From Manila Survival Guide

By Sonny Africa

The Duterte administration’s Tax Reform for Acceleration and Inclusion (TRAIN) bill reportedly due for ratification by Congress this week burdens the poor with higher consumption taxes so that the rich can have higher take-home pay. The Department of Finance (DOF) used income tax gains for a few middle-class families as a smokescreen for even greater tax gains by the richest Filipinos and, worse, higher consumption taxes for the majority of poor Filipinos.

The bicameral conference committee on TRAIN on Monday reconciled the Senate and House versions. Proponents have grossly exaggerated how millions are supposedly exempted from paying income tax. They have also downplayed how tens of millions of the country’s poorest will be burdened by higher prices on basic goods and services without getting any income tax exemptions.

The overwhelming majority of Filipinos do not get any income tax benefits from TRAIN. Most of the country’s total 22.7 million families do not pay income tax because they are just minimum wage earners or otherwise in informal work with low and erratic incomes. Even if TRAIN reduces income taxes paid by most of the reported 7.5 million personal income taxpayers, this still leaves as much as 15.2 million families without any income tax gains.

A reported 6.8 million low- and middle-income families will be completely exempted because they are earning less than the Php250,000 threshold for income tax to start to be paid. These families certainly deserve income tax cuts to cope with rising costs of living. But it is misleading to claim “6.8 million” benefiting from TRAIN because this figure includes millions of minimum wage earners already exempted by law. If anything, the DOF, House and Senate have even proposed to remove this minimum wage exemption.

The country’s rich are meanwhile among the biggest gainers from TRAIN’s income tax reforms. Low income and middle class families earning up to some Php60,000 a month will have a few thousand up to around Php80,000 additional take-home pay annually. The richest 1% of families with incomes of Php1.5 million or more a year will have an average of Php100,000 to over Php300,000 additional take-home pay annually especially when income taxes are lowered further in 2023. This is on top of how the rich will pay billions of pesos less in estate and donor taxes.

On the other hand, the poorest 15.2 million Filipino families not getting any increases in take-home pay will have to deal with more expensive food and drinks, cooking expenses, jeepney and bus fares, electricity and other goods and services next year. Prices will increase because of the direct and indirect effect of higher taxes on: sugar-sweetened drinks; oil products including liquid petroleum gas (LPG), kerosene, diesel, and gasoline among others; and coal. The burden on poor Filipinos can only get worse once it becomes clear what value-added tax (VAT) exemptions will be removed.

The Duterte administration’s TRAIN runs over the poor to avoid taxing the rich. Hundreds of billions of pesos can be generated if only the government were unafraid to impose higher taxes on the country’s wealthiest families who have accumulated trillions in pesos and can well afford to contribute more to government revenues than they already do. Planned higher taxes on cars and cosmetic surgery are miniscule compared to the wealth they have. If passed into law, TRAIN only confirms the Duterte administration’s anti-poor and pro-rich economic policies.

IBON Features – Contempt for human rights is fast becoming a Duterte administration trademark. Over 10,000 people, mostly poor, have reportedly been executed in its war against drugs. Extrajudicial killings, harassment and intimidation, illegal arrests and forced evacuation of communities have continued and recently started escalating. The victims include many opposing the government’s anti-people policies. Authoritarianism is growing astride neoliberalism.

Big business- and foreign investor-biased neoliberal policies cause economy-wide violations of people’s economic, social and cultural rights while creating prosperity for a few. This will only worsen with the neoliberal tax reforms and wholesale liberalization being pushed by the Duterte government.

Alarming state

Recent rapid economic growth has not resulted in the attainment of the rights to work, to just wages, to land, to adequate standard of living, and to health, housing and education – in many instances the situation has become even worse. Promises to end contractualization and of free land distribution, education and housing are still unmet. The abrupt termination of peace talks with the National Democratic Front of the Philippines (NDFP) betrays the government’s lack of interest in, among others, the basic social and economic reforms that the country needs.

Some 11.5 million Filipinos are jobless or underemployed – counting the unemployed that official statistics have stopped reporting but still excluding the over 10 million forced to find work abroad. Of those employed, 31.6 million or nearly eight out of 10 are in the informal sector with poor quality work. Some 5,800 Filipinos leave the country every day to work overseas. As it is, the latest labor force survey data for July 2017 reported 784,000 jobs lost from the same period last year including a million agricultural jobs lost that were not replaced by new jobs elsewhere in the economy.

Around 22 million Filipinos live in extreme poverty at Php60 per person or much less per day, and almost two-thirds of the population live on just Php125 or less per day. Inequality persists — the combined wealth of the 15 wealthiest individuals amounting to Php2.6 trillion is equivalent to the combined income of the 77 million poorest Filipinos. Wages meanwhile are still less than half the family living wage.

Landlessness is still widespread, Even among supposed agrarian reform beneficiaries, some three out of four are unable to amortize the land supposedly awarded them. Farmers and farmworkers are evicted from their lands by corporate plantations, ecotourism projects, and real estate developers. This imperils not only farmers’ livelihoods but also the nation’s food security. Farmers that have dared to collectively occupy and cultivate land have been attacked by landlords and the state’s armed forces.

Homeless urban poor groups have claimed idle government housing but still grapple with spotty health services, and water and power supply. Their leaders meanwhile face arrest for the boldness of their organizations’ assertion of the right to housing. In the Visayas, tens of thousands of Typhoon Yolanda survivors have been in temporary shelters for four years with their former communities declared no-dwelling zones yet transformed into tourism spots. In Mindanao, a few thousand Marawi evacuees have been promised free housing even as thousands more are prevented from returning to their war-ravaged homes by business-led rehabilitation cordons.

