino administration have been achieved not by doing something meaningful to alleviate poverty but by setting incredibly low parameters so that many who are poor would be excluded from the list. Still, the poverty of basic sectors worsened and was most noticeable among the youth, formal and migrant sector workers, and people residing in urban areas. The fisherfolk and farmers have the highest poverty incidence at 41% and 37%, respectively. (See Table 10) The magnitude of poor in basic sectors increased by 969,291 in 2009 compared to the number in 2006. Migrants and formal sector workers and women registered the highest increases in the number of poor. Those with no jobs saw worsening poverty. Poverty incidence of the unemployed increased by 6.6%, or an increase of 93,044 in magnitude. But the irony is that a bigger number of those who have jobs are also considered poor. The number and incidence of working poor have also increased. The number of employed who are considered poor grew from 7.26 million in 2006 to 7.88 millionin 2009, or an increase of 625,925. Poverty incidence for the working poor increased from 22.1% in 2006 to 22.4% in 2009. An overwhelming share or 71% of the poor lives in rural areas. Rural poverty is entrenched because of lack of rural development where agriculture remains small-scale, non-mechanized and backward and aggravated by globalization and government neglect. The impact of the CCT as the banner poverty-alleviation program remains to be seen. After almost four years of its implementation, the government continues to increase the budget of the Department of Social Welfare
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and Development (DSWD) for the programs implementation without the benefit of an assessment on poverty alleviation gains. Even then, the DSWD seeks to increase the budget for CCT next year by Php4.8 billion to Php44.3 billion in 2013 to cover 3.8 million households. For whom? Sources of economic growth have not delivered in terms of job generation. Also, growth has not translated to meaningful increases in wages and reduction in poverty. However, there is noticeable increase in the wealth of the rich and profits of the biggest corporations. Net worth of the 40 richest families in the Philippines increased by 40% from 2011 to 2012. Combined net worth in 2012 is US$34 billion which, for comparison, is equivalent to 27% of the countrys gross national income in 2011. In 2012, the number of Filipino billionaires increased from 11 to 15. This shows that there is extreme wealth concentration. Interestingly, the corporations of most of these billionaires have also benefited from greater opportunities in government contracts especially those in relation to public-private infrastructure projects. Their corporations have also benefited by capturing water, electricity and oil thus practicing monopoly pricing.
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Net income of top 1000 corporations in 2010 further increased by 6.4% from 2009 to Php804.1 billion. Total net income of said corporations actually increased 591% since 2001 or in a span of just one decade. Interestingly, the sources of economic growth which failed to create jobs are also the most profitable sectors of the economy. (See Table 11) In 2010, net income of top corporations in Finance, Insurance, Real Estate and Business Services posted growth of 36.1%; in Electricity, Gas and Water posted growth of 33.1%; and Wholesale and Retail Trade posted growth of 40.6 percent.
The top performing corporations in 2010 are also under the sector which posted highest growth rates in the economy. Meralco, the top corporation in the Philippines in 2010 by gross revenues and the largest electricity distributor, which holds the franchise for Metro Manila and neighboring areas, for example saw its profits rise as a result of increased distribution, supply and metering charges. Meralcos net income increased by 66.2%, from Php5.6 billion in 2009 to Php9.24 billion in 2010. Petron Corp., the second largest corporation in 2010, increased its net income by 104.4%, from Php4 billion in 2009 to Php8.1 billion in 2010. Average daily basic pay in the sectors which are the top sources of growth have not increased as fast as how the average daily net income of top corporations belonging in these sectors have increased. (See Table 12) Meanwhile, the larger percentage of the population share a small portion of the income pie. In 2009, for instance, the combined average income of the poorest 80% of families (13,923 families) was even smaller than the combined average income of the 20% richest families (3,481 families). Still, some 65 million or 70% of Filipinos live by on Php104 or lower per day according to IBON estimates. The daily income of the poorest half of the population ranges from Php22 to Php67. But the government in 2009, using an incredibly low poverty threshold of Php46 per day, estimated the number of poor at only about 23.1 million.
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Intensified Marginalization
In the past six months, the heightening peoples marginalization, in contrast with drawing the majority to the mainstream, has become increasingly noticeable both in rural and urban areas. Landlessness Even as the Aquino administration persistently tries to convince farmers that they will get land, it does not perform even the minimum requirement for land distribution. Data shows that the Department of Agrarian Reform (DAR) only accomplished 23% of its national LAD (land acquisition and distribution) target as of
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December 2011. As of the said period, there are 961,974 hectares of land still targeted to be distributed by July 2014. (See Table 13) The Aquino administration is second to the Arroyo administration among all post-Martial Law governments for having the lowest land distribution average. At the current rate of DAR land distribution, the Aquino administration is already over five years behind schedule from the June 2014 target of the extended agrarian reform program, CARPer. The Aquino government, like its predecessors, is not decisively confronting landlord and big business interests. Starting with his own hacienda, Hacienda Luisita, President Aquino has not shed off its landlord image when his administration has continued to refuse to recognize the farmers as the legal and historical owners. Land distribution under CARPer is circumvented further by using the flaws of the CARP. In the case of Hacienda Luisita, the Cojuangco-Aquino family claimed just compensation while it managed to insert a beneficiary verification to maneuver the distribution process. The verification strategy is apparently being used to come up with a different set of beneficiaries from those who signed the stock distribution option more than two decades ago. Its insistence of just compensation or simply put payment at market rates, for land to be distributed is contrary to the ideals of a genuine agrarian reform. The Cojuangco family is demanding Php9.75 billion, based on the 2006 real estate rate of Php2.5 million per hectare, as just compensation. The just compensation clause, being in the CARP, does not really transfer the control of resources and break land monopoly in the country. Numerous cases of landgrabbing and land re-concentration, some involving the countrys big haciendas, immediately ensued. This has been noticeable especially after the Cojuangco family claimed payment for use of right of way in Hacienda Luisita to build a portion of the Subic-Clark-Tarlac Expressway (SCTEx) and with the start of construction works for the Tarlac-Pangasinan-La Union Expressway (TPLEx) interchange, covering barangays located inside Hacienda Luisita.
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As it is now, there are more than 200,000 hectares of land which remain undistributed in Southern Tagalog, including haciendas such as Hacienda Yulo in Laguna and Hacienda Looc in Batangas. These landholdings are also current sites of real estate development, leading to the displacement of tenant farmers. In Central Luzon, farmers continue to face the threat of being ejected from their farms due to various infrastructure projects in the region. A recent study on reconcentration of sugarcane land found that 41% of agrarian reform beneficiaries who are sugar workers lost their awarded land through various land transfer schemes. To date, some 270,000 hectares of agricultural land are being claimed by foreign biofuel and food companies and their local partners such as Hassan Group (Bahrain), Itochu (Japan), Far Eastern Agricultural Investment Company (Saudi Arabia), Jeonnam Feedstock (South Korea), San Carlos Bio-Energy (United Kingdom), and the government of South Korea for energy and food export. In January 2012, it was reported that a US$50 million deal with Bahrains Nadir and Ibrahim Sons of Hassan Group was inked by AMA Group Holdings of the Philippines. The deal was seen as part of the US$300-million land lease deal that the Aquino government entered into with Bahrain in the first months of his administration. Meanwhile, farming communities are further marginalized to make way for so-called development projects. The farmers in Opol, Misamis Oriental have been treated as trespassers in their own land by an oil palm plantation which was granted permit in 2011 to develop a contested land of the indigenous people, the Higaonons. The farming community of Tungkong Mangga in Bulacan are now facing the construction of metro rail transit line 7 (MRT-7) under the PPP program which would run through some 300 hectares of farm lands encroached by Aquino ally, the Roxas-Araneta family. It is about to displace more than 300 farmer-families in the 311 hectares of land and some 40,000 residents in Tala and Pangarap Village in Caloocan City (in dispute with Greggy Aranetas Carmel Development). In Saranggani, farmers will be driven out of their land for a castor and oil palm plantation which a foreign company has inked with the local government. On February 20, farmers who tilled a portion of the 184-hectare idle land being claimed by the Rizal Commercial Banking Corporation in partnership with the administrators of Hacienda Luisita were dispersed and charged with trespassing. Mining In the countryside, the sources of livelihood for communities in mining areas have greatly diminished. Meanwhile in Cagayan Valley, Ilocos, Bicol, Eastern Visayas and other regions, the offshore, foreshore and erstwhile common areas near the coast are being mined for magnetite, which is altering the coastal areas and destroying livelihoods of fishing communities. Magnetite mining has substantially degraded the commons to mine black sand to be exported to other countries such as China for iron production. Magnetite mining in Northern Luzon has threatened fish catch on rivers and seas. The Bureau of Fisheries and Aquatic Resources (BFAR) in June 2012 is closing the Cagayan River to fishing because of the declining population of Ludong, a very expensive fish in the Cagayan River largely due to magnetite mining. This will marginalize the fishing households in the area and will affect their livelihood. In Negros Occidental province, productive agricultural lands and fishing grounds are also being threatened after some 28,000 hectares of land was granted to Mozart Minerals to mine magnetite. Prime agricultural lands are also threatened in Batangas province as Crazy Horse Ltd. and subsidiary Asian Arc Mining will mine copper, gold, lead, limestone and clay deposits, according to peasant group Kilusang Magbubukid ng Pilipinas (KMP). In coal and mineral-rich Andap and Zapanta valleys in CARAGA region, indigenous communities are forcibly displaced to clear the area for exploration of companies such as Minimax Gold Exploration and SR Mining Inc. In the CAR, there is continuous militarization of indigenous communities to stem the peoples opposition to, and in order to clear the area for, the exploration of large-scale mining companies such as Cordillera Exploration Co., Inc. (CExCI)/ Nickel-Asia Corporation in Abra and Kalinga provinces and Freemont-McMoran/Phelps Dodge in Kalinga. In Leyte province, Chinese corporation Nicua Mining may have been the cause of fishkills in Lake Bito, according to the Mines and Geosciences Bureau (MGB). The first wave of fish kill was on March 14 to April 15 and this was followed on May 12, 2012. Nicua Mining has been operating in MacArthur and Javier since 2010. Landlords have leased their farms to the mining company, leaving tenants without land to till. Nicua exports all magnetite it has mined to China.
