Overhearing the Palace Thinking

rom time to time, documents fall into the public domain that reveal the candid thinking of those at the highest levels of government. In the long, unclosed Book of Gloriagate, a persistent theme has been that of a Presidency defending itself in the name of the Republic but exercising what Manuel L. Quezon III called Scorched Earth Governance. Today, courtesy of the highly recommended weblog of Journalist Ellen Tordesillas, Philippine Commentary reproduces in full a very revealing and substantial document that may lend insight into the accusation that the survival of Gloria Macapagal Arroyo has become confounded with the survival of the Republic itself. If this document IS what it purports to be it reveals how the advisers around the President viewed the political situation of President Gloria Macapagal Arroyo sometime after the House of Representatives had quashed an Opposition impeachment move against her last September 7. Gloriagate was then four months old. Today, six months into Gloriagate, that wild roller coaster ride of controversy is still in frenetic orbit with the sudden reappearance of Virgilio Garcillano. Never has the nation been so divided between the apathetic or helpless on one hand, and the people who can not only afford principles but intend to uphold them. There is no shame in belonging to the latter for the former is what some used to call the trapos and the Erap supporters, though in what follows such picturesque language is not used. [Trapos are "traditional politicians" but the pejorative term is double entendre as the term in Pilipino literally means an old, dirty rag.]

The most wanted man in the Philippine Archipelago has reappeared -- hooded in "Muslim" headgear, and hidden in a "hut" that Henry Omaga Diaz says felt like somewhere "over a mountain and across a river," -- with a towel over his head, claiming to be the victim of wiretapping, not the perpetrator of voterigging, -- and suing the very Congress for gravely abusing its discretion to hold in contempt and warrant the arrest of an honest and God-fearing Comelec Commissioner, as Garci. It is dated 9 September 2005, but there are marginal notes (handwritten words) referring to events in October, when it was most likely presented to the President and the National Security Council. One can of course see the traces of this paper in the subsequent events, one reason to think it may be relevant, but...

Disclaimer: Philippine Commentary cannot vouch for the veracity, accuracy or relevance of this document. It is reproduced here in whatever Public Interest may be attracted to some odd bit of text in a weblog. It's author is unknown, maybe it's a plant or kuryente. Its provenance is uncertain, and it cannot be represented as being the work of any particular person, official or agency. Its ultimate value is probably merely rhetorical. No thoughtful person can ignore the mixture of patriotic and selfish sentiments here expressed, as Gloriagate is not a black and white thing. The spirit in which this is done is that of Jose Rizal in his Dedication of the Noli Me Tangere, to expose the object of disease upon the steps of the Temple, so that those who have just prayed, may help in its diagnosis. Perhaps there are things the public can see that their leaders cannot, and in that knowledge, they may secure their own freedoms and liberties even if the government will not. What I know is this. Many of our allies do not trust this government because of its demonstrated inconstancy and selfish treachery to firm commitments that do have a bearing on life and death, war and peace. Anything that will inform us of the way the Palace thinks, may be crucial to the common weal. A related post is: America's Interests and the Fate of Gloria Macapagal Arroyo. I provide this link because the Situationer does not really consider "foreign policy" issues, perhaps because that was beyond the purview of its author. Mostly however, I am glad at the confirmation by Palace insiders, of the pertince of some of my speculations in these posts from a month ago: Game Theory and Gloriagate and Gloria Macapagal Arroyo and the Veto Holders.

In fine, the following reveals a manner of thinking indistinguishable from that of the Palace's most organized enemies, the Far Left and the Far Out of both Civil and Evil Societies. This only deepens the perception that politics in the Philippines is a war among political Mafias far MORE than it is a battle of ideas or values -- a struggle among high paid consiglieri, communist cadre, and the trapos, all wearing patriots' clothing, and vying either to seize power and territory or desperately hold on to it. This theme was developed in The Paradox of People Power.

