Questioning the fiscal crisis

If the screaming headlines and hair-raising front-page stories don't get you, then maybe the stark figures will. No doubt about it: We are in the middle of a fiscal crisis of such magnitude that worst-case scenarios like Argentina's financial meltdown in 2002 are being cited and taken seriously.

No less than 11 faculty members of the University of the Philippines School of Economics tell us so, their dire warnings bolstered by tables, charts and mathematical formulas.

As if on cue, President Gloria made an uncharacteristically candid admission that, indeed, the "state of fiscal crisis" is upon us and calls on everyone to pull together to overcome this latest challenge to the survival of the nation.

In short, GMA says Congress must pass pronto all eight new tax measures she has certified as urgent and agree to slash the legislators' pork barrel, local government units must learn to render public service without spending because they won't get their expected slice of the national budget, and the people must tighten their belts further under an undeclared austerity program that will test their capacity to survive extreme conditions of poverty, want and a bankrupt, some say inutile, government.

The scuttlebutt is that our government has been spending much, much more than what it earns and to keep that up, has gone deeper and deeper in debt.

The cold facts are there, paraded now and not hidden by our economic managers, the better to shock and awe us into belief. The national budget deficit has been soaring in the past six years -- it was PhP199.9 billion, or 4.6% of GDP, in 2003. This was more than double the original 2003 target in President Arroyo's Medium-Term Development Program 2001-2004.

Moreover, the government is trillion pesos in debt! Total public sector debt, including those of the national government, government banks and corporations and central bank, totalled PhP5.4 trillion as of September 2003. PhP2.01 trillion of the PhP3.36 trillion in national government debt was incurred by the Estrada and Arroyo regimes from 1997 to 2003.

A full third of the 2005 budget will go to interest payments. More shocking, according to an administration congressman, Albay Rep. Joey Salceda, 94% of revenues the government would collect next year will be used to pay its debt, including the principal.

Accordingly, the budgets for social services and capital outlay have been cut to the bone. This is indeed alarming since real spending on education, health and housing has been falling since 1997, particularly when President Arroyo came to power.

The UP School of Economics paper draws an even direr, if more accurate, scenario than government has been compelled to admit. It draws attention to the economy's heightened vulnerability to "any large external shock" such as a sudden increase in global interest rates, a sustained increase in world oil prices, a sharp decline in overseas workers' remittances or anything that could cause the import bill to rise, including, ironically, attempts to revive an import-dependent, export-oriented economy.

These, by the way, are not far-off possibilities, but are already on the horizon, if not actually undermining the economy such as runaway prices of oil and the impact of the wars in Iraq, Afghanistan and Palestine on OFW remittances from the Middle East.

Any or all these conditions would predictably result in "huge difficulties in repayment, whether or not the government defaulted formally." In turn, there would be a huge and sharp cutback in foreign lending as foreign creditors and investors lose confidence that they will get their money back. This would then lead to a series of events including "a sharp peso depreciation, most likely aggravated by capital flight, severely contract(ed) trade as the price of imports rose, and correspondingly a deep recession and unemployment."

But more than what the lenders and investors will think or do, the UP professors point to the more pressing and mundane reasons why government must act to stem the worsening fiscal crisis. For how then will it turn the soaring promises at President Gloria's SONA into anything close to reality? Did she not mention food on every table, jobs, housing, education and lifesaving medicines?

The UP paper proceeds to show how government prescriptions won't necessarily work; in fact, that these could stir up more public protest and political instability because they will hit the poor more than the rich. Already, government pressure to introduce new taxes has been generally perceived as nothing but added burdens on a people already reeling from huge erosions in income due to job loss, frozen wages, inflation versus the unrelenting increases in the cost of basic needs such as food, water, electricity and transportation.

At this point, the urgency of dealing with the public deficit and debt is beyond doubt. However, if we were to meet this fiscal crisis clearheadedly and with the best interests of our people (not the government that has demonstrated an appalling capacity to mess things up), shouldn't we be asking how the crisis came about to begin with?

In medicine, the diagnosis is more than half the treatment: One can't rush off providing the cure without having a clue as to what's causing the patient's disease in the first place.

Giving the Arroyo administration another PhP80 billion of new tax revenue without making it accountable for all the trillions that are now nothing but piled up debts sounds too much like we're being taken for another ride.

BusinessWorld
Aug. 27-28, 2004

Matching words with action

All's well that ends well, or so it seems with the uneventful, safe release of two military men held as, in the parlance of their erstwhile captors the Romulo Jallores Command of the New People's Army, prisoners of war. The white t-shirts they wore as they walked to freedom bore the unmistakable letters "POW."