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The Aquino administration released in July this year Executive Order (EO) 79, stipulating its mining policy. The mining EO in essence is about making large-scale mining and the much-discredited liberalization of the sector look responsible. It is an effort to make the economic activity more efficient through regulation of small-scale mining, creation of inter-agency forum, one-stop shop application, and the primacy of national government laws over local legislations. But it does not in any way correct the basic flaw of the Philippine Mining Act of 1995 which allows foreign plunder of the countrys natural resources. There is lip service to full enforcement of environmental standards and exemption of prime agricultural lands and ecologically-sensitive areas to mining while it allows non-compliance to environmental standards by mining companies and massive land grabbing prevail. Placing a moratorium on the approval of new mining permits and the planned crafting of legislation to amend revenue-sharing schemes and value-added activities does not change the Aquino governments stance to allow and even promote irreversible resource depletion and plunder in exchange for miniscule benefits. More importantly, while this moratorium is in effect, the EO allows exploration to continue, at which stage, according to the Mining Act of 1995, most incentives are given to mining corporations for seven years of exploration up to the entire duration of mining. Demolitions, strikes In urban poor communities, the past six months saw violent demolitions to make way for PPP projects and other projects of big business. In January 2012, houses of residents of Corazon de Jesus in San Juan were violently razed to the ground. In April 2012, the violent demolition of houses in Silverio compound in Paranaque, Metro Manila by members of the Special Weapons and Tactics (SWAT) team of the Philippine National Police and the Paraaque City Civil Disturbance Management Unit (CDMU) killed a minor and injured many others by gunshot wounds or when they were truncheoned, kicked and forced to the ground, even when they were not resisting. The city government is apparently planning a medium-rise housing project under PPP, which would accommodate only 1,900 residents, and which they would have to amortize. The national government has eventually handed down a moratorium on demolition in the last week of April as damage control in response to public indignation. Since 2010, there has been a trend of fires breaking out in urban poor communities with pending government development plans. In May, Isla Puting Bato, a community of almost 6,000 people, located within the reclaimed area being planned for the North Harbor modernization project, was razed to the ground when a fire broke out after receiving arson threats from men reportedly from the Philippine Ports Authority (PPA), the agency tasked to clear the area. The residents were also reportedly barred by the PPA from rebuilding their shanties. There have also been harsher response in the labor front. In 2012, union members of the Aboitiz-owned and second largest electricity distributor in the country, the Visayan Electric Company (VECO), have been served by the management with notices of administrative hearing for participating in a rally in their uniforms. The workers of Co Ban Kiat, supplier of hardware materials to major hardware stores such as Ace Hardware, were met with a deployment of more than 70 policemen and SWAT team and a fire truck in the strike area to dismantle their picket in May. The companys practice of non-regularization and unjust termination has been going on for years.
Discredited Globalization Policies

Despite economic growth being exclusionary as well as exclusive, the Aquino government continues with a much-discredited model of development - the push for globalization policies. PPPs The Aquino government has made PPP its centerpiece in development and has been aggressive since 2010. Following a tepid investor response since the beginning, the Aquino government has upped the ante by spending more on it, fast-tracking the regulatory risk guarantees and being stricter on protecting investments. The Aquino administration allocated a bigger budget for PPP in the 2012 NG budget, which is its counterpart
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equity for PPP projects. The education, health, agriculture, and transportation and communications departments all received allocation in the NG budget which has to be spent within the budget year. In mass transportation, the US$1 billion MRT-7 project which was an unsolicited proposal by Universal LRT San Miguel in 2007 is now being undertaken by Marubeni-DMCI consortium from a contract with Universal LRT. Universal LRT is owned by San Miguel Corp. It is the original proponent of the project. The mass transport and highway project will run through Tungkong Mangga, San Jose del Monte City, Bulacan to SM City North EDSA. The project will run through disputed lands (Roxas-Araneta) in Bulacan and Caloocan, as already mentioned. The PPP Center is also bidding out the Php35 billion Light Rail Transit line 1 (LRT 1) extension including the privatization of operation and maintenance. There are 22 PPP projects for rollout in 2012. PPPs in mass transportation and roads are the first to be rolled out. Only the smallest project, the Daang Hari-SLEX, has been bid out last December 1, 2011 to Ayala Corp. The other projects in various stages of implementation are: LRT Line 1 Cavite Extension and the MRT-7 unsolicited proposal. (See Annex) The main feature of an Aquino-brand of PPP is the granting of regulatory risk guarantees, which ensures the private proponent of its profits. Regulatory risk guarantees make sure that the government would pay the private sector in case external problems arise, which include even public or customers clamor to regulate. What is more alarming is how these guarantees undermine the remaining powers of government to stop projects that it may deem as not beneficial to the Filipino people. The Aquino government is currently working to finalize the terms and the legal framework for regulatory risk guarantees. This controversial component of the Aquino governments PPP program is being fast-tracked to convince investors to bid for PPP projects. The second feature of an Aquino-brand of PPP is the inclusion of social services in PPP projects. Social services are the only means by which the State at this point can offer a semblance of wealth redistribution by taxing the haves to deliver services to the have-nots in society, yet are now being passed on to the private corporations. In social services This year, the education and finance departments are getting ready to bid out the first tranche of PPP classroom construction packages worth Php10.4 billion. The project entails the design, financing and construction of some 9,300 one-storey and two-storey classrooms, including furniture and fixtures, in various sites in Regions I, III, and IV-A. As of May, there are eight corporations that qualified in the pre-bid, all of which are large construction corporation such as Citicore Holdings Investment, Inc.-Megawide Construction Corporation Inc., D.M. Consunji Inc. and Makati Development Corporation-First Balfour, Inc. Only the largest construction corporations will be able to bid for the projects as they can take the financial risks such as the possible disapproval of Congress. There are also risks related to financing costs such as the private proponent asking for a higher rate of return given the extended payment period. Private financing has been proven to be more expensive than government borrowing because of commercial rates and terms of borrowing. There is only one PPP project in health currently being prioritized by the Aquino government, from originally 10 PPP projects in 2010. The Php453 million Vaccine Self-Sufficiency Project Phase 2, which entails the local formulation, filling, labeling, and packaging of Pentavalent Vaccine for diphtheria, pertussis, tetanus toxoid, Single hepatitis B, and Haemophilus influenza B. The government does not have project for research and development (R&D) in health. A bill seeking to corporatize 26 public hospitals was filed and immediately passed by House Committee on Health on May 21, 2012.The modernization and corporatization of government-owned hospitals is reflected in some PPP projects and is meant to cater mainly to medical tourists taking advantage of skilled manpower, state-of-the-art technologies, and relatively lower cost of health services. This has implications in the price of hospital services and the quality of services especially to indigent patients.