But on to the Situationer from the Palace...and the "government" that Rep. Teddy Boy Locsin got me so riled up over during Pinky Webb's show that I called Rep. Rodolfo Antonino an insipid Palace sycophant in "Was the Adam & Eve of All Tapes Digital?".
(Boy I sure hope I spelt SYCOPHANT right. Hey Rizalist, go get Websters Unabridged would you...?)

UPDATES:

(1245) CITIZEN TEDDY BOY LOCSIN was talking to RICKY CARANDANG on Dateline News Philippines (ABS-CBN News). Those who think the gene pool of the Archipelago has run out are dead wrong! The Congressman from Makati is absolutely fed up with the whole Garci affair and says what he wants is for the public's intelligence not to be insulted any more. He must be referring to the BIG FAT LIES of Secretary Ignacio Bunye and the Palace, one of them being the thing that ignited the whole controversy, which Teddy Boy describes as "there's a real coverup!" -- vowing to summon Bunye and Bong Ruado to Congress. I have said it myself many times. The worst thing about our present state is having to swallow lies that insult not only our consciences but also our simple, God-given intelligence. But more importantly he puts the HEART OF THE MATTER succinctly: Who recorded, produced and/or procured and released the Garci conversations? Who has the power in this country to bug a President and Comelec Commissioner and precipitate a crisis of this magnitude? That is a national security issue that can and should be prosecuted independent of the contents of the tapes. [paraphrased from TV broadcast.] DO IT! The truth may be hard for many to bear, but it will set the rest of us free from a Gulag of Lies.

ZUGZWANG: A term used in the Situationer -- UNSTABLE STALEMATE -- is a pure oxymoron, among chess afficionados. But for the political situation precipitated by Gloriagate and the Garci tapes, perhaps the more apt descriptor is ZUGZWANG. But for which side?

HERE IS THAT PALACE SITUATIONER:

NEW THREATS TO PHILIPPINE DEMOCRACY
Briefing for the Cabinet
(9 September 2005)

OVERVIEW: AN ENDANGERED DEMOCRACY

Last September 7, after almost 24 hours of marathon plenary session, Congress voted 158 against 51 to end the impeachment complaint against the President. Days prior, tensions rose after former President Aquino and Ms. Susan Roces along with members of a civil society movement called the “Coalition for Truth” held prayer and unity rallies in support of the pro-impeachment bloc in the lower house. The group vowed to take its cause to the streets should the impeachment complaint not push through.

A few hours before the final rally in Congress showed a decisive defeat by the pro-impeachment bloc, government braced for the worst. Some of the leading political luminaries of EDSA 1 and 2, including Mrs. Aquino herself marched side by side with militant groups and close to 10,000 supporters. A de facto solidarity emerged on that day among the mainstream opposition militants identified with the extreme left, moderate civil society groups, even rightist groups on the single agenda of causing the ouster of the President. But the “revolutionary moment” did not materialize.

Aside from our worst fear of a violent confrontation, what was it that this government just averted, or will have to continue to guard against within the coming weeks or months?

The unstable stalemate induced by the three-month old wiretap controversy has brought about a delicate and complicated security picture. Shadowy groups have emerged, convinced that the only solution to the crisis lies outside of a system they have already condemned as a failure.They are trying to find allies among politicians and vested interest groups, who might be looking fro an opening to advance their own political ambitions. They are seeking alliances with unwitting civil society groups… for legitimate reforms in society. Should these groups succeed in … .. extra-constitutional closure to the controversy, we will have in our hand at best, as shaky transition government that could set us back by several years.

This political situationer will:

· Present a profile of the new breed of threats we are confronting and the implications, and
· Provide an assessment of the prevailing ground situation as it affects these groups’ interventionist agenda.

GROUPS CALLING FOR EXTRA-CONSTITUTIONAL OPTIONS: INTENTIONS, CAPABILITIES AND WEAKNESSES

More than three weeks ago, we alerted the NSC Cabinet group to the increasing number of loosely organized alliances calling fro extra-constitutional options. Let us review these groups, their intentions, capabilities and their weaknesses.