Community-built schools in Lumad and other remote areas where the government is absent have enabled thousands of indigenous children and their families to avail of free and relevant education. Yet the Duterte administration continually threatens them with many already harassed, bombed and forcibly evacuated by the military and paramilitary groups. Teachers and community leaders have already been killed.

Elitist priorities

The Duterte administration’s social and economic policies as found in its Philippine Development Plan (PDP) 2017-2022 and priority legislation remain trapped in obsolete neoliberalism. These will only worsen the jobs crisis, undermine decent wages, further erode social services and public utilities, and prevent the country from benefiting from its rich natural resources. At the same time they will further entrench the hold of local and foreign big businesses on Filipinos’ economic life.

The Tax Reform for Acceleration and Inclusion (TRAIN) program will strain the budgets of poor households who will have to pay more for their marketing, transport fares and utilities because of new taxes on oil products, sweetened beverages, coal and others. The country’s more well-off families on the other hand will be relieved of income, estate, donor and other taxes; even corporate income taxes are planned to be cut. 

Among the biggest beneficiaries of TRAIN revenues will be big local and foreign investors participating in or otherwise using the big-ticket infrastructure projects in the administration’s “Build, Build, Build” program. These projects include large dams feared to displace some 20,000 indigenous peoples’ families across the nation.

Proposed amendments to the Public Service Law and to the Build-Operate-Transfer Law seek to completely turn over public services and utilities such as telecommunications, transportation, water and electricity to the private sector including to foreign investors. More than ever, these will become commodities to profit from rather than vital services that all Filipinos have a right to. Their affordability and accessibility will be compromised.

The Duterte administration’s drive to completely liberalize the economy for foreign investment is especially alarming. The nationalist economic provisions of the 1987 Constitution will be made ineffectual under the proposed Federalism charter. This removes the last legal measure for the country to assert its sovereignty over its national patrimony and economy. As it is, the administration will already take initial steps towards this in its upcoming revision of the foreign investments negative list (FINL).

The anti-development repercussions of federalism also cannot be underestimated. Pres. Duterte’s federalism initiative will drive local governments to compete with each other in a race to the bottom to attract investors through cheaper labor, lower business taxes and other conditions favorable to profit-seeking at the expense of social and welfare considerations.

The state is obliged to respect, protect and fulfill human rights. The Duterte administration’s neoliberal policies do the opposite and violate the rights of tens of millions of Filipinos. As with all its other rights violations, it should be held accountable for these attacks on the Filipino people’s economic, social and cultural rights.###

Illustration by Francis Busok IBON@2017

Sonny Africa

Among Pres. Rodrigo Duterte’s idiosyncrasies is preferring a vulgar stream-of-consciousness approach in his speeches. This is even for the annual state of the nation address (SONA) at the opening of Congress which is undoubtedly the government’s highest-profile policy speech of the year. The president’s choice is a matter of style but then this also means that his SONAs shouldn’t be analyzed the way other presidents’ SONAs are – that is, as a coherent comprehensive statement of the administration’s policies and priorities.

Having said that, Pres. Duterte’s 2017 SONA can still be interpreted against everything else he has been doing in the past year. What becomes clear is that he continues to build his image and behave as a benevolent paternalistic strongman.

This is dangerous, anti-democratic, and anti-development especially in the specific conditions of the country. The Philippines’ political institutions are underdeveloped with a strong patronage-clientelist streak. The military and police are abusive and violate human rights with impunity. Oligarchic and business elites abuse their economic power with the backing of the government.

Authoritarianism was unfortunately prominent in the president’s SONA and in his press conference afterwards. He played up the need for a forceful – even militarist – approach to dealing with the country’s problems.

The president repeatedly highlighted the importance of the military and police and strengthening them with tens of thousands of additional troops and hardware. He took a combative stance against millions of Filipinos – “anarchic” Leftists occupying the streets, the National Democratic Front of the Philippines (NDFP), Lumad schools, Moro who will “side [against] government”, and poor alleged drug users and pushers. He defended martial law as an expedient way to deal with peace and order problems, never mind that this is excessive and unnecessary. And he again pitched for the death penalty for “deterrence” as well as “retribution”.

The president also trivialized human rights and due process. These were portrayed as a hindrance to tackling the menace of illegal drugs, criminality and corruption. The military and police were also assured of impunity with the president declaring: “I have your backs.” And yet these are such basic liberal democratic values.

The president, in discussing his tax reform program, was appreciative of a sycophant Congress yet threatening to those uncooperative. He commended the 246 members of the House of Representatives (HOR) who supported his anti-poor and pro-rich tax reform bill. But, with the measure now in the hands of the Senate, he also threatened the chair of the Senate Ways and Means Committee for being critical especially of the tax program’s anti-poor aspects.

The president’s SONA had precious few fragments of reforms. The most prominent was prioritizing the environment over mining and other destructive activities. Also potentially important was the exhortation to set up mineral processing and manufacturing industries in the country, notwithstanding ambiguity if these would be genuinely Filipino or just foreign firms setting up shop in the country. The budget for assistance to overseas Filipino workers was doubled to over Php1 billion. He also dramatically told the sick to go to any hospital and just say that the president would take care of their expenses.

And yet the 2017 SONA was actually dismissive of the serious socioeconomic problems the country is facing. There was no acknowledgement that the economy actually shed almost 400,000 jobs in the first year of the Duterte administration and that poverty remains deep and widespread among tens of millions of Filipinos. There was no sign that the president grasped how neoliberal Arroyonomics and Aquinomics resulted in rapid growth, profits and wealth for a few amid poverty and joblessness for the many.