Why is the NPA insistent on using the term "POW?"

Luis Jalandoni, chairman of the National Democratic Front (NDF) Negotiating Panel, minced no words when he said that the two, being combatants captured in a tactical offensive carried out by the NPA on March 1, 2004, were considered as hors de combat (unable to fight) when they surrendered. Thereafter, they were treated as POWs and "accorded humane treatment in accordance with the NPA's long-standing policy of lenient treatment toward prisoners of war, the Geneva Conventions and Protocols, and the Comprehensive Agreement on Respect for Human Rights and International Humanitarian Law (CARHRIHL)."

The NDF has again scored propaganda points by releasing the two POWs held by the NPA for more than five months. It is ironic that the Arroyo administration has so far failed to do better or at least match the same treatment accorded government soldiers by a group it calls "terrorist."

The NPA may be accused of merely engaged in a publicity gimmick with the release of the two POWs on Aug. 18, but the government can do better beyond its usual knee-jerk reactions.

The release speaks for itself: It once more underscored the big difference in the conduct of war by the two warring forces, with the NDF pursuing efforts to adhere to international rules of war and, on the other hand, the government failing or refusing to act on reports of military atrocities committed against NPA captives as well as innocent civilians merely suspected to be NPA sympathizers.

Instead of at least minimizing the NDF's propaganda mileage in the POWs' release, government played a clumsy game by holding and interrogating at a checkpoint journalists covering the event.

Captured in a gun battle last March in Tinambac, Camarines Sur, Army 1Lt. Ronaldo Fidelino and Pfc. Ronel Nemeno were supposed to be released as early as June, but military authorities refused to heed NPA demands that, for the sake of the two soldiers' safe release, the AFP and police declare a temporary suspension of operations in designated areas in Bicol.

By their own admission during an interview with a Bicol reporter, Fidelino and Nemeno said they were treated well by their captors. Early this week, the Arroyo administration finally declared a suspension of military and police operations in Bicol thus allowing an NPA custodial team to hand over the two soldiers to representatives of the International Committee of the Red Cross (ICRC).

Theirs is the latest in a series of releases of POWs done by the NPA, in coordination with the NDF, over the past several years. The releases involved both ordinary soldiers as well as senior AFP officials, including a general who was set free in Mindanao about five years ago. Many of those released talked about how they came to know of the NPA's revolutionary cause in a way that enabled them to correct previous misimpressions about the organization. Their military superiors could only rebut by saying that their soldiers might have been victims of the Stockholm syndrome.

But what has been government's response to the NDF? It promoted one of the most notorious violators of human rights tagged by rights watchdogs as the "Butcher of Mindoro" -- Jovito Palparan. Despite charges filed with the Commission on Human Rights (CHR), the Justice department and Congress, Palparan has been promoted twice in just one year -- from colonel, to brigadier general and now, after heading the Philippine contingent in Iraq, to a two-star general as chief of staff of the Army.

We have received reports from the provinces, verified by either human rights groups or even local officials of the CHR and local government executives, of NPA guerillas who had surrendered after a gunbattle being shot at close range or left to bleed to death without being treated. I have read a report by Karapatan, a human rights alliance watch, of a farmer who was abducted on mere suspicion of being an NPA sympathizer, then tortured, stabbed several times and left for good inside a village chapel with his hands tied to his back. Other reports talk of minors killed by indiscriminate firing by troopers and of children along with their parents who were arrested and beaten up.

Many of such incidents are now subject of more than 100 cases filed with the Joint Monitoring Committee, the group formed by both government and the NDF to monitor the implementation of CARHRIHL. Many of the cases were first brought to the attention of the CHR, the Department of Justice and even Congress, but nothing much came out of these efforts. Appeals to the President to have the cases investigated were futile.

Unless government does something positive with such cases, it will confirm and fortify allegations by the NDF that in the context of the peace process, the state has not fulfilled its obligations under the CARHRIHL and other agreements forged so far by the two parties. We have yet to see government upholding the two Oslo joint agreements signed early this year that provide for the immediate release of a number of political prisoners, the indemnification of some 10,000 torture victims of the Marcos dictatorship and the removal of the "terrorist" listing of NDF chief political consultant Jose Ma. Sison as well as the CPP and NPA.

Failure to do so only strengthens speculations that either the Arroyo administration lacks the political will, or civilian supremacy is being undermined by the rabidly anti-communist AFP or both.

Unfortunately, the militarists in the Arroyo policy circles have this flimsy fear that by seriously implementing peace agreements or treating NPA suspects and prisoners humanely, government will only support the NDF's claim to belligerency status.