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Energy The controversial Angat Hydroelectric Power Plant (HEPP) has also been put in the list of PPP priority projects. It may be recalled that under the privatization of energy generation, political, financial and regulatory guarantees are not included, thus the PPP program can correct this shortcoming. The privatization of the Angat HEPP and running it for profit poses risks to how the Angat Dam, the main source of water supply for Metro Manila, will be managed. The countrys experience in energy privatization is not encouraging. The countrys power sector has been captured by a narrow section of the elite, or around three to four families or conglomerates. The Cojuangco, Lopez, and Aboitiz families are leading in terms of subsidiaries and assets. These are among Asias billionaires. From 2001 to 2009, top 25 revenue-making corporations in generation, collection and distribution of electricity saw their net income jump by 902 percent. Meanwhile, residential customers have been shouldering increasing prices of electricity because of power privatization as all the costs of doing business, debt and the risks that come with privatization are being passed on to the consumer through the universal charge, environmental charge, and charge for foreign exchange fluctuations. Rates for residential customers have increased more steeply than those of commercial and industrial customers. From 2001-2010, residential customers suffered an increase in electricity rates of 80% as against the increases of only 53% for commercial customers and 37% for industrial customers. In 2010, the Philippines, with tariffs at US$18.1 cents per kWh had the highest residential electricity rates in Asia and had overtaken industrialized Japan, according to the study of Australia-based International Energy Consultants. Mass transportation In January 2011, the Aquino administration proposed to increase MRT fares to stop government subsidies to MRT fares. The fare hike was approved in May 2011 but was suspended until further decision. The MRT was built through a build-lease-transfer agreement, a privatization scheme, between the government and Metro Rail Transit Corp. (MRTC) and MRT Development Corp. (MRT DevCo), a consortium of private local and Japanese corporations. The government incurred huge debts because of the lopsided terms of the contract. The government was forced to buy out 76% of the MRTC through the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP) to the tune of US$800 million. Also questionable was the extremely expensive maintenance deal worth US$2 million per month with TES Philippines, a subsidiary of Sumitomo Bank, one of the banks which provided the investment loan for the project. Amid the widespread opposition to the fare hikes, the Aquino administration prioritizes the privatization of the MRT and LRT which will further increase the fares and burden commuters. Big business groups such as Metro Pacific Investments Corp. (MPIC), of Manuel Pangilinan and Malaysian partners, Optimal Infrastructure Development, Inc of Ramon Ang; Ayala Corp.; DM Consunji, Inc.; and First Balfour, Inc. of the Lopez Group have already expressed their interest in bidding for the projects. PPP as a globalization policy being peddled by the World Bank is not new and has had tremendous impact even in capitalist countries. It has caused governments to shell out more and place the burden on the people so that the profits of corporations are ensured. PPPs in health in Canada and health and education in UK have reduced access to services, deteriorated the quality of services, and made people pay more. PPPs are not the solution to peoples problems nor the panacea to underdevelopment as the Philippine experience in privatization has already shown and experiences of other countries with PPPs have proven. As a development framework, meaningful growth does not lie in mega infrastructure projects that do not solve the chronic crisis of agrarian backwardness and pre-industrial industry. Privatization through PPPs will reduce access to social services and public utilities and make the people bankroll the financial risks that the government agrees to undertake in behalf of the corporation.
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CCTs The CCT program, despite supposedly being only a social safety net, is the governments full-fledged antipoverty program. It is the governments main strategy in addressing poverty, and it is by injecting additional money into some households. However, it is being implemented without complementary economic policies to create jobs and genuinely address poverty, such as land distribution, support for agriculture and building domestic industry. Social infrastructure does not support conditions of cash transfer. In rural areas, the lack of education and health services and facilities does not facilitate the assumed context of cash transfer. Allocation for the implementation of the CCT program accounted for a big share in the government budget in lieu of social services. The DSWD is seeking a Php645-billion budget in 2013 to support more beneficiaries. The number of CCT beneficiaries will peak in 2013 and those who will graduate from the program will still face poor prospects of jobs and incomes in the economy. But more importantly, the CCT program has twisted the meaning of poverty alleviation from genuinely addressing the roots of poverty through broad-based growth and job creation to expensive dole-outs that would not even make a dent on inequality and lack of inclusive growth in the country. Poverty is structural and not at the household level. Thus household level cash distribution will not solve poverty. The CCT program has recently been praised by the World Bank and the ADB as having provided social protection for the poor amid slow trickling down of economic benefits. The World Bank and the ADB will earn from interest payment of their estimated US$1.007 billion loan to the Philippines to implement the CCT program. Already, there have been documented anomalies in the implementation of the program and proofs that the CCT is failing to alleviate poverty. Still, the government has not come up even with a mid-term assessment of program impacts even as it continues to inject government resources into this palliative solution. Bilateral free trade deals The Aquino government has not only reaffirmed its loyalty to globalization but also intensified its allegiance to the US and other advanced capitalist countries through deals, such as the EU-RP Free Trade Agreement (FTA) and the US-led Trans-Pacific Partnership Agreement (TPPA). The forging of bilateral and regional free trade deals under the Aquino administration has taken some developments in the last six months and how these developments will play out spells the future of the negotiations. The EU-RP FTA is the most advanced and the priority in forging bilateral free trade agreements. The government has increased efforts to clinch the EU-RP FTA by conducting a second round of sectoral scoping studies, roadshows and seminars to start talks in the third quarter. This renewed call by the EU follows the eruption of the crisis in EU countries beginning late last year. The EU is currently negotiating and expects to clinch an FTA with three Asian countries soon: India, Singapore and Malaysia after the EU-ASEAN negotiations have been stalled. According to the Philippine government, the sticky issue would be in agriculture because the countrys agriculture sector will find it hard to compete with the advanced agriculture sector of the EU. Meanwhile, the Philippines prospects for the TPPA lies heavily on changing the Philippine constitution to suit USs economic agenda. The TPPA is USs tool in asserting economic dominance in Asia and the Pacific and leveraging China. In early July, Mexico and Canada have been invited to the TPPA negotiations for nearly completing the changes in its domestic procedures. This invitation was taken as a positive cue by the Philippine government to also be able to enter the negotiations. The change in the economic provisions of the 1987 Constitution (legislative and even constitutional reforms necessary before [the Philippines] can be part of the TPP) has always been key to the Philippines standing in the US-led TPPA. At any rate, constitutional changes particularly those of proposed economic amendments have been raised time and again in the recent period.
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Globalizations 99% President Aquinos globalization policy is a much-discredited policy. It has been proven to have caused poverty and misery to peoples of the Third World and the working class of capitalist countries, thus the heightened peoples struggles against globalization. Globalization has created the wealthiest families and companies while it has caused untold misery to the people around the world. The number of hungry people is now at over one billion for the first time in history. Over half of these live in Asia and the Pacific and a quarter live in Africa. Most of the countries in these regions where poverty and hunger are high are former colonies that have been implementing globalization policies for decades. After three decades, 1.4 billion in poor countries are considered poor, three out of four poor people live in rural areas, and 22,000 children die each day due to poverty. In 2012, protests against the greed and the unsustainability of the global capitalist system have escalated. Protests in different countries strike at the heart of capitalisms failure to bring about development for the greater people. In many parts of the world, unsustainable production systems of capitalism and its imposition on poor countries through globalization are being discredited, with some countries even rolling back some of the functions surrendered to the private, corporate sector in the name of deregulation, privatization and liberalization.
Nationalist Economics
Globalization policies have not ushered in inclusive growth and development. At this juncture, it is imperative that nationalist economics should challenge the existing paradigm. Nationalist economics is the embodiment of the ideas, policies and principles for the economy that is biased for nationalist aspirations. In seeking development, there may be several components that can be advanced by the people. First is by rejecting globalization as the framework for development. There is a need to expose the impacts of globalization on the domestic economy and peoples livelihoods and discard it as a development framework. Reversal of globalization policies can be done immediately and moreso in the long term. This requires responsible government intervention to build local industry and agriculture. It is also inevitably focused on protecting ecology for the kind of development that takes in consideration the needs of future generation. Second is by advancing economic policies that place the interests of the people first over corporations, elite and powers-that-be. Putting peoples interests first entails the provision of just wages, meaningful land distribution with strong state support in pricing, credit and finance and R&D, and the preeminence of public education, health and housing. Wages should be seen as sufficient to attain a decent standard of living for the entire family. Social services should be considered social goods which must be made available regardless of the capacity to pay. Free and compulsory land distribution and support for rural development have long been wanting and should be implemented to reverse the control of the rural elite of resources in the countryside. Third is putting in place progressive taxation to ensure that wealth is redistributed and inequality and inequity are addressed. Policies that would redistribute income and wealth from the current concentration in the hands of the few and reverse the trend of non-inclusive and unsustainable growth should be put in place. Fourth is pushing for an independent foreign policy that rejects onerous debt conditionalities and ensuring mutually beneficial foreign investments for instance. It is founded on the principle that the Philippines is a sovereign nation. It has natural and human resource capacity to be self-reliant. With that capacity, it can craft and implement policies that are based on the aspirations of a democratic economy and society, such as rescinding unequal bilateral trade agreements and other agreements that impinge on economic sovereignty and start establishing international relations that are free from the clutches of other countries.