There was, if anything, oversimplification to bolster the drive to authoritarianism: “The economy surges when there is peace and order.”

This is blind to the long-standing and deep structural inequities that keep the economy underdeveloped. Landlords and rural elites take the greatest part of what landless peasants and farmworkers produce. Capitalists exploit workers through low wages and scant benefits, and charge consumers the highest prices they can. Domestic agriculture and industry are stifled to preserve foreign capital’s markets and sources of raw materials.

Indeed, the talk of “investor confidence” and “protecting local and foreign investors” is a virtual defense of these inequities. A declaration to uphold a bias for the disenfranchised and propertyless poor in the economic sphere would have been much more welcome. The impression instead is of growing authoritarianism as the political framework to press the neoliberal economic agenda against growing protest and opposition.

These are alarming developments in the state of the nation. The tens of thousands of rallyists outside the Batasan complex and many thousands more across the country are however vivid expression of people asserting their social and economic rights. The administration would do well to heed their grievances and demands. They are the real forces of change that, looking beyond particular administrations, play the long game of bringing the nation forward to a democratic and developed future for the people.—IBON Features


Sonny Africa

Pres. Rodrigo Duterte started his term as a potentially powerful unifier of the nation, but he is now unfortunately its biggest source of division.

Last year, he spoke of resuming peace talks with the National Democratic Front of the Philippines (NDFP), bringing all Moro groups together in an undivided peace process, and upholding the people’s interests versus oligarchs. Yet a year later, the Armed Forces of the Philippines (AFP) is launching an all-out war against the New People’s Army (NPA), the talks wth the NDFP have been cancelled, the military is attacking Moro and Lumad communities, the poor are being executed in an ill-conceived war on drugs, and narrow oligarch and foreign investor interests are being upheld.

In the president’s state of the nation address (SONA), it would be reassuring to hear real openness to peace talks, courage to order the military to stand down, and boldness to declare that economic policy will have a pro-poor and pro-Filipino bias. The presidency is a powerful position to push for real social, economic and political reforms that benefit the majority of Filipinos.

But the SONA may instead repeat macho posturing. The anti-drugs and anti-terror rhetoric is calculated to project the image of a benevolent strongman and, in effect, to justify greater authoritarianism and martial law. There has already been so much of this that it is no longer enough to stop the rhetoric – upholding even simple liberal democratic values needs an explicit retraction.

The SONA should focus on the serious socioeconomic issues that still bedevil tens of millions of the poorest Filipinos. The president will hopefully mention that the economy shed 393,000 jobs since last year to underscore the urgency of shifting from the current exclusionary growth path.

However, it would not be helpful if the SONA overstates what the flagship ‘Build! Build! Build!‘ infrastructure projects can do. These big-ticket projects mainly benefit the National Capital Region (NCR, which takes up 44% of the identified budgets so far) and the Central Luzon and Southern Tagalog regions (19%). The biggest corporations in these areas will be the biggest beneficiaries.

The flagship projects are also overwhelmingly transport projects which take up 94% of total identified budgets. This is not the economic and social infrastructure urgently needed by the poorest Filipinos or by backward rural and even urban areas in the rest of the country. The ‘Build! Build! Build!‘ program will at best be a short-term boost that keeps the economy on its path of exclusionary growth.

The administration’s neoliberal economic policies worsen the already vast divide between the few rich and the many poor Filipinos. But its irrational wars create even more divisions. Tens of millions of Filipinos are vilified on the say-so of a benevolent autocrat – people and communities asserting their human rights are ‘enemies of the state’, poor alleged drug users and pushers are vermin to be exterminated. The upcoming SONA is potentially, but unlikely to be a moment where the nation can unite on the problems they face.


Photo by People's Lens

“Agricultural development should first focus on real land reform. This ensures that subsequent farm support will increase rural incomes and improve the livelihoods of the majority poor peasantry, expand the domestic market, and create a surplus for reinvestment in national industry. These are also the conditions for greater linkages between agriculture and industry, including the promotion of rural industrialization. A genuinely equitable distribution of land and rural assets is the necessary starting point of rural development.” – Change Underway? | IBON 2016 Yearend Birdtalk (The briefing paper is now available at the IBON Bookshop, #114 Timog Ave. Quezon City)


Official development aid (ODA) is increasingly becoming a tool to support private profits rather than people-centered development. This indicates the persistence of the neoliberal ways that prevent aid from meaningfully contributing to national development.

The Second High-Level Meeting of the Global Partnership for Effective Development Cooperation (GPEDC) recently held in Nairobi, Kenya, concluded with a resolution to “foster enabling policy environments for the business sector”. This policy direction means that more and more of ODA at the center of development cooperation will go to support private profits. This directly contradicts how aid is supposedly for development.

The Nairobi high-level meeting on November 28-December 1, 2016 was attended by heads of state, ministers and high representatives of developing and developed countries, heads of multilateral and bilateral development agencies, international financial institutions (IFIs), parliamentarians, the business sector, and civil society organizations (CSOs). IBON Foundation was among CSOs attending. The GPEDC takes up the status and direction of the global aid architecture.

The increasing involvement of the profit-seeking private sector was prominent in the Nairobi meeting. In particular, aid was proposed to be used to “catalyze” big corporations to invest in infrastructure and other business projects in developing countries. This use of public funds to support private profits is justified as helping achieve the 17 Sustainable Development Goals (SDGs) of the 2030 Agenda for Sustainable Development.