Intentions. These groups vary by level of radicalism. But the ultimate objective of these newly emerging groups is to set up a revolutionary government that is purportedly transitional in nature. It is to be headed by some form of council that will “rule the country temporarily” until the elections are conducted. Usually, the proposed council is to be composed of a broad coalition of civilian and (in some proposals) military leaders, and from most indications would include even such groups as the CPP/NPA/NDF as sitting members. Upon assumption of power, there are proposals to suspend the Constitution and dismantle the legislature. The major decision-making powers will be concentrated on the ruling council.

· The strategy for intervention is to unite all groups demanding the resignation or ouster of the President, galvanize a united peoples’ stand against the government, and force an extra-constitutional solution to the crisis most probably through another civilian-military uprising.

· There is a lot of activity going on in the untied front effort and apparently meeting significant success. Between and among themselves, there is already an emerging alliance. They have also linked up with other key GMA-resign forces such as the Lacson and FPJ-Susan Roces and Villanueva camps.

· One of the first groups to call for an extra-legal solution to the crisis is General Abat’s Coalition fro national survival (CNS) which called for the setting up of a civilian-military junta to be headed by himself and other unnamed civilian and military leaders. The CNS issued a manifesto purportedly signed by 50 other civil society groups.

· The Estrada camp later on endorsed the idea and proposed its own council composed of 9 to 15 leaders to be headed by the deposed President himself. Among those to be invited to the council are Senators Lacson and Enrile, Mayor Binay, and Bro. Eddie Villanueva.

· Identified with the Estrada camp is the UP Aware and Laban ng Masa composed of former UP heads, members of the academe and student groups. The latter called for drastic political change which will dismantle the whole government and replace it with a revolutionary, transitional one. Intelligence information revealed that Estrada actually funded the UP Aware’s proposed political platform.

· Militant groups and partylist identified with the CPP/NPA/NDF called for drastic political change through the total dismantling of the entire Arroyo government.

· The Unity for Truth and Justice marked its public debut with a proposal to set up a Multi-Partisan Revolutionary Council to be headed by Susan Roces, Bro. Eddie Villanueva, and Boy Morales. The CPP/NPA is also being invited to sit in the council.Jose Ma. Sison was quoted by Utrecht press to have endorsed plans for the setting up of a revolutionary transition government.

· The Young Officers Union New Generation (YOUNng), which claims to be a younger batch of the original YOU that launched a series of military coups against Cory Aquino in the late 80’s also joined in and vowed to bring down the Arroyo government and set up a revolutionary government in its place.

· The Solidarity Movement called for the establishment of a caretaker transition government that will rule the country for two years. The group is inviting Reporma leader Renato de Villa as head of the caretaker government. Personalities such as Mrs. Aquino, Ms. Roces, Liwayway Chato, Eddie Villanueva, and Senators Lacson and Drilon will be invited to lead the transition government.

· The Cory Aquino camp is now endorsing people power to [pressure the President to resign or cause her ouster. The Cory factor should be given careful attention. The forces identified with her are known for their persistence in causing the ouster of a regime particularly Marcos. Some members of the so-called HYATT 10, particularly Secretaries Dinky Soliman, Ging Deles and Butch Abad have linked up with her.

Based on an analysis of the composition of these groups, it is evident that the main forces behind the clamor for extra-constitutional options are the Estrada camp and the groups identified with the leftist movement. These are forces that have been infiltrating the rest of the anti-Arroyo forces in society in an attempt to forge a united front with them. They already have the grassroots support to push their agenda but they need groups such as Cory forces to facilitate the other conditionalities for a successful people power.