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Where is daang matuwid leading to?
he second year of the Aquino administration, specifically in the last six months, saw it wage and win a major battle to oust former Chief Justice (CJ) Renato Corona from the Supreme Court (SC). This singular event, and its aftermath, has grabbed public attention for most of the first half of the year. Peoples interest during the period has also centered on the still ongoing tension with China over the Panatag Shoal and South China Sea. Lack of real reforms with tangible economic benefits for the people continues to undermine the presidency of Benigno Noynoy Aquino III. Despite strong public opinion on the impeachment of Corona and so-called Chinese intrusion, surveys indicated a steady decline in public satisfaction and approval in the Presidents performance. More and more people are becoming dismayed over the administrations failure to address high prices, poverty, job scarcity and low pay. It appears that the mantra of daang matuwid (the straight path) is no longer as effective. Aquino has overused the theme to rally and sustain popular support, serving as the anchor for most of his initiatives. But in the face of record unemployment, hunger and poverty in the past two years, not only are the inbuilt limits of the daang matuwid rhetoric beginning to showit is also being exposed bit by bit as a ruse to create the illusion of reforms while continuing the same pro-foreign, anti-development policies and trapo practices of the past. Direct assistance but band-aid responses like the conditional cash transfer (CCT) program are not enough to prop up the sham of inclusive growth. While the CCT budget has grown massively under President Aquino, it has been ineffective in pacifying public restlessness. The past months have seen sustained mass protests over high and overpriced fuel, demolition of urban poor areas, low wages and lack of jobs, deficient social services, destructive large-scale mining, landlessness, etc. In the first place, Aquinos overused daang matuwid or fighting corruption will end poverty slogans and inclusive growth rhetoric are based on the principles of free market democracy. This campaign for good governance has long been promoted by the World Bank and other neoliberal apologists to mask the economic damages brought about by globalization. Washington is also pushing the good governance campaign to help justify to the American public the funding and support that it gives out to its puppet regimes. In the countryside, the 43-year old peasant war being waged by the New Peoples Army (NPA) continues to rage. In recent months, the NPA has targeted the operation of foreign-owned large-scale mining companies and huge plantations in Mindanao due to alleged environmental destruction and unfair labor practices. The Moro Islamic Liberation Front (MILF), on the other hand, continues to flex its muscle even as it engages government in peace negotiations. These social contradictions are being roused by the enduring global crisis as it weighs down on the backward domestic economy. Competing for fewer opportunities to profit, the local elite and their foreign partners have increasingly used state power to create an ever more favorable environment for private investors, often at the expense of the people. Public-private partnership (PPP) is creating such environment and providing more profit-making opportunities for big business through further privatization of infrastructure, utilities, social services and other vital sectors. Another is the aggressive promotion of extractive industries including mining and oil and gas exploration. Persistent talks by close Aquino allies on Charter change (Cha-cha) to, among others, allow foreign ownership of land is also part of efforts to open up new areas for business. This heightens the contradiction between the ruling elite and the people, who are further oppressed with higher user-fees, deprivation of basic services, physical displacement to give way to PPP projects, marginalization from the use of natural resources, land grabbing, etc. At the same time, it amplifies the contradiction among the
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factions within the ruling elite as they jockey for position to grab the most profitable PPP projects and mining and energy contracts and other favors from government. More fundamentally, it unravels the heightened allegiance of the Aquino government to foreign interest at the expense of nationalist aspirations. Even Aquinos good governance campaign is more about instituting reforms to reduce business costs and risks than going after big-time plunderers like Mrs. Gloria Macapagal-Arroyo. But Aquino and the Liberal Party (LP) also rode on the strong anti-Arroyo sentiment to maintain the legitimacy of their rule and pursue the immediate political objective of consolidating power. In the past months, this took the form of ousting Corona behind the pretext of making Arroyo accountable. In the coming months, this will take the form of appointing the new Chief Justice and at the minimum ensure a cooperative SC, and maneuvering to dominate next years midterm polls. A key component of political consolidation is solid US support, which Aquino has enjoyed from the onset. Building on this, Aquino has played a willing part in the US scheme to pivot to Asia Pacific. Government, abetted by uncritical reporting by mainstream media, fanned anti-China sentiment to justify increased US military intervention in the Philippines. On top of sovereignty issues, the unprecedented presence of US forces in the country in the post-US bases era is stoking greater instability in the region. Corona impeachment and power consolidation It was in the name of daang matuwid that Aquino and the LP had sold to the people the impeachment of Corona, riding on the strong anti-Arroyo public sentiment. The Aquino clique took advantage of the valid and wide perception that Corona, a midnight Arroyo appointee, was using the SC to protect his patron. But reviewing how the impeachment trial went would show how it was driven by trapo interests and won by the administration through trapo maneuverings. The issuance of a temporary restraining order (TRO) by the SC on the Department of Justices (DOJ) travel ban on Arroyo and her husband gave LP members at the House of Representatives (HoR) the perfect opportunity to initiate the impeachment of Corona. Thus, despite the hasty filing of the impeachment complaint by the HoR, the public readily supported the move. Meanwhile, the progressive mass movement, including its representatives in Congress under the Makabayan bloc, supported the impeachment on the basis that it was one of the important arenas in the continuing campaign to make Arroyo, her family and allies accountable for their many crimes and abuses against the people during their reign. This, even as the progressive groups prepared to counter the pitfalls of Coronas ouster, particularly the Aquino clique consolidating its control over the entire bureaucracy. Shock and awe Apparently, the LP hoped to duplicate its quick victory in removing Ombudsman Merceditas Gutierrez by applying a sort of shock and awe attack in impeaching Corona. Just within hours, the complaint containing seven cases was signed by 188 congressmen (almost twice the minimum constitutional requirement of 95 signatories) and directly transmitted to the Senate. Moreover, prior to the actual hearing, there was already a sustained anti-Corona propaganda campaign being waged through the major media outlets perceived as supportive of Aquino. The LP hoped that in the face of very wide public backing for the impeachment and relentless attack in the media, Corona, like the former Ombudsman, will be overwhelmed and quit his post even before the trial could actually start. But Corona opted to go through the whole impeachment trial and even engaged Malacaang in a propaganda war. He stressed Aquinos personal grudge against him due to the SC verdict on Hacienda Luisita and the Presidents agenda to control all three branches of government; LP president Manuel Mar Roxas IIs aim to take over the Vice Presidency via his electoral protest against Jejomar Binay, which is also pending at the SC; and Associate Justice Antonio Carpios desire to become CJ.