This distortion of the aid system is the latest symptom of neoliberal trends in the global ODA system. In the 1980s, IFIs like the International Monetary Fund (IMF) and World Bank used ODA to force neoliberal policies on underdeveloped countries. These disabled recipient governments’ means to independently define their nation’s course of economic development on one hand and allowed market forces to prevail on the other.

Today, increasing portions of aid are going to support private profits especially of large corporate interests. In the Philippines this includes using aid to facilitate big-ticket public-private partnerships (PPP). For instance the United States Agency for International Development (USAID) and Japan International Cooperation Agency (JICA) are involved in designing power, water and flood control projects in the country. Similar efforts in the past have created profitable opportunities for US and Japanese firms, contractors and consultants.

International development cooperation should be about development and improving the lives of people, not supporting private profits. The global ODA system remains flawed and efforts to ensure that this genuinely addresses poverty and inequality remain urgent. ###

Photo from the Philippine Star

For daring the US and others to withdraw their aid, President Rodrigo Duterte has been called a “psychopath”. For those whose way of thinking has been systematically warped by colonialism and neocolonialism/imperialism, it is plain madness. As a poor country, why would we shun the “altruism” of rich countries like the US?

On the contrary, the US would rather not stop its aid program here. Since our nominal independence from the US’s colonial rule 70 years ago, patronage through economic and military aid has been a key component of enduring US imperialist domination and plunder of the Philippines.

Beyond altruism

Data from the US Agency for International Development (USAID) show that from 2001 to 2014, total economic aid to the Philippines reached more than US$1.94 billion (in current prices). Total military aidduring the same period reached almost US$566.11 million. That’s a combined US$2.51 billion in 14 years. Annually, the US disbursed US$138.95 million in economic aid and US$40.44 million in military aid or a combined $179.39 million every year from 2001 to 2014.

For 2015, preliminary USAID data show that the US disbursed $180.62 million in economic aid. There’s no 2015 data yet on military aid from the USAID online database. Reports, however, say that US military assistance for the Philippines was about US$50 million last year that will reportedly rise to US$79 million in 2016, on top of another US$42 million from the new US-Southeast Asia Maritime Initiative.

Further, note that US assistance to the Philippines has grown quite substantially under President Barack Obama and his declared US pivot to Asia. From 2010 to 2014, US economic aid increased by almost 15% in real terms annually. Military aid grew by almost 8% a year during the same period.

(US economic and military aid data since 1946 can be generated fromUSAID’s reports & data)

And we’re counting just the bilateral aid from the US. The US is also a major contributor to multilateral bodies like the World Bank and agencies of the United Nations (UN), which provide development aid to the Philippines as well.

That’s a lot of aid money that Duterte would be foregoing if the he will really spurn American patronage.

But as mentioned, there’s more to foreign aid than the simple altruism of donors. Aid, especially US aid, is used not for development cooperation but to advance the interests and agenda of the donor and deepen their patron-client relationship with the aid recipient. It is an effective neocolonial tool to foster continued dependence and subservience, and steer domestic policy making in directions that the donor wants. Lastly,aid is also a means for the US to directly create profit-making opportunities for their transnational corporations (TNCs).

Education, health, disaster relief

Remember how the US used the public education system as an integral part of their colonization campaign in the Philippines? It was far more successful in making Filipinos subservient to the colonizers than using purely military might. Colonial education was so effective that many Filipinos could not imagine life without the US. Just look at the reaction to Duterte’s stance on independent foreign policy.

It continues to this day through, among others, the use of foreign assistance. Classified by purpose, the largest bilateral US aid disbursed to the Philippines in 2015 was in Primary Education at US$25.33 million. Almost half of this amount, US$12.49 million, went to the Basa Pilipinas project of the USAID. Through this project, the US develops and distributes teaching and learning materials, English books and reading materials, etc. for local teachers to use for their Grades 1-3 pupils. Another US$5.35 million in US aid was also disbursed for Higher Education in 2015. (See Chart 1)


The second biggest chunk of US aid disbursement last year went to Material Relief Assistance and Services with US$20.37 million. They also disbursed US$3.84 million for Disaster Prevention and Preparedness;US$1.92 million for Emergency Food Aid; and more than US$1 million for Relief Coordination, Protection and Support Services.

The US has been using disaster relief to justify and expand their military presence in disaster-prone countries like the Philippines. The controversial Enhanced Defense Cooperation Agreement (EDCA), for instance, was justified using the pretext of humanitarian aid and disaster relief. American troops can base in military facilities here so they can preposition not just their weapons and war machines but also “humanitarian relief supplies”. (Read for instance, US Secretary of State John Kerry’s recent statement on EDCA made last July 2016)

Family Planning also traditionally gets a big portion of US aid with disbursement reaching US$17.08 million in 2015. Related sectors also got significant amounts such as Reproductive Health Care (US$3.94 million) and Population Policy and Administrative Management (US$0.43 million).

Population control has long been a strategy of US imperialism in the Philippines. In 1974, the USAID and Central Intelligence Agency (CIA), among others, produced the “Kissinger Report”. It said that population growth threatens US access to the natural resources of poor countries. A large population of youth must also be controlled because they are most likely to challenge US imperialism. The Philippines is one of 13 countries identified in the Kissinger Report as primary targets of US-led population control efforts.