On the contrary, government should not even refer to the peace process as a starting point for upholding international humanitarian law and the Geneva Conventions on the rights of combatants and civilians. Justice and respect for human rights is beyond the peace talks process; every human being on earth is supposed to have his or her rights respected, including the right to life and humane treatment even during times of war, regardless of ideology and so on.

But then, that is a tall order. As far as rights watchdogs in the Philippines -- and Amnesty International and the UN Commission on Human Rights -- are concerned, the Arroyo government is short on deeds and long on talk in upholding human rights. Perhaps, the government can start correcting this record by first implementing CARHRIHL earnestly and seriously.

BusinessWorld
Aug. 20-21, 2004

Baseless and unjust

The "terrorist" listing of the Communist Party of the Philippines/New People's Army (CPP/NPA) has just been renewed. Adam Ereli, deputy spokesman at the US State department, said Secretary of State Colin Powell has renewed the designation of the CPP/NPA as a "Foreign Terrorist Organization" under the US Immigration and Nationality Act. It is likely that CPP founding Chair Jose Ma. Sison, who was tagged as a "foreign terrorist" two years ago, will likewise be relisted.

The Arroyo government welcomed the listings and would want the European Union to follow the US line.

Initially, the US-led "war on terror" had the semblance of being on a moral high ground, and the Arroyo government could justify its joining the anti-terrorist war.

But this "war" has since been exposed for what it really is - a terrorist war. It has devastated millions of innocent civilian lives in Afghanistan and Iraq without having anything to show for its avowed aim of curbing international terrorism. Condemnation of this war is snowballing, especially after the exposes of US military atrocities in Afghanistan and Iraq.

Indeed, so isolated now is the George W. Bush administration that Dubya cannot claim solid support for his war even from his own political party.

With that, the Gloria Macapagal Arroyo government would do well to take a good second look at its position on the "terrorist" listing of the CPP-NPA and Mr. Sison. For its own good, this government must now ask itself if it should continue to ride on the heels of a war that is increasingly turning out to be indefensible from both the moral and the legal perspectives.

The interfaith and multi-sectoral alliance of peace advocates, Pilgrims for Peace, asserts that "the listing(s)... disregard... Protocols I and II of the Geneva Convention and UN resolutions that distinguish national liberation movements from terrorist groups."

Moreover, "while purportedly in line with the US-led 'war against terrorism,' (these) listing(s) (are) baseless and unjust, and contravene all previous agreements between the NDFP (National Democratic Front of the Philippines) and GRP (Government of the Republic of the Philippines) that obligate both parties to uphold the national sovereignty of the Filipino people and respect the rights of participants in the peace negotiations to safety and immunity guarantees."

In brief, the "terrorist" listing intrudes into the internal affairs of the Philippines, violating its sovereignty, jeopardizing the GRP-NDFP peace negotiations, and violating the democratic rights of Mr. Sison.

It is also being used as a leverage to force the NDFP to sign a "final peace agreement." This agreement amounts to nothing but a surrender pact that does not in any manner take into account the social and political roots of the armed conflict. That tactic has proven to be a miserable failure.

For all these reasons, the Arroyo government must do a thorough reexamination of its line on the "terrorist" listings. It must, in pursuing the peace negotiations with the NDFP, uphold national sovereignty and build goodwill measures to inspire confidence in the prospect of attaining a just and lasting peace. Correcting its course as regards the "terrorist" listings would be a leap in that direction.

"If this is the price to pay for being Filipino, so be it." These were fighting words from President Arroyo, said last week in response to a statement by Richard Boucher, spokesman of the US State department, that the Philippines was, "at this point," not part of the so-called Coalition of the Willing, following its decision to withdraw its troops from Iraq ahead of schedule to save the life of Angelo de la Cruz.

It is not too late for the Arroyo government to act with the same spirit with which it saw fit to heed public opinion and choose to save the life of an innocent Filipino over maintaining troops in support of a condemnable war.

Many say that spirit wasn't borne out of genuine nationalism, but more likely arose from a desire of the beleaguered Arroyo administration for self-preservation.

If the government misses this opportunity to set things, it will be left with no choice but to go against the tide of public opinion. Our people have repeatedly shown that they are for peace - a lasting peace based on justice.

BusinessWorld
Aug. 13, 2004

Lessons in geopolitics from Angelo de la Cruz

Angelo de la Cruz was probably the last person to think that he would some day be in the center of a raging foreign policy debate over the GMA government's unwavering, some say blind, support for the US-instigated invasion and occupation of Iraq and its unquestioning commitment to the so-called US-led "war on terror."