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Coronas decision to go toe-to-toe against the countrys most powerful man lies less on his claim of innocence and more on desperation to protect himself. The apparent support of the influential Iglesia ni Cristo (INC), whose relationship with Aquino turned cold soon after the 2010 polls and whose prominent lawyer-members have lent their services to defend the Arroyos and their allies, may have also encouraged Corona to challenge his impeachment. In his propaganda campaign parallel to the Senate hearings, Corona depicted his impeachment as an attack against the supposed independence of the Judiciary and for the regime to put its own stooge in the SC. Not only did Corona mobilize the people and resources of the Judiciary for his defense, he also used the SCs powers to derail the impeachment trial (such as the TRO on Coronas dollar accounts and barring Justices and staff from testifying at the Senate), creating the specter of a constitutional crisis. Downgraded complaint Since the LP anticipated an early resignation, the prosecution team it turned out was not quite prepared to go through the impeachment trial. As the hearings at the Senate progressed, the serious defects of what appeared to be an ill-prepared impeachment complaint have been exposed. From an original eight articles of impeachment, the complaint was reduced to just three: failure to disclose his Statement of Assets, Liabilities and Net Worth or SALN (Article 2); failure to meet standards of competence, integrity and probity (Art. 3); and partiality in granting a TRO to allow the Arroyo couple to go abroad (Art. 7). Dropped were partiality and subservience in cases involving Arroyo (Art. 1); issuing a TRO on the HoRs impeachment of Gutierrez (Art. 4); arbitrariness and partiality in the case of 16 newly-created cities (Art. 5); improperly probing an SC Justice to absolve him (Art. 6); and failure to account for the Judiciary Development Fund (Art. 8). It did not help that the LP leadership of the prosecution team displayed ineptitude in presenting and arguing the case. The case was put in greater jeopardy as the LP presented pieces of evidence that were either acquired through questionable means or were downright problematic such as the case of the small lady who supposedly gave photocopied bank accounts of Corona and the defective Land Registration Authoritys (LRA) list of 45 real estate properties. Worse, while the public was led to believe that the impeachment of Corona was about going after the former President, lead counsel Rep. Niel Tupas Jr. weakened the case connecting Arroyo to the former CJ when he agreed to exclude Associate Justice Lourdes Sereno as a witness in the trial. This was despite a pending request by prosecutor Rep. Neri Colmenares of Bayan Muna Partylist for Sereno to appear before the Senate so that she can expound on her dissenting opinion on the SC TRO on the DOJs travel ban. In the end, the battleground was reduced to the non-declaration of Coronas dollar accounts and certain peso accounts in his SALN. But despite much help from LP stalwarts in the Senate led by Sen. Franklin Drilon, the prosecution was still unable to firmly establish a very strong case against Corona before Congress took its regular Lenten break. Maneuverings But the six-week recess proved fateful as Malacaang moved to secure the votes of senators it deemed were undecided or leaning towards acquittal. Sen. Miriam Defensor-Santiago revealed that during the break, the Aquino administration dangled pork barrel to lure the members of the impeachment court to convict Corona. Earlier, the defense team alleged that Executive Secretary Paquito Jojo Ochoa Jr. offered at least Php100 million in soft projects to senators. Government denied these claims. What was clear was that President Aquino used the massive resources, machinery and influence of the Executive to pin down Corona. Amid reports that the INC was lobbying senators to acquit Corona, the President
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himself held a one-on-one meeting with the religious groups leader Eduardo Manalo to explain that the impeachment was part of the administrations reform agenda. The smoking gun in the trial was given by Conchita Carpio-Morales, Aquino-appointed Ombudsman and a personal foe of Corona. Citing a report by the Anti-Money Laundering Council (AMLC) and assisted by the Commission on Audit (COA), Morales disclosed that Corona maintains 82 dollar accounts worth US$10-12 million left undeclared in his SALN, which the Senate pounced on. Consequently, Corona was forced to admit not declaring in his SALN some US$2.4 million in four dollar accounts while signing a waiver to let authorities probe the said dollar accounts if they were ill-gotten. He also dared his accusers and all high-ranking government officials to sign a similar waiver. But this did not prevent his conviction as the Senate, echoing the arguments of Malacaang and the prosecution, argued that nondisclosure of wealth (even if it is not ill-gotten) is a culpable violation of the Constitution. Aquino/LP agenda However, the rhetoric of daang matuwid and reform agenda was quickly betrayed by developments as soon as the Senate voted 20-3 last May 30 to convict Corona. An offshoot of the impeachment was the controversial waiver challenge, which Aquino and the LP have suddenly dismissed as unnecessary even as the President was reminded of his campaign promise to sign such a waiver. Despite widespread public clamor for government officials to waive the confidentiality of their bank accounts, only a handful heeded the call, including the progressive party list groups. Aquino, his Cabinet officials and leading LP members who initiated and directed the impeachment campaign continue to ignore the clamor, exposing the hypocrisy, to say the least, of their avowed campaign for transparency and accountability in pushing for the ouster of Corona. Even the certainty that Arroyo will be held to account for her crimes remains in limbo as the administration continues to mishandle the issue whether due to outright incompetence or calculated scheme to keep Arroyo and her cohorts around. Until today, only one case initiated by government has been filed against the former President, the 2007 electoral sabotage case, which gives her an opportunity to post bail. The much stronger case of 2004 poll fraud (Hello Garci scandal) is still not being taken up while the Ombudsman has downgraded her non-bailable plunder case in relation to the botched US$329-million NBNZTE deal to a bailable case of graft and corruption. The Aquino government also does not seem interested in pursuing human rights cases against the former President for command responsibility in the militarys murderous Oplan Bantay Laya (OBL) I and II. Already, there are calls from officials such as Senate President Juan Ponce Enrile to allow bail for Arroyo and let her seek medical treatment abroad, even as the Aquino administration appears to extend her special treatment by allowing her extended hospital arrest. These developments reveal how the Aquino bloc is apparently still unprepared to significantly shake up the countrys system of elite governance with an Arroyo conviction for plunder or human rights violations. It is also consistent with how the impeachment process was less about accountability and more about controlling the Judiciary. For the Aquino clique, the concrete and immediate gain from the removal of Corona is that it now has a free rein to choose the head of the SC and ensure a more cooperative, if not totally compliant, Judiciary. Coronas ouster gives a chilling effect on the appointees of Arroyo even as Aquinos own appointees in the SCSereno, Bienvenido Reyes and Estela Perlas-Bernaberemain a minority. At present, the Judicial and Bar Council (JBC) has approved the nomination of 22 candidates that include six sitting members of the SC, including Carpio and Sereno; and two Executive officialsDOJ Secretary Leila de Lima and Solicitor General Francis Jardeleza, among others. Jardeleza is a former lawyer of San Miguel Corp. (SMC) of Aquinos uncle, Eduardo Danding Cojuangco Jr. The selection of the next CJ is apparently causing
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contradictions even within the Aquino clique itself, as it considers both the reaction of the public and other elite groups while thinking of its own interests. It is important for Aquino and the LP to make certain that the SC will toe Malacaangs line for a variety of reasons. Politically, the biggest reason is the continuity of the LP reign when Aquinos term expires in 2016. As noted by analysts, key to this is the presidential ambition of Roxas, which will certainly be boosted with a favorable ruling by the SC sitting as the Presidential Electoral Tribunal (PET) hearing the LP chiefs poll protest against Binay. However, the Binay camp has reportedly agreed on a Corona conviction only if Carpio, founder of the law firm that handles Roxass case, will not sit as the next SC. In addition, the ouster of Corona is, for the President and his family, a sort of sweet revenge for the formers role in the SC decision dismantling the Hacienda Luisita. With the clear message sent to SC members by the removal of Corona, there is a very real risk that the High Court might soon undercut the favorable ruling obtained by the Luisita farmers and farmworkers. Of particular concern is the possibility of reversing the decision of the SC to peg the payment at 1989 valuation and not the 2006 level being sought by the family of the President. Aquino himself has expressed publicly that his family deserves just compensation for Hacienda Luisita. 2013 elections With Corona ousted from SC and the desire to control the Judiciary now possible, the next crucial phase of the Aquino cliques scheme to consolidate political power is the 2013 elections. It must be noted that Aquino exerts control and/or influence in the two major mainstream political blocs that will contend in the midterm polls next year, his own ruling LP and the Vice Presidents United Nationalist Alliance (UNA). However, there are ongoing contradictions between the political interests of key players in the LP and UNA that will surely intensify as the elections draw near. How the Aquino clique will manage these contradictions will determine whether the upcoming elections will sustain or undercut the process of its consolidation of political power. UNA is the coalition of Binays Partido Demokratiko PilipinoLakas ng Bayan (PDP-Laban) and ousted President Joseph Erap Estradas Pwersa ng Masang Pilipino (PMP). Showing how the Presidents clan, the notorious Kamag-anak Inc., has positioned itself to take full advantage of its reinvigorated political clout, Aquinos maternal uncle, Jose Peping Cojuangco Jr., has been appointed secretary general of the PDP-Laban. (Another presidential relative, Paolo Benigno Bam Aquino IV, is also running for senator in 2013 under his cousins LP.) Peping is considered the brains behind the Noy-Bi tandem in the 2010 presidential race, which created a rift within the Aquino faction between LP and the Cojuangco clan. LP had accused Peping of ditching party president and losing vice presidential bet Roxas in favor of Binay, a long-time ally of the Aquino family. As in the case of every presidential election in the country, the political configuration changed in the aftermath of Aquinos victory in 2010. The once formidable Lakas-Kampi of Arroyo, which was the merger of the erstwhile two largest political parties in the country, has already disintegrated. Some of its prominent personalities have abandoned the party and joined the LP, PDP-Laban or PMP. About 30 Lakas-Kampi congressmen-members have formed their own National Unity Party (NUP) to make possible their membership to the LP-led coalition in the HoR. Two of its erstwhile key members, Zambales Rep. Milagros Mitos Magsaysay and Cebu Governor Gwendolyn Garcia, have transferred to PDP-Laban, while another Lakas-Kampi stalwart former Senator Juan Miguel Zubiri has joined the PMP for their senatorial bids in 2013. Lakas and Kampi, meanwhile, are not participating in the senatorial race. It is certain that UNA is not presenting itself as, or even pretending to be an, opposition to the Aquino administration. Thus, 2013 is turning out to be a contest among the contending factions of the elite within the Aquino clique. As candidly and plainly laid out by Peping in one of his interviews with the media, he is only