Capabilities. These new emerging groups are structurally amorphous and some of them, still underground at this point. However, they have the following strengths:

· Moral and political clout (Cory group, Villanueva camp, some members of the mainstream opposition, UP Aware);

· Logistics and resources (Estrada camp, partylist);

· Well-developed organizational networking and mobilization and propaganda machinery (extreme leftist militants and partylist);

· Grassroots support and mass base (Estrada camp and extreme leftist militants and partylist );

· Armed component or capability to launch terrorist attacks (CPP/NPA identified groups); and,

· Clout in the military and police (CNS, Estrada, Lacson and De Villa camps)

Vulnerabilities. The main weaknesses of these newly emerging groups are lack of assured support from the armed forces, lack of consensus on a single rallying figure, lack of agreement on the extent and nature of political change being sought, internal disunity or incohesiveness, and identification with suspicious/discredited political agenda/politicians. For instance, proposals fro a ruling council or juntas to be manned by discredited and vested-interest groups are alienating to the more conservative but influential sectors of Philippine society.

( Marginal note written by hand on the above paragraph: “AFP, divided into 3 groups- FVR, militant AFP, GMA/FG loyalists. De Casto package to take-over only to oversee snap election. As of Sept. De Castro is not willing.”)

THE GROUND SITUATION

Let us now examine the evolving ground situation and how this could affect these new threat groups, destabilization and interventionist designs. To a large extent, the
Succeeding discussions also provide explanations as to why such groups have failed so far in their agenda.

Political Alignments: Emerging Trends

Let us start with the emerging patterns and trends of political alignments. A close look at the positions of key sectors and stakeholders on relevant issues reveals that these destabilizers have not reached consensus with the former on vital questions. Let us take a look at these issues one by one.

On Calls for the President’s Resignation. On the issue of the President’s resignation, quit-calls gathered momentum after several important sectors withdrew their support from the Arroyo Administration and public opinion turned for the worse during the first month of the crisis.

o There is already a consensus among the mainstream political opposition, intellectuals/professionals groups and extreme leftist militants that the President must go. Two former presidents share the same view (Aquino and Estrada).

o Other influential sectors are divided. (Next to this sentence is a handwritten note:”Good proper strategy (carrot and stick) of PGMA group is continuously dividing the church-business society.)

o In the religious community, the influential catholic Bishops Conference of the Philippines (CBCP). Couples for Christ, the Philippine Council of Evangelical Churches (PCEC), and the Bible Believers League for Morality and Democracy (BBLMD) refused to join calls fro the resignation of the President. Other religious groups such as the El Shaddai and the Iglesia Ni Cristo (INC) tend to be supportive of PGMA. A faction of the Protestant community and Brother Eddie Villanueva’s JIL, however, have taken an opposite position.

(Marginal note on CBCP: “change in CBCP will lead to call fro PGMA resignation.” On CFC: “”Undecided”. On El Shaddai and INC: “have not taken call for resignation’)

o Big business is also divided. A faction of the Makati Business Club under Luz and Romulo and the Financial Executives Institute of the Philippines (FEIP) called on the President to step down. An MBC group under Yuchengco, the Philippine Chamber of commerce and Industry (PCCI), the Federation of the Chinese Chamber of Commerce and Industry (FCCCI), and the Employers Confederation of the Philippines (ECOP) took a contrary position. The PCCI and ECOP were among the first to express approval of Congress decision to junk the impeachment case against the President. PCCI also appealed fro an end to protest actions after the historic September 7 plenary voting. (Marginal note: “Business maintains conditional support fro PGMA-profit motivated.”)

o The more moderate civil society groups are also inching closer towards a consensus on the President’s resignation. The CODE-NGO, Plunder Watch, KOMPIL 2, and the newly launched White Ribbon and September 7 Movement, coalition for Truth and Black and White Movement are some of the middle forces that called fro the President’s resignation or ouster through impeachment.

At present, her Excellency’s support base in government remains formidable even if it was recently challenged by the falling away of some members of her political coalition and cabinet.

At the local government level, the President’s support base is intact. Majority of provincial governors, municipal mayors, councilors and barangay officials are rallying behind her.

(Marginal note: “cannot be sustained for so long since government will start delaying delivery of IRA project funds. Sept.”

Likewise, there has been no mass exodus so far within the ranks of pro-administration congressmen as shown by the voting in Congress last plenary session.

(Marginal note: FVR/JDV formula is to cut short PGMA term. JDV leadership in the House must be calibrated for possible new Speaker. Nograles, Pichay, Fuentebella, Cojuangco boy.)