Just before the US dropped the not-so-smart bombs on Baghdad and other Iraqi cities last year, MIGRANTE International, the organization of overseas Filipino workers, already raised the alarm about how government support for the war would place the lives and jobs of over a million OFWs in the Middle East in jeopardy. But when Saddam Hussein's armed forces were quickly routed by the overwhelming firepower of the US, with nary a casualty among our OFWs, the GMA government glowed in the reflected glory of the US victory and crowed about the hundreds of thousands of jobs awaiting our job-hungry compatriots.

From a few hundred, Filipinos working in Iraq grew to 4,000, many of them providing the menial yet critical services that the occupation forces of the "Coalition of the Willing" needed. Many more eagerly, if desperately, waited to land jobs in the Middle East. Where possible, not in war-torn Iraq, but there, too, should the choice redound to risking death abroad by bullets or at home by starvation.

Who would have thought that the Iraqi resistance would become so fierce, determined and widespread that the seemingly invincible US military war machine would veritably come face to face with another Vietnam. Who would have anticipated that the Iraqi rebels would hold foreign nationals as captives to force governments and business interests to accede to their political demands? No one, it seems, from among the foreign policy advisers of this administration and certainly not the President herself.

As if that were not problematic enough, why couldn't the Americans find those weapons of mass destruction they said Saddam, the Evil One, had been hoarding in huge stockpiles? Why didn't the overthrow of the hated Saddam regime bring about the flowering of democracy, progress and peace that Bush and Blair promised? Those damaging findings by the US Joint Congressional Committee about flawed and falsified intelligence used to justify the Iraq war couldn't have come at a worse time.

The nagging doubts about who stands to profit in the aftermath of the war on Iraq, specifically, the giant oil and construction companies embarrassingly identified with US President Bush and Vice-President Cheney and their neo-conservative think tank, tainted no end the US motives for warring against Iraq.

By the time the de la Cruz hostage crisis threatened to blow up in the GMA government's face, the US-led war and occupation of Iraqi had become exposed as an ignominious sham, a grandiose and costly scheme (in dollars, and in innocent people's lives) to advance the economic and geopolitical interests of the US.

It had been rightly condemned, from the Vatican to the Islamic world to the streets of Washington, D.C., as illegal, immoral, and unjust, an abominable and contemptible trampling of the rights of a sovereign peoples and state.

All these were not lost on the people praying, demonstrating and holding vigil in the churches and streets of Metro Manila, in the Pampanga hometown of de la Cruz and many more places around the world home to the Filipino diaspora. The popular demand reverberated: Save the life of Angelo! Pull out Filipino troops from Iraq!

There comes a time even for a loyal ally, some say puppet, to take stock of things and see the writing on the wall. Angelo de la Cruz, who had become the Filipino Everyman, could not be allowed to become another Flor Contemplacion, the sacrificial lamb to the Ramos government's incompetence and insensitivity to the plight of OFWs.

Not when charges of massive fraud were still flying fast and thick and Mrs. Arroyo had to be proclaimed by Congress in the wee hours of the morning when the FPJ camp and the rest of the nation were fast asleep. Not when a really serious financial crisis for the debt-strapped government loomed in the wake of the election spending spree by the incumbent administration dipping its dirty fingers into the public coffers.

This time, President Arroyo, the faithful US drummer girl in Southeast Asia, did the right thing: She pulled out the Philippine troops from Iraq. Of course, in the process, she saved her own political life from the real threat of being ousted from power had she not heeded the public clamor to save the life of Angelo de la Cruz.

No less than US State Secretary Colin Powell and Defense Secretary Donald Rumsfeld overtly exerted pressure on the Arroyo government to reverse its decision to withdraw the Philippine troops by July 20 in a rare case of public arm-twisting of its most favored non-NATO ally. No less than the Australian Prime Minister John Howard and his undiplomatic Foreign Minister Alexander Downer called the Philippine government names for allegedly caving in to "terrorist" demands.

Foreign policy experts and even newspaper columnists fancying themselves as such bemoaned the alleged loss of credibility of the Philippines in the international community and predicted dire scenarios of lost foreign investments, foreign aid and foreign jobs.

In the end, the view from the streets is that the withdrawal of Philippine troops one month early from Iraq to save the life of de la Cruz was a small, but dramatic step in the right direction. It has correctly been described as upholding national interest in defiance of US superpower pressure.

Just how far the GMA government will go with its newfound wisdom that not everything the Americans say is for our own good is still anybody's guess.

BusinessWorld
Aug. 6-7, 2004