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up against the senatorial candidates of LP while stressing that there is no problem in his relationship with his nephew President. Binay and Erap have both expressed support for the Aquino administration, specifically its declared anti-corruption campaign. Other major parties, meanwhile, have decided to align with the ruling LP. Dandings Nationalist Peoples Coalition (NPC) will field re-electionist Senators Loren Legarda and Francis Chiz Escudero under the administration ticket. Also forging an alliance with Aquino is former bitter foe Sen. Manny Villar whose Nacionalista Party (NP) is fielding re-electionist Senators Alan Peter Cayetano and Antonio Trillanes IV, Villars wife, former Las Pias Rep. Cynthia Villar, and former Surigao del Norte Rep. Ace Barbers. Unlike the 2010 elections which was defined by candidates links (real or made up) with the Arroyo administration, the 2013 polls does not offer a similar theme that will delineate the competing political blocs. The LP, of course, could raise the issue of the inclusion of key Arroyo allies like Zubiri, Magsaysay and Garcia in the UNA slate, and try to link the coalition to the despised Arroyo clique. But it could also backfire on the LP, which seemed to have forgotten that it once tagged its now-ally Villar as the secret Arroyo bet in 2010 (Villaroyo). Also, the impact of such propaganda is somewhat tempered by the moving forces behind UNA: Erap, who is seen as a victim of the Arroyo regime; Binay, who has been a critic of the former president; and Enrile, who led the impeachment court in convicting Corona, widely perceived as Arroyos last line of defense in her legal cases. All these illustrate the opportunist character of Philippine politics where politicians easily change parties not on the basis of issues or platforms but on political expediency. Like past midterm elections, the upcoming polls will be a sort of referendum on Aquinos performance in the first half of his presidency. How senatoriables endorsed by Aquino will fare would give signals on public approval or disapproval of the current regime. Tied to this are the political plans of Roxas and the LP in 2016. A strong showing by LP candidates will sustain the momentum of the ruling partys consolidation of its hold to power. For elite interests Indeed, far from the illusion of good governance and democratic reforms, it is business as usual for the powers that be under the daang matuwid. Consolidation of power by the Aquino clique, in fact, creates an even more favorable political environment to push for retrogressive economic programs and policies that favor certain big local businesses (and their foreign partners). They include those who are closely associated with the CojuangcoAquino clan and are taking advantage of governments centerpiece program, the PPP, as well as new contracts in mining and oil and gas exploration, among others. These big business interests are the same companies that have been expanding their economic empire by taking over, through PPP deals, infrastructure development in energy, telecommunications, transport, and water and storage in the past almost three decades. They include the Ayala family (US$10.2 billion in investment commitments from 1984 to 2009); Lopez (US$7.1 billion); Pangilinan (US$5.3 billion); Razon (US$3.2 billion); Aboitiz (US$2.8 billion); Ang/Cojuangco of SMC (US$2.6 billion); and Consunji (US$1.1 billion). Expectedly, they are the same families that are bagging PPP contracts under the current regime. The Ayalas and its Spanish partner, for instance, cornered the Php1.9-billion Daang Hari SLEx link road project. Meanwhile, the Ayala family is also competing with the Ang/Cojuangco group, Pangilinan and Consunji and their respective foreign partners for the Php60-billion LRT Line 1 extension project. Aside from infrastructure and utilities, another major source of massive profits for the local elite and foreign corporations is the wanton extraction and exploitation of the countrys natural wealth; in particular the vast domestic reserves of mineral and energy resources. It is estimated that some 24% of approved mining applications have been clinched in the first two years of the Aquino administration.
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It is not a coincidence that Cojuangcos SMC has been on a buying spree of mining firms in the past two years. In 2011, it bought 10.1% stake in Australian firm Indophil Resources NL which owns 37.5% of Sagittarius Mines Inc. (the rest owned by Swiss firm Xstrata Copper), the operator of the estimated US$5.9-billion Tampakan copper-gold project in South Cotabato one of the worlds largest undeveloped sites. In 2010, SMC bought three coal mines in South Cotabato and Sultan Kudarat previously owned by Daguma Agro Minerals, Inc., Bonanza Energy Resources, Inc. and Sultan Energy Mining and Development Corp. But mining, while profitable, is also contentious and invites strong opposition from various sectors. Consistent with the deception of daang matuwid, Aquino recently issued Executive Order (EO) No. 79, which supposedly attends to concerns on environmental degradation and negligible economic benefits from mining. While the EO imposes a mining ban on 78 areas designated as ecotourism sites (including Palawan, apparently to appease Gina Lopez and co. of the powerful Lopez clan) and a moratorium on new mining deals until Congress passes a new law that will increase governments mining revenues, it will not stop controversial and greatly destructive mining projects such as SMCs Tampakan. More significantly, Aquino does not intend to reverse the liberalization of the sector under the Mining Act of 1995. Increased US military presence and dim prospects for peace Aquinos first two years in office ushered in a new era in Philippine-US neocolonial relations. This has been exemplified in particular by increased US military presence in the country unseen since the Americans were forced to shut down their sprawling military facilities in Subic and Clark in 1991. Perceived bullying by China over the decades-old dispute in the South China Sea is being blown up to justify such increased presence of US forces. Filipino and American authorities, aided by an unsuspecting media, obscured how increased US military presence in the region is goading China to project its own military might and be more aggressive in its assertion of territorial integrity. While China would not want to go to war despite the firmness in its position, the US scheme is nonetheless stoking tension in the region and creating conditions of volatility. Aquino is playing a dangerous game by allowing the country to be used as Americas pawn in its agenda to contain China as an emerging power and competitor. The DFA has even proposed to designate the US as some sort of a Spratlys cop to supposedly keep the peace in the region. But for the Aquino clique, this ensures continued US support, which is indispensable to its own agenda of political consolidation. For the US, on the other hand, Aquino serves as the perfect partner (or for activist groups, puppet) to implement its geopolitical agenda, its so-called pivot, to Asia Pacific. Being a popular government, Aquino gives the US the legitimacy it needs for deepened American involvement in the Philippines and advance its bigger agenda in the Asia Pacific. An unchallenged Aquino regime also provides the necessary political condition to better and more easily implement US military objectives and schemes in the region. The deepening military relations and the lack of an independent foreign policy are a manifestation of the countrys continued subordination to US agenda. US pivot to Asia Pacific What is driving the refocusing of American foreign policy priorities towards the Philippines and the region is the worst economic crunch that has hit the US since the Great Depression. Asia Pacific is widely seen by American policy makers and foreign policy experts as key to US recovery from its crisis. As US State Secretary Hillary Clinton wrote in her November 2011 essay Americas Pacific Century, the region will yield the biggest returns in US economic, political and diplomatic investments at a time when the country is
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facing a severe crisis. She called Asia central to US economic and strategic interests due to its massive markets and investment areas. Under the Obama administration, the US has been steadily laying the groundwork for a reinvigorated American economic clout in Asia. In last years Asia Pacific Economic Cooperation (APEC) meeting in Hawaii, Obama was able to secure wide support for the US-sponsored Trans-Pacific Partnership (TPP) deal to enhance US free trade and investment with the region. On top of huge trade and investment opportunities are the vast natural resources that the region hosts such as the gas and mineral reserves in the disputed South China Sea. According to experts, South China Seas massive but untapped oil and natural gas reserves could place China, the Philippines and other claimants alongside Saudi Arabia and other leading energy producers in the world. Its increasing economic interests in Asia Pacific thus necessitate the refocusing of US military projection in the region. The Philippines, along with Japan, South Korea, Australia and Thailand, have long maintained treaty alliances with the US. But the ascent of China as an economic behemoth has posed new challenges for American interests in the region. China is being depicted as having the greatest potential to compete militarily with the US and a threat to the freedom of navigation in the South China Sea, which for the first time is being considered as a matter of US national interest. Thus, as Clinton pointed out in her foreign policy essay, there is a need not only to sustain but to update USs existing alliances which will serve as the fulcrum of its pivot to Asia. This entails the expansion of existing military cooperation and forging new ties for defense and security. Aside from the deal with the Philippines, the US has also clinched new military arrangements with other longtime allies in the region like Australia and Singapore. The pact with Australia allows the US to station up to 2,500 Marines in a military base in Darwin while the deal with Singapore will let it station combat Navy ships for forward deployment. The US has been building up as well its military relations with Vietnam through joint naval exercises, and in August last year, the former Cold War foes forged their first formal military deal. It is also aggressively pursuing new bilateral ties including even with Burma, which Clinton visited last Decemberthe first trip by a US Secretary of State in more than half a century. Updating existing military alliances and forging new ones, however, have to be pursued in the midst of the harsh economic realities facing the US. Amid its raging public debt crisis that has been caused in part by costly wars in Iraq and Afghanistan, the Obama administration released last January its latest defense strategy document Sustaining US global leadership: Priorities for 21st Century Defense. The document was the result of an assessment of US defense strategy in the light of the changing geopolitical environment and changing fiscal circumstances. Consequently, the latest US defense strategy calls for developing innovative, low-cost and small-footprint approaches to achieve US security objectives, relying on bilateral and multilateral training exercises, rotational deployments and advisory capabilities. This will allow US forces to conduct a sustainable pace of presence operations abroad and at the same time let it commit to a large-scale operation in one region while still having the capability to impose unacceptable costs on an aggressor in a second region. But given its reduced resources, the US needs to make thoughtful choices on the location and frequency of these operations. As mentioned, Asia is high on Obamas list of security priorities. Apparently referring to the South China Sea, the defense strategy reaffirmed US commitment to assure access to and use of global commons by maintaining relevant and interoperable military capabilities.