Meanwhile, public opinion showed signs of softening during the second month of the crisis. We have also yet to see the latest surveys to determine if this has changed for better or for worse after the impeachment battle in Congress.

(Marginal note:”Due to optimism impact of impeachment.”)

The President’s net trust rating now stands at – 24 per the latest 2-4 August survey by the SWS conducted in Metro Manila. This is a significant improvement from the –33 rating last may considering that MM has always been traditionally oppositionist.

(Marginal note:”Lowest ever for a President. Lower than Marcos.”)

As of August, there are also fewer people demanding the President’s resignation. In the same survey, 53% think the President should resign against 37% who think otherwise.This is an improvement from the 59% wanting her to resign and 31% opposing it in the 12-14 July SWS survey. The net negatives have been reduced by 43% in a matter of 21 days. This is a significant change.

Likewise, the same survey revealed that fewer people now believe that the economy would worsen should the president remain in power until 2010. The rate of change constitutes a 61% turnaround.

Her Excellency’s international image also enjoyed a boost lately after international surveys projected her as one of the world’s strongest women (Forbes survey). The US also expressed optimism that PGMA can still turn things around if she would push through with reforms.

On the Manner of Resolving the Crisis. On the manner of resolving the crisis, many sectors and the rest of the public show an overall willingness at present to give constitutional processes a chance to take their course.

· The mainstream opposition rightist civil society groups and CPP-NPA identified militants and partylist have been at the forefront of efforts to foment another popular uprising. Like we said earlier, within such circles, there are attempts to secure public endorsement for radical options in the form of either a junta-style government (CNS, Erap camp, Unity for Truth and Justice) or a revolutionary transition government (UP Aware, solidarity Movement, militant groups).

· Many key sectors, however, remain averse to people power and other extra-constitutional modes as option to resolve the crisis. Big business, the religious sector (with the exception of a few factions), and the US (as a major influence in the international community) are calling for sobriety and for allowing legally prescribed mechanisms and processes to take their course. This appears to be a significant inhibiting factor to the eruption of any unmanageable level of public emotionalism at this point.

· Likewise, the attitude of the general public is tempered at this point, even though the people are not inclined to just let the issue rest. In the June survey by the SWS in Metro manila, an overwhelming 77% of the respondents said they want some things to be done. Only 20% agreed that the controversy should be put to an end.

- Of the things they wanted done, there was abroad reference for due process. The most popular answers were: more investigation to find out the truth at 26 %, resignation at 18%, airing of the tape in public at 13%, impeachment at 7% and have an election at 6%. Only a very negligible percentage suggested power people and a recount of the votes.

- The July 2005 nationwide survey by Pulse Asia also tends to validate SWS findings in this regard. Only 7% actually support the option of the President being removed from office by any means, including unconstitutional ones.

On Consensus on Alternative Leaders. Another inhibiting factor that we noted is the lack of clear consensus at present on an alternative leader. Compared to EDSA 1 and2 revolts, the requirement for an alternative leader appears to be higher this time around.

· The Vice President is the constitutional successor and leads the people’s choice of alternative leaders at 26%, according to Pulse Asia’s July nationwide survey. The opposition, however, is posing resistance to the Vice President because there is little political gain for them in this scenario.

(Marginal note: “October indicators show increasing acceptance for De Castro as transition for snap election.)

· In the opposition camp, there appears to be a strengthening move to prop up Ms. Susan Roces. We are inclined to assume that the Erap camp is open to the idea. United Opposition Senator Pimentel already hinted that Ms. Roces could be an effective unifying figure for the opposition. However, Ms. Roces has not made known any clear personal political agenda even though she has pledged her willingness to support a people’s initiative.

· Senator Lacson is another possible alternative. Pulse Asia July nationwide survey showed Lacson as the second choice (21%) of the people.

(Marginal note: “Money and force could keep him afloat.”)