Public health is another major sector that the US has been long supporting in the country. In 2015, the USdisbursed US$16.04 million in aid for Tuberculosis Control and more than US$0.90 million for STD Control including HIV/AIDS. A productive and efficient (and, of course, cheap) labor force is one of the primary resources that US imperialism exploits for super profits. Control of infectious diseases like TB and AIDShelps ensure an efficient workforce, which poor countries with weak public health systems due to imperialist plunder and underdevelopment could not afford

Plus, big US pharmaceutical companies that have monopoly over patented drugs used in these health programs are assured of markets. In the Philippines, for instance, the anti-TB campaign is a partnership between USAID and Johnson & Johnson, an American pharmaceutical and consumer goods giant.

Aid and policymaking

But the biggest impact of US aid in the Philippines is on how national economic policies and priorities are determined. Obama, for instance, introduced the Partnership for Growth (PFG) initiative. It is an aid program participated in and coordinated by the USAID, State Department, Millennium Challenge Corp. (MCC) and other US agencies as well as the World Bank, International Monetary Fund (IMF) and various UN bodies.

Through the PFG, the US deepens its role in national policy making such as through the five-year Joint Country Action Plan (JCAP), which identified priority areas for policy reforms in the Philippines. These include trade and investment liberalization, deregulation, effective enforcement of contracts with private business (such as those engaging in public-private partnership or PPP), as well as fiscal and judicial reforms.

An example of how US steers internal policy-making is the PFG’s centerpiece program in the Philippines, which is the $433.91-million grant from the MCC. The MCC is a highly conditional aid and requires the Philippines to, among others, maintain so-called “economic freedom” to continue receiving the grant.

One of the indicators of economic freedom, as designed by the MCC, is the Trade Policy Indicator. It measures the country’s openness to international trade based on average tariff rates and non-tariff barriers (e.g. trade quotas, production subsidies, government procurement procedures, anti-dumping, local content requirements, etc.) to trade. The “Compact” or agreement between the Philippine government (as represented then by the Aquino administration) and MCC is that the latter may suspend or terminate the grant if the country fails to reverse its policies that are inconsistent with the Trade Policy Indicator and other indicators designed by the MCC.

Also part of the implementation of the PFG is The Arangkada Philippines Project (TAPP) of the USAID and the American Chamber of Commerce (AmCham). Through the USAID-funded TAPP, AmCham is pushing for 471 specific recommendations that promote the interest of foreign corporations in the country through greater liberalization, deregulation, privatization and denationalization. These are contained in the comprehensive advocacy paper “Arangkada Philippines 2010: A business perspective” prepared by the Joint Foreign Chambers of Commerce in the Philippines (JFC), of which AmCham is a key member.

Under the TAPP, the JFC has been producing Legislation Policy Briefsthat identify broad recommendations for Congress and the Executive. Among the many proposals of the JFC is the lifting of constitutional restrictions on foreign investments through Charter change (Cha-cha).

All these are in preparation for the country’s future membership in the US-led Trans-Pacific Partnership (TPP) agreement. The TPP is an ambitious free trade deal and the latest campaign of US imperialism to further deepen and consolidate its economic domination in Asia Pacific in the face of a rising China. Just last March 2016, the US Chamber of Commerce, with funding from USAID under the PFG’s five-year US$12.84-million Trade-Related Assistance for Development (TRADE) project, released its “readiness assessment” of Philippine membership in the TPP.

The said report examined the “consistency of the country’s existing policy framework with the agreement’s requirements, and the implied changes that may be necessary if the Philippines is to meet these requirements”. As expected, one of the “implied changes” is liberalization through Cha-cha. (The full report may be downloadedhere)

Military patronage

Lastly, the US employs military aid not to modernize the Armed Forces of the Philippines (AFP) but to maintain its influence and control over our military. US military aid mostly comes in the form of Foreign Military Financing (FMF). Under the FMF, the US provides grants and loans to help the Philippines buy US-made weapons and defense equipment as well as acquiring defense services and military training.

In 2014, US$50 million in FMF was disbursed by the US to the Philippines out of the total US$57 million in military aid that year. The Philippines is traditionally one of the largest recipients of FMF among all US allies. It ranked fifth in 2014 in terms of FMF behind Egypt, Israel, Pakistan and Jordan. The country also accounted for 64% of US FMF in East Asia and the Pacific. (Data here)

However, military items that the country gets under the FMF and other US military aid programs are either surplus or second-hand and antiquated military articles. They are also not actually given for free but are sold at a discount (with a portion of the amount shouldered or waived by the US through the FMF).

Examples include the five-decade old US Coast Guard vessels (“Hamilton-class cutters”) that the US Navy has retired and sold to the Philippines. Since 2012, the Philippines has already bought two of these decommissioned ships for about US$25 million – and a third one is expected soon – through the FMF, Foreign Military Sales (FMS) and Excess Defense Article (EDA) programs.

The weapons systems of the ships have also been removed by the US prior to their turnover to the Philippine Navy. The country had to separately purchase from the US the vessels’ weapons and guns as well as additional technology including radar system, anti-ship missile system, etc. US military aid thus also means more business for the US military industrial complex.

Aside from FMF, other US military aid programs in the Philippines include counter-narcotics, military education and training, cooperative threat reduction, and counter-terrorism fellowship program. (SeeChart 2)


Along with annual military exercises under the Visiting Forces Agreement (VFA), military aid fosters complete dependence of the AFP on US military technology, hardware and expertise. It also helps justify the continued presence of American troops in the country. But despite decades of US military patronage, the AFP remains one of the weakest and least modernized in the region. The Abu Sayyaf that the US has long been using to legitimize their military presence in the country persists and continues to terrorize the people.