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Radar, spy planes, nuke-powered submarines The past six months saw a series of high level meetings between Filipino and American officials transpire, which culminated in a one-on-one meeting between Presidents Aquino and Barack Obama at the White House last June 8. These meetings usher in a new episode in the neocolonial ties between the US and the Philippines, one that is supposedly being motivated by the aggressive stance of China in the disputed territories in the South China Sea. (See Table 14) Following the Aquino-Obama meeting, the US military announced that it will provide a powerful land-based radar system to the Philippines. Called the National Coast Watch Center, the spy base will supposedly boost Philippine defense capabilities and improve maritime domain awareness as it helps track ships off the countrys coastline. While presumably a Philippine facility, the planned coast watch center will serve as part of Americas network of spy hubs in the region to monitor Chinese activities. Apart from building a spy base, the US is also offering the deployment of its surveillance aircraft, the P-3C Orion, over the South China Sea. If this pushes through, it is likely that the Clark air field in Pampanga will be
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once again home to American military planes. In fact, the use of facilities in Clark and Subic in Zambales forms part of US repositioning of its forces in the Asia Pacific. The Americans are already starting to build, through private defense contractors, the needed infrastructure in Subic, which is expected to host frequent port visits by US warships, including its most advanced submarines. With the US moving 60% of its warships (it has a fleet of about 282 ships) and 6 of its 11 aircraft carriers to the Asia Pacific in the coming years, Subic will be a key port for the maintenance, repair and logistics services needed by the US Navy. AMSEC LLC has already partnered with South Koreas Hanjin Heavy Industries and Construction Philippines Inc. (HHIC-Phil), which operates a modern shipyard in Subic. AMSEC LLC is a subsidiary of Huntington Ingalls Industries, an American firm that is the sole designer, builder and refueler of US nuclear-powered aircraft carriers and one of just two builders of nuclear-powered submarines. The US Navy facility in Subic may already be operational as evidenced by the docking of two US nuclearpowered submarines in the past three months. Last May, the USS North Carolina, one of the stealthiest and most technologically advanced attack submarines in the world, surfaced at Subic for what officials described as routine ship replenishment. Then in June, the USS Louisville also docked at Subic to replenish supplies and for rest and relaxation of its crew, said the US Embassy. These so-called routine port calls further stir up the volatile situation in the South China Sea. Amid diplomatic talks to resolve the Panatag standoff, for instance, China suddenly deployed five of its warships including two destroyers, two frigates and an amphibious transport vessel in Philippine maritime domain in reaction to the surfacing of the USS North Carolina. More critically, the presence of a US spy base, surveillance aircrafts and warships in Philippine territory makes the country a legitimate target of US military adversaries in the region, not to mention the risk of disaster that American warships and fighter planes carrying nuclear weapons bring. Of course, there is also the longstanding issue of violation of our national sovereignty and constitutional ban on foreign bases due to the operation and presence here of the US military and its support services. All this will add to the already considerable presence of US forces in the country and the controversies and problems that they have created even prior to Americas Asia Pacific pivot. Under the Visiting Forces Agreement (VFA) and Balikatan joint military exercises, tens of thousands of American troops have trained in the country since 2002 while several hundreds of elite US soldiers have been permanently stationed through socalled rotational deployment. The last Balikatan training in April, which involved an unprecedented 4,500 US troops, was again controversial after a 56-year old Basilan fisher was hit and killed by a speeding boat of American soldiers supposedly conducting maritime exercises. It also appears that the notorious US drone program has long been operating covertly in the Philippines, engaging not only in reconnaissance, as claimed early this year by Aquino himself, but actually conducting combat missions in clear violation of the Constitution. A recent New York Times report said that the US carried out a drone strike in 2006 which hit a supposed terrorist camp in the jungles of the Philippines but missed its target, Indonesian national Umar Patek, while killing others. Just last February, a suspected US drone strike in Sulu also reportedly killed Abu Sayyaf commander Doc Abu as well as a Singaporean and a Malaysian member of the Jemaah Islamiyah (JI) along with 12 others. Government, expectedly, denied the involvement of US attack drones, which are being widely used in Pakistan where one study estimates that one in five casualties is a civilian, including children.
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Junior partners Meanwhile, in tune with US refocusing of its forces in the region, American treaty allies Australia and Japan have also pursued military deals with the Aquino administration. Seemingly from out of nowhere, the Philippines and Japan announced the signing of the Statement of Intent on Defense Cooperation and Exchanges between the two countries defense ministries last July 2. The five-year agreement (renewable thereafter until revoked by one party) with Japan apparently gives it the right to participate in military training activities and exercises conducted by the Philippines. The deal creates obvious legal issues considering that it appears to allow bilateral exercises with Japan like the Balikatan with the US, but without a treaty. Also suddenly revived after the announced US pivot to Asia Pacific is the Status of Visiting Forces Agreement (Sovfa) with Australia, which is similar to the USs VFA. Like Japan, Australia also serves as Americas junior military partner in the Asia Pacific. The Sovfa has been hibernating after it was signed by Manila and Canberra in 2007 but was tried to be rushed for ratification by the Senate before its pre-Sona (State of the Nation Address) break. However, Sovfas ratification was delayed after seven senators rejected the deal in its second reading. Another possible military deal is being considered as well with close US-ally Singapore. While it is not yet clear how all these security pacts will play into the US pivot to Asia Pacific, it is expected that once finalized, they will create a policy environment that allows for the smooth and efficient cooperation among all US treaty allies in the region. For the Philippines, it further deepens and multiplies the political, security and social issues associated with the presence of foreign troops on its soil. Dealing with the communist insurgency With power consolidation and increased American military support and intervention, the prospects of achieving a just and lasting peace have become ever more elusive under the Aquino regime. Despite declared intentions to pursue negotiations for peace, it seems that the Aquino administration is more determined to militarily crush one of the biggest challenges to its legitimacy and consolidation, the Communist Party of the Philippines (CPP) and its armed wing, the NPA. Aside from failing to respect and comply with previous agreements with the National Democratic Front of the Philippines (NDFP), the CPPs political front, the Aquino administrations attitude towards political prisoners, especially peace consultants of the NDFP is undermining the progress of peace negotiations. Last month, just two weeks after negotiators met in Oslo, Norway to break a six month impasse in formal talks (which opened in February 2011), detained NDFP consultant Alan Jazmines was furtively and forcibly transferred by authorities from the Philippine National Police (PNP) Custodial Center in Camp Crame to Camp Bagong Diwa without informing his legal counsel. This, the NDFP said, is a further violation of Jazminess rights guaranteed under the Joint Agreement on Safety and Immunity Guarantees (Jasig). Another consultant, Tirso Alcantara, is being kept in solitary confinement in Fort Bonifacio, which the rebels describe as a brutal and inhumane treatment. At present, there are 363 political detainees, 94 of which were arrested under the Aquino administration, and 14 of which are NDFP consultants and personnel. While formal peace talks between NDFP and the Aquino government have been often off since opening in February last year, big military operations persisted in the countryside, raising once again serious human rights issues. Under Aquinos Oplan Bayanihan, an internal security plan designed after the US counterinsurgency guide, areas deemed as NPA strongholds are facing heavy militarization.