· We are considering the possibility that former President Estrada retained the loyalty of some of his old supporters. In the July nationwide survey by Pulse Asia, he ranked third at 11%, Estrada has offered to head a transitional revolutionary council. He would have to contend, however, with the same forces that ousted him.

(Marginal note: “Nil possibility.”)

· Only recently, the Solidarity Movement floated Reporma leader Renato de Villa as alternative leader, possibly in a bid to win support from the military.

(Marginal note: “Not yet firm up.”)

On Charter Change. In a no –impeachment scenario, the battle now appears set to branch out to the issue of Carter change.

· Thirty-two House members have already started campaign to secure support for Charter Change. There appears to be strong support at the lower house and at the government levels.

· Business appears divided. Guillermo Luz did not speak for the MBC per se but voiced his opposition to Charter change. The heads of the Bankers Association of the Philippines, PCI, Federation of RP Industries, and Federation of Filipino-Chinese Chamber of Commerce and Industry, on the other hand, are open to the idea.

· The religious sector. the Bishops-Ulama conference has endorsed the proposal.

· Partylist groups identified with the Left (Bayan Muna, Anakpawis, Gabriela, Akbayan, and Partido ng Manggagawa) have voiced out their resistance to Chacha.

· At the public opinion level, it is clear that the people do not know enough about the Constitution to make an informed choice at this point.

- The latest August survey by the SWS found that only 22% know enough about parliamentary system. Of the 22%, respondents are evenly split at 10% on whether they feel it would work fro the country.

- The respondents are also divided on the issue of which is more important, 22% say Charter change is more important and 25 % say the two are equally important.

- These surveys mean that with more education and information drive, public opinion could still turn around either way.
Trends in Protest Actions.Let us now examine the prevailing trends in protest actions. The recent indicators are not very favorable for destabilizers.

· Reduced Frequency, Inceased Coordination. After more than a month of sustained rallies, the frequency of protest actions in connection with quit calls went down after the SONA and then picked up on the run up to the plenary battle.

· Anti-Arroyo rallies were highest a the onset of the controversy, at the start of the Congressional investigation a the height of Congressional debte on the playing of the tape and the July 13 Makati rally, the SONA rallies, and the days prior and after the Congressional voting on the impeachment.

· However, there appears to be increased coordination of rallies as protestors who will initially deploy themselves in separate locations in Metro Manila would eventually converge in a single rally site in Makati and Batasan area. Recently, there have been attempts to revive the People Power Monument in EDSA as convergence site.

Not enough Warm Bodies. Participation in rallies has not yet reached critical levels – the highest number achieved so far is between 28,000 to 40,000. Rallies after the impeachement battle in Congress theinned even more to only 8,000 at a time.

(Marginal note: “Due to change in strategy of rally organizers. We have yet to see the new mode of protest.”

Dominance of Left-Leaning Groups. It is very revealing that in most of these protest actions, the left-leaning groups are decidedly dominant.

· From January 2005 to date, 82% of protst actions were largely instigated by the leftist militants.

· There remains a basic wariness towards the leftist militants. Recently, however, it has been quite successful in forging tactical alliances with mainstream opposition personalities, the Erap camp particularly the People’s Movement against Poverty (PMAP), and oust-Gloria groups.

The CPP’s Destabilization Plot. Let us consider the CPP/NPA factor. For the past several weeks since the start of the crisis, the intelligence community has been monitoring reported plans by Leftist movement to launch a destabilization drive.

· The plot involves the employment of provocateurs in the rally sites, assassinations, and the lauching of terrorist attacks. We suspect that the plot may already be operational.

· Last week, after the House Committee on Justice rejected all three impeachment complaints against the Presient, militant groups clashed violently with anti-riot personnel. Dozens were hurt in the incident.

· Significantly, after agreeing a couple of days ago to return to the negotiation table, the NDF panel once again pulled out of the talks just last night. This could mean that it’s destabilization drive could come full circle in the near future.

Vulnerability of the Military to Infiltration. Let us now discuss the increased vulnerability of the military to infiltration by destabilizers.