Mutual respect, sovereignty

Foreign aid is not necessarily bad. It is, in fact, an important element of cooperation among countries to promote development. But as the case of US aid in the Philippines illustrates, aid could also be used to perpetuate the skewed relationship between the donor and recipient, between the colonial master and colony.

Such unequal, oppressive and exploitative relation between the US and the Philippines is the real reason why the country is underdeveloped and Filipinos are starving. If the Duterte administration rejects US aid to pursue a truly independent foreign policy and nurture development cooperation with other countries based on mutual respect and sovereignty, then we are already taking the initial steps to address the underlying causes of our poverty and hunger. ###

Photo from

by Sonny Africa

IBON FEATURES – Presumptive president Rodrigo Duterte projected a vastly different image from the other presidential candidates and indeed from every national politician the Philippines has ever had: coarse, cussing, irreverent, misogynistic, an unrepentant human rights violator, and a self-proclaimed “Socialist” and “Leftist”. But, never mind, the strongman was effective and got things done. Filipino voters seemed to make an unorthodox choice in the May 9 general elections.

Yet just days after the elections it’s become clear that Davao City Mayor Duterte is actually not that different from the other candidates in what really matters the most. Despite his singular personality it turns out that his plans for the economy are strikingly interchangeable with the other losing candidates and even with the outgoing Aquino administration.

His transition team hurriedly presented an eight-point economic agenda to assuage elite panic. Belying Duterte’s powerful campaign theme of change, it embraces and upholds neoliberal economic policies that enrich a few but keep the national economy backward and tens of millions of Filipinos in poverty.

Learning from the past

Jose Rizal once said “Ang di lumingon sa pinanggalingan, hindi makararating sa paroroonan.” Rizal’s advice tells us that in order for the people to move on to a better future, they must learn from the past. Many believe that Duterte’s win is an affirmation of the people’s disenchantment with “daang matuwid”, the embodiment of the Aquino government’s neoliberal policies – that it is best to move forward rather than look back. But a second look at Duterte’s economic plans reveals that the failed “daang matuwid” of the past will remain a significant part of the country’s future.

The Philippines seems to be a vibrant economy that is the emergent star of Southeast Asia. There is economic growth, growing corporate profits, rising oligarch wealth, investor confidence, and international media hype. These are all true. Yet there is also a profound deterioration across a huge swathe of the economy and in its most important fundamentals.

The economy is creating less new jobs per year where the average of just 692,000 new jobs annually in 2011-2015 is much less than the 858,000 annually in 2001-2010. This has resulted in the most unemployed, underemployed, discouraged job-seekers, and overseas Filipino workers in the country’s history.

The quality of employment is dismal. Some 24.4 million working Filipinos or nearly two-thirds (63%) of total employed are non-regular, agency-hired, informal sector, or unpaid family workers. Among wage and salary workers, over two-fifths (44%) are non-regular workers. Labor productivity is increasing but the mandated minimum wage and actual daily basic pay received barely keep up with the rising prices of goods and services. Even then, nearly half (46%) of workers receive less than the minimum wage and one-fourth (25%) receive just exactly the low minimum wage.

Despite Php295 billion spent on the Pantawid Pamilyang Pilipino Program (4Ps) conditional cash transfer (CCT) program in the period 2011-2015, the number of Filipinos in extreme poverty is unchanged at some 27 million in the first half of 2015. Anywhere between 56-66 million Filipinos should really be considered poor by a reasonable standard of decent living. The number of underweight children even increased by some 203,000 and the number of children not fully immunized increased by 692,000 in 2015 from the year before.

The Philippines is rich in natural resources and raw materials. Yet agriculture and industry remain in decline. The country’s production sectors — agriculture, manufacturing, construction and mining — accounted for over 60% of the national economy, services for some 30%, and utilities for 10% until the late 1970s. Production started to collapse upon the onset of the globalization era during the Marcos regime. At some point in the mid-1990s, the economy became a service and trading economy more than a producing economy. Near the end of the outgoing Aquino administration, production was down to 39% of the economy while low-productivity services rose to over 49% in 2015.

This worsening joblessness, poverty, and economic backwardness — and ever more concentrated wealth and economic power in a few corporations and a handful of oligarchs — are the inevitable result of over 35 years of neoliberal “free market” economics. The state has been oriented to support the private profit-seeking of a few more than socioeconomic development for the majority. The economy was opened up to foreign capital, goods and services. This devastated Filipino producers and reduced domestic enterprises to subordinate, albeit profitable, partners and subcontractors. Education, health, housing, water and electricity became commodities to profit from rather than services every Filipino is entitled to.

Neoliberal insanity

“Insanity,” Albert Einstein wittily quipped, is “doing the same thing over and over again and expecting different results.” The decades of market-ledunderdevelopment are self-evident and mirror the experience in other countries.The problems faced by the majority of Filipinos are also well-known to the presidential candidates who, exploiting the yearning for change, all made sweeping promises of poverty reduction and job creation.

The Duterte camp has already articulated its eight-point economic agenda. It does not really offer anything different from the outgoing Aquino administration or from those that came before it. (The performance of the Aquino administration is assessed in more detail in IBON’s 2015 Yearend Birdtalk, “End of the Road, and a New Beginning?”)

The neoliberal emphasis on promoting private profit — even in public utilities and social services — and unqualifiedly welcoming foreign investment is largely intact. Government resources and regulatory authority will be geared to supporting corporate profits rather than ensuring national development and attending to the people’s welfare. Real asset reforms and redistributive measures that challenge elite power are avoided.