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US role in Aquinos Oplan Bayanihan and counterinsurgency campaign is expected to further deepen with the US pivot to Asia Pacific. This includes not only advisory role and alleged participation in combat but also in carrying out civil-military operations as part of the campaign to win the hearts and minds of the people and legitimize their presence. The US Navy hospital ship Mercys two-week humanitarian mission last June in Samar to provide various medical services for poor communities is seen as an initiative with such objective. The mission apparently aims to complement the ongoing US$214-million Samar road project under the US$434-million grant from the US State Departments Millennium Challenge Corp. (MCC). The said project will construct and repair 220 kilometers of roads that cut across the most marginalized communities of Samar, which the local government described as part of the campaign to eradicate insurgency in the province. While providing social services and economic infrastructure in the poorest communities is welcome, using poverty alleviation and development work under a military-defined, not to mention foreign-designed, internal security effort only tends to undermine the peace and development process. It marginalizes efforts to address the root causes of insurgency (i.e. peasant landlessness) such as through a political settlement based on fundamental principle of social justice while perpetuating the conflict and rampant human rights violations. Such is the case of South Quezon and the Bondoc Peninsula, home to several haciendas and energy investments, where the Philippine Army (PA) has deployed eight of its battalions in 22 towns, an unprecedented concentration of military troops, to supposedly conduct medical missions, construct bridges and roads, and implement literacy programs, among others. But as in most cases where there is a large concentration of soldiers, various forms of human rights abuses have been documented by Karapatan from January 2011 to April 2012, including one case of enforced disappearance; torture (4 cases); illegal arrest and detention (15); illegal search and seizure (5); violation of domicile (3); divestment of property (3); coercion (2); and threat, harassment and intimidation (17). As the resumption of peace talks continues to be hindered by governments non-compliance of previous agreements like the Jasig, armed confrontations persist and, according to available data, fighting appears to have heightened even more this period. IBON monitored 180 confrontations between government forces and the CPP-NPA-NDFP. These confrontations reported a rise in casualties especially among civilians suspected as NPAs, confirming accounts of heightened militarization of civilian communities in the countryside. (See Annex) Human rights violations continue, peoples struggles heighten Human rights abuses and the climate of impunity continue under the Aquino administration. Putting an end to human rights violations (HRVs) was one of Aquinos campaign promises in 2010, but not only have HRV cases under the Arroyo regime remained unsolved, violations persist under Aquino. The continuing impunity and human rights abuses are an indication that these remain a state policy, directed against those who are perceived as threats to the ruling elite. Not one of the perpetrators of the cases of extrajudicial killings and enforced disappearances of activists during Arroyos term has been held accountable. In fact, Gen Jovito Palparan, dubbed as the butcher because of his atrocious record of human rights abuses, remain freedespite an arrest warrant issued in December, which gave momentary hope that the drive against impunity was moving forward. Human rights group Karapatan reported at least 76 killings under Aquinos term, nine of which happened in the first half of 2012. The latest victim of extrajudicial killing is Dutch missionary Willem Geertman, who has been in the Philippines for 46 years and served peasants and indigenous peoples communities in Central Luzon. Geertman, who received numerous death threats and tagged by the military as an NPA supporter, was also involved in environmental issues like mining and in the farmers campaign against the Aurora Pacific Ecozone and Freeport Authority (APECO). Karapatan has noted a rise in human rights violations against farmers, rights workers and environmental/anti-mining activists like Geertman.
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There were also more than 6,000 victims of forced evacuation caused by intensified militarization in the countryside, aside from thousands of other victims of harassment, threats, intimidation, indiscriminate firing and military abuses in communities. (See Table 15) Karapatan also reported a trend of the militarys use of civilian facilities like school buildings and barangay halls for its operations. Combat operations in civilian communities have resulted in a growing number of children becoming victims of indiscriminate firing, harassment, illegal arrests and physical abuse by the military. The Childrens Rehabilitation Center (CRC) documented some of these cases in Iloilo, Tarlac, Quezon, Camarines Norte, and Northern Samar.
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Human rights abuses continue to become rampant as the Aquino government intensifies military operations under its counterinsurgency program Oplan Bayanihan. Patterned after the US counterinsurgency guide, Oplan Bayanihan combines the same intense military operations with a non-combative approach through community organizing for peace and development (COPD) operations such as livelihood projects, 4Ps and CCTs implementation, and medical missions in communities. This militarist approach however fails to win the hearts and minds of civilians and communities, and in fact has only heightened peoples struggles. Human rights violations were also rampant in urban areas. The first half of 2012 saw one of the most brutal demolitions of urban poor communities in history. Arnel Leonor, 21-year old resident of Silverio Compound in Paranaque, was killed after police open fired at demonstrators. The demolition also wounded 33 other residents and protesters who were later charged with disobedience to authority and disturbance of public order. Like the demolition in Bgy. Corazon de Jesus in San Juan early this year, the incident was marked by extreme police brutalitywitnesses said that police officers continued to fire shots as they arbitrarily performed house-to-house searches to arrest and harass more residents. The local government of Paranaque was reportedly pushing for a PPP project for Silverio Compound, eyeing big developers to build medium-rise and commercial buildings in the area. This is clearly a case of a local government prioritizing profits over the peoples basic rights to shelter, and more violent demolitions of urban poor communities like these are expected pending the construction of government infrastructure projects under the PPP. Despite the increasing repression and human rights violations, the peoples struggles have intensified in the past months, as Aquinos socioeconomic policies continue to stir up widespread mass protests. The first quarter of the year saw widening opposition against oil price increases with workers, business, academe, lawmakers, transport groups, youth and peoples organizations reviving the Coalition Against Oil Price Increases (CAOPI) formed in the late 1980s. Meanwhile, labor groups continued to demand for a substantial wage increase and rallied against exploitative employment schemes like contractualization. Workers of Co Ban Kiat Warehouse defended their right to job security when they went on strike in May and halted factory operations after management reneged on their agreement to reinstate illegally terminated workers. The first half of 2012 featured the urban poors unrelenting resistance in defending their right to shelter, as in the cases of Bgy Corazon de Jesus, Silverio Compound, Isla Puting Bato in Tondo, and other communities. The increasing marginalization of farmers and rural communities has led to greater struggles to defend peoples resources and livelihood. Residents together with local government officials, farmers, small-scale miners and environmental activists continue to come together to oppose large-scale mining projects in areas like Compostela Valley, South Cotabato, Panay, Ilocos, Pangasinan, Pampanga, and many others. Peasant groups have also heightened their struggles against land grabbing and land conversion in provinces like Isabela, Aurora, Tarlac, Nueva Ecija, Batangas, Quezon, Mindoro, Bukidnon and many othersas they continue to demand for improved conditions, lower land rent, higher farmgate prices and genuine land distribution. In the face or worsening inequality, marginalization, attacks on livelihood and repression, the peoples demand for meaningful reforms are seen to grow even more in the coming period. Daang matuwid leading to greater crisis and resistance More than two years ago, Aquino made the lofty promise of daang matuwid. It was a commitment that let many Filipinos hope that Arroyo will be punished for her crimes and abuses. It was also a commitment that made the people hope that the injustice, oppression and marginalization they long suffer, especially under the Arroyo regime, will be finally corrected and reversed. Indeed, Aquino campaigned and won on the theme of renewing the peoples hope by rebuilding the damaged legitimacy of government and its institutions. To be sure, the administration was able to remove Corona and Gutierrez from key judicial positions, which Aquino would claim as major achievements in his anti-corruption and good governance campaign. But the fact remains that Arroyo is still not convicted for any crime and the best that government can dofor all its vast resources and influence, and not to mention noise about daang matuwidis to put the former President under hospital arrest in a case that allows her to be exonerated. The fact remains that extrajudicial killings continue with impunity and Palparan remains unpunished.
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More importantly, the campaign for good governance is being pushed to ensure that the US agenda is being implemented. This campaign continues to strengthen the US hold on Philippine politics, lays basis for destructive economic policies and trade deals, and subordinates the country to the USs agenda in East and Southeast Asia. Amid this, the rotten trapo ways of using state power and monopolizing control over the bureaucracy to perpetuate elite and foreign economic and political agenda and interests continue, resulting in greater and deeper poverty, exclusion, plunder, foreign subjugation, domestic and external conflict and human rights violations. It is even worse that all this is being pursued through a deceptive campaign of daang matuwid and good governance. However, while the daang matuwid is leading us to an ever worsening crisis, it also leads the people to the path of greater resistance to defend their democratic rights. Slowly but surely, the people are beginning to see that the straight path towards social justice and genuine reforms that truly serve their interest could only be the result of their unrelenting struggles.
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Annexes
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Btalk 2012 Midyear - 20120712

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