· We do not believe that the conditions for a successful coup to be launched by factions of the military already exist.
· Nevertheless, the military remains a primary target of infiltration by provocateurs and destabilizers. The ranks of younger officers are particularly prone due to the reality of deeply-rooted internal military problems.

IMPACT OF THE CRISIS ON THE ECONOMY

Let us now examine how the crisis has taken its toll on the economy.

Pre-Crisis Situation. We must point out that before the twin controversies of alleged jueteng payola and poll fraud erupted, there were sure early signs of an economic recovery despite the impact of soaring prices. Revenue collection posted improvements not seen in many years, the budget deficit eased up, international credit rating agencies gave favorable reviews, stock market performance and the peso were stable and the national economy grew strongly.

Current Situation. At present, the economy still retains its resiliency despite the current uncertainties but the prospect of a long-drawn out political crisis could eventually take serious toll on economic recovery efforts.

(Marginal note: “Take-off is not insight- govt must start ”painting” a new landscape.”)

* After sustaining heavy losses during the first month of the crisis, stock markets are again showing signs of recovery. Prior to the impeachment battle in Congress, trading was almost back to the pre-crisis level.

- Compared to the lows experienced by the local stock markets during Estrada’s impeachment crisis, the current situation is still better off.
- The local bourses are trading between 1,800 to 2,000 points currently. At the height of Estrada’s impeachment crisis, trading was only between 1,300 and 1,500 points.

* The peso is also showing signs of weakening after breaching the P56 to the dollar mark at the height of political tensions. Still analysts are of the opinion that the peso has held remarkably steady during the past three months. In the first three months of the crisis, the peso was fluctuating at a daily average of —centavos. The current trend is less serious compared to the last three months of Estrada’s crisis when the peso was fluctuating at daily average of 31 centavos. Likewise, during the first three months of our current political crisis, the peso depreciated by P1.77 (from P54.51 to P56.28) This is much better performance compared to the first three months of Estrada’s crisis when the peso depreciated by P5.32 (from P46.36 to P51.68).

* A discouraging trend in the economic sector is the downgrading of our credit rating by Moody. Fitch and Standard and Poor from stable to negative largely in reaction to the TRO on the EVAT, JP Morgan, however, upgraded RP’s credit rating from negative to neutral.

*Fluctuating world prices of crude oil is also expected to further complicate the security picture. Last month, crude oil price hit a historic high of $70 per barrel and we are already sitting on a 7.2% inflation rate as of August.

IMPACT OF THE CRISIS ON GOVERNANCE

Let us consider the impact of our present political woes on governance.

(Marginal note: “Options – (separate briefing) resignation. Leave of absence, national govt. of Solidarity, creeping governance , and revolt within.”)

Everyone agrees, some painful and necessary reforms are needed fro the country to move forward. There are important reforms the government should undertake in the fiscal section, agriculture, defense and security, counterterrorism, and governance. But the government is prevented from doing so by this kind of divisive politics that has been with us for sometime now.

The Political and Economic Risk Consultancy could not have put it more accurately. Its 30 July 2005 report said, “Political rivals are tying up the country in knots. The whole affair shows how divided Philippine politics is and how difficult it is for any leader to push meaningful and badly needed reforms.

CONCLUSIONS AND RECOMMENDATIONS

That brings us to our conclusion. More than the instability it is causing, the brand of politics we are currently experiencing is:

· Making the country a breeding ground for radical and competing groups offering the political formulas that could either only lead to further uncertainty or signal a return to dictatorship – or both.

· Sabotaging the economy and preventing it from maximizing recent indications of economic recovery, and

· Slowing the government down, preventing it from carrying out real reforms in the economic and the political system.

At this point, we are concerned about several questions. First, do the conditions for a successful intervention by groups calling for extra-constitutional solutions already exist?

Recent developments show that some crucial conditions are still lacking which explains why anti-Arroyo forces have failed at this point to exploit “golden opportunities”. These conclusions were not strict requirements in the past EDSA revolts. But the situation might be different this time, given the magnitude of prevailing national problems.

- They lack a clear consensus on an acceptable alternative.