Since being the runaway frontrunner in the 2016 elections, Duterte has become systematic in articulating how his administration will be pro-business. Big corporations are assured consistency in contracts, ease of doing business, and an efficient bureaucracy. For instance his camp has declared that the “Davao City model” of expediting business licenses will be applied nationwide. A more sustained pro-people position articulating a bias for the country’s marginalized versus entrenched elites would have been much more welcome.

During the campaign period, Duterte avoided declaring open support for public-private partnerships (PPP) whose flaws are already well-known to the public. His camp however finally declared open support for it right after the elections as well as targeted the equivalent of 5% of gross domestic product (GDP) for infrastructure spending. This is not surprising given the likelihood of the Duterte camp courting the support, if it does not already have it, of Filipino oligarchs in construction, agri-business, mining and other businesses. Expanding transport infrastructure gives lucrative contracts to build and operate as well as eventually makes doing business easier and more profitable.

Duterte’s camp has proposed reducing taxes among lower personal income tax brackets which may be a way of making reduction of tax burdens on the rich more palatable. Many of the other presidential candidates were conspicuously in favor of, or at least open to, lowering corporate income tax rates. Yet Duterte is apparently not bold enough to pursue the more rational option of a progressive tax system that increases direct taxes on the rich and relieves the poor of regressive indirect taxes (his spokesperson apparently misunderstands what a “progressive tax system” means). This would increase government revenues for national development, if it were so inclined, as well as erode the economic base and power of elites.

Duterte’s first economic policy statement after the elections was on changing the 1987 Constitution to ease restrictions on foreign investment. He has become even more active in courting foreign investors. Duterte said that he would immediately call for a constitutional convention to, among others, remove the nationalist economic provisions of the Charter that foreign capital complains about. He has not yet announced pursuing more free trade agreements (FTAs), presumably including the United States (US)-centered Trans-Pacific Partnership (TPP) agreement, but given the thrusts of his eight-point economic agenda this may just be a matter of time.

Duterte had previously declared support for manufacturing although he did not say if by this he means Filipino-driven manufacturing and industrialization. He did say that he would strengthen basic industries and gave the steel industry as an example. The announced economic agenda also promotes the pseudo-industry of tourism as part of a “rural development strategy” to help the vast rural poor.

Like virtually every presidential candidate the country has ever had, Duterte proclaims support for agriculture. He has promised to prioritize, strengthen or revitalize the sector by providing irrigation, post-harvest facilities, support services and agricultural credit.

However the historical record of candidates in keeping such promises is not reassuring. The agricultural sector has for decades taken up barely 5% of the national budget, on average, and this is even down to just 4% under Aquino in 2016. On the other hand Duterte’s promises to promote agri-business and corporate farming, and to let foreigners lease land longer are more likely to materialize. Despite widespread landlessness, Duterte has not been bold enough to say that he will distribute land to farmers for free.

Duterte declares support for education. While he said that K to 12 implementation has to be improved he says nothing about addressing its retrogressive orientation of merely producing a cheap and docile labor force for corporations in the country or for export. His camp only announced giving scholarships for tertiary education that will likely go mainly to private schools. Duterte also declared support for health care and in particular for expanding PhilHealth coverage and benefits. Yet he says nothing about addressing the underlying privatization of health and hospitals that drives up the cost of medical care and makes this inaccessible to begin with.

Finally, like all the candidates Duterte makes grand promises to expand the conditional cash transfer program and to index payments to inflation. In the absence of a real long-term program to create jobs and develop the economy, the promise of cash dole-outs for tens of millions of poor and undoubtedly needy Filipinos bordered on post-paid vote buying using government funds. In contrast, he does not commit to distribute land for free to landless farmers. Nor does he give convincing guarantees of meaningfully higher wages or ending contractualization that assert workers’ rights over capitalist profits.

People elect, elites choose

But then attributing the incoming Duterte administration’s old, failed and stale neoliberal economic policies merely to failing to learn from the past may actually be too generous. More fundamentally, its policies reflect the deeply undemocratic imbalance of power in the country.

Even with supposedly free elections, the majority of poor Filipinos are systematically marginalized from political power — often violently. The general population elects its leaders in periodic elections but they do not actually choose or, at best, only choose from the restricted choices the political system allows. The real choices are made by the concentrated core of elite families that has dominated Philippine economic and political life throughout its modern history. This core is hardly changed by how some enter or exit as new fortunes are built or old ones lost.

But, powerful as it is, even this domestic elite is constrained in its behavior. Global monopoly capital has asserted its ultimate control over the country since the US colonial period, despite formal independence in 1946, and throughout the neocolonial era until today. The US has the longest record of self-serving imperialist intervention using scores of direct, indirect, formal and informal levers — treaties, trade and investment agreements, international financial institutions, so-called development aid, policy conditionalities, diplomatic pressure, lobbying, back-room manipulation, and even military interference.

The presumptive president’s personal, professional and class background certainly predisposes him to neoliberal policies. But, more to the point, he became the leading candidate because his upholding neoliberal policies makes him acceptable to domestic elites and foreign monopoly capital. In practical terms this means campaign funding and political support. The in-fighting, personality differences, or variations in style between candidates can get colorful but do not really mean any substantive policy divergence among them.

Unfortunately, the marginalized majority remain unable to challenge elite capture of the electoral system and, indeed, are even cynically manipulated into supporting this. Even with a month-and-a-half before the next administration, neoliberal socioeconomic outcomes are already preordained.

Fortunately, the efforts to increase the people’s influence on governance goes far beyond the moment of seemingly active citizenship the elections provide. As ever, the daily organized struggles of the country’s farmers, fisherfolk, workers, informal sectors, indigenous peoples, women, youth, and others in the mass movement remain the most potent forces for real democracy and radical development in the country. ###

By Getty Images

#BeyondElections2016 | The Aquino administration’s long-playing call to sustain its so-called legacy of a fast-growing economy driven by “good governance” resonated in the “ituloy ang Daang Matuwid” electoral campaign. That the elections are just a day away and that the term of Pres. Benigno S. Aquino III is nearing its end are opportune moments to review Daang Matuwid and expose it for what is has truly been.

These past six years have shown that the Daang Matuwid legacy which the ruling party’s standard bearers vow to continue is that of exclusionary economics, antipeople neoliberal policies, elite governance and deepened subservience to foreign interests at the Filipino people’s expense.

Exclusive growth. The Liberal Party has taken to claiming the supposed achievements of the Aquino administration: a relatively fast-growing economy under its rule. They attribute this growth to “good governance” with an anti-corruption drive and the pursuit of market-based reforms which purportedly boosted the confidence of business to invest and consumers to purchase.

Daang Matuwid underscores how market-based reforms help to create a business and foreign-investment friendly environment, which is expected to eventually translate into widespread development for the country.  “Inclusive growth” is treated as an add-on to be addressed through increased social service spending.

However, this is merely a continuation of the same old neoliberal globalization policies that began in the 1980s.  The government focused on using public funds and resources to promote private profits and interests.  Though growth may have been relatively rapid, it was not felt by many and did not deflect from the deterioration of the domestic economy.

Jobs crisis. Despite reported uptick in employment, job generation has weakened  to an average of only 692,000 from 2011-2015 down from  the annual 858,000 from 2001-2010. Poor quality work is widespread: 24.4 million or 63% of total employed are non-regular, agency-hired, informal sector, or unpaid family workers. Working Filipinos are also grappling with low incomes despite increasing labor productivity.  Almost half or 46% of workers receive less than the minimum wage and 25% receive just exactly the low minimum wage.

Persistent poverty. The number of Filipinos in extreme poverty remains unchanged at 27 million in the first half of 2015. There is an estimated 66 million poor Filipinos surviving on just P125 or less per day. There are 203,000 more underweight children while there are 692,000 less fully immunized children despite P295 billion being spent from 2011-2016 on the conditional cash transfer scheme Pantawid Pamilyang PilipinoProgram (4Ps).

Shrinking production sectors. The agriculture and industry sectors, which are vital for national development and sustained growth, continue to deteriorate. Agriculture growth has been declining from 2.8% in 2012 to just 0.2% in 2015.  Manufacturing growth has also been slowing down from 10.3% in 2013 to 5.7% in 2015.

Inequality. The neoliberal policies pushed on the Daang Matuwid platform concentrated wealth and economic power in the hands of a few elite business groups and oligarchs.  The wealth of the 25 richest Filipinos (US$44.1 billion) is equivalent to the combined income of the country’s poorest 76 million Filipinos. The networth of the 40 richest Filipinos grew from 14% of the gross domestic product (GDP) in 2010 to 24% in 2015.  The gross revenue of the top 100 corporations also rose from  59% of the GDP in 2010 to 69% in 2014.

Public funds for private gain. The government’s centerpiece public private partnership (PPP) program has allowed the private sector to greatly profit from public funds and resources – even in utilities and social services such as education, health, housing. For instance, the San Miguel Corporation owned by presidential uncle Eduardo Cojuangco has bagged PPP contracts worth a total of Php149.06 billion.  Under Daang Matuwid, there have been 12 projects worth Php217.4 billion awarded to the private sector. Many of these projects such as the construction of MRT7 in San Jose Del Monte, Bulacan and the Quezon City Business District have driven farmers and urban poor settlers, respectively, from their abode, resulting in forced evacuation and violent demolitions.

Daang Matuwid’s idea is to make business out of housing instead of providing it as a social service. The Daang Matuwid administration has allocated billions to private education instead of strengthening the public school system and has pushed K-to-12 to hone an army of cheap labor for the global market. Despite PhilHealth, its so-called universal health-care program, 69% of total hospital bill is still paid with salary, loan or sale of property: government subsidy ends up in private health institutions.

Foreign-controlled economy. Daang Matuwid’s economic policy has been largely defined by foreign interests such as the US government and international financial institutions like the World Bank (WB). The US Agency for International Development (USAID), one of the US government’s key mechanisms for crafting the country’s economic policy, funded the US$1 million Arangkada Philippines Project (TAPP) since 2010. Administered by the American Chamber of Commerce and implemented by the Joint Foreign Chambers of Commerce in the Philippines, the program aggressively seeks to change the 1987 Philippine Constitution and remove foreign economic restrictions. By 2015, some three out of four (75%) of the TAPP’s 471 policy recommendations have been started or already completed. The WB also used US$1.1 billion in development policy loans in 2006, 2011, 2013 and 2014  to push for health, education and power privatization, higher VAT and other taxes, and reduced government spending.

Onerous deals. The Aquino administration also actively pursued Free Trade Agreements (FTA) that seek to liberalize trade and investment, further exposing its subservience to foreign interests at the expense of government regulation for public interest.  Since the beginning of its term in in 2010, the administration has actively sought to join the US-dominated Trans-Pacific Partnership (TPP) agreement. It has also started formal talks for the European Union-Philippines (EU-PH) FTA, and through the Association of Southeast Asian Nations (ASEAN