- There is no agreement either on a clear political plan of action in an exit-scenario. Some of the alternatives offered are either alienating to the more moderate sectors or do not provide enough details as to capture the imagination of the public and key power blocs, specially the military.

(Marginal note: “it is all geared up- waiting for its tipping point. PGMA to continuously update and shape her exit plan.”)

- In short, the Arroyo Administration is still the best alternative at present. We also witnessed how her Excellency’s support base consolidated at critical times.
Second, now that Congress has decided there will no impeachment against the President for at least one year, are our troubles over?

· A stalemate situation remains. This is so because the President’s enemies clearly do not accept the decision of congress. While civil society groups are taking their cause to the streets, pro-impeachment politicians vowed to take the fight all the way to the Supreme Court. They also vowed to continue investigation into the issue in both chambers of the legislature. Senate already started its own probe.

· The following trends are like to continue in the coming weeks or months.
- Destabilization campaign by anti-Arroyo forces, specially the CPP. (If the opportunity does not exist, then the opportunity will be created.)
- Demolition politics against the President, more dirt to be dug up; sustained trial by publicity; and
- Intensification of solidarity works by groups calling for extra-legal measures to cause the removal of the President.
· The stalemate is an uneasy one but the situation is holding. We are not yet over the hump, but there are favorable signs that the crisis has softened in the past several weeks. These include:
-Improvement in the President’s popularity
-Thinning number of protesters in major rallies
-Manageable negative impact on the national economy:continued economic resiliency.
· Nevertheless, there are future flashpoints that could be a factor in dramatically changing the current ground situation, e.g. EVAT issue, Charter Change and incoming oil crisis.

The last question we wish to address is what should the government do in the coming months. There will be a race for the people’s hearts and minds. At present the Administration and the anti-government side are competing for the support of key sectors that have yet to make a definite stand on the matter. Some of the influential blocs in society include:

· Other political parties such as the Liberal Party (LP) and the Nationalist People’s Coalition (NPC) that have yet to take a united and official party stand on the issue.

· While refusing to join quit-calls, the Catholic Church has adopted an open-ended position that could still change in the future.
(Marginal note; “Until December – we expect to see a radical posturing under the new CBCP leadership in January 2006.”)

· The armed forces has retained an apolitical stand since the start of the crisis. We are aware, however, that a large segment of the military is quietly sitting on the fence right now, waiting for developments. While we trust our AFP, we cannot discount the possibility that in the event that the government fail to control the situation, it will step in if only to save the country from anarchy.”
Hence, if these power blocs in society along with a big chink of the silent public are discouraged by the Anti-Administration side due to its current weaknesses, then such weaknesses should become the government’s strength.
In this connection, these are our recommendations:

· Visible sustained and invigorated reform and governance approach in key areas: peace and order, energy, poverty reduction, counterterrorism, fiscal policy, anti-graft and corruption drive.
· Harness what remains of the government’s support base.
· Clear, detailed and decisive plan of political action in the event of worst-case civil disturbance scenarios.
· Formulation and adoption of a roadmap fro political change and reform.
-End-
At the end of the document are more marginal notes:
Underlined is “US factor is critical”.
Under it were three items: 1) Determine role in the crisis; 2) FVR continue to play the “bridge” for US thinking in Philippine scenario;3) role of RP in US policy for Asia (no longer lead role).

Next to those items were more notes: “Poor acceptability of GMA in Bush administration; high risk for US under PGMA;incompatibility of interest between GMA boys and US business; declining public popularity not conducive to the US; indifference of international community to GMA leadership (Japan, China, Germany, EU and Muslim countries; high profile graft.”

Additional marginal notes: “CPR, propa, House probe to be restricted, media management, offensive media plan.” “Economic emergency measures, takeover of basic facilities, bring down tariff, prices” “Keep EVAT hanging to appease public , to meet creditors requirement.” “Check on FVR moves.”

HAPPY NATIONAL HEROES DAY FOLKS!
And a proud salute to all the winners at the Southeast Asian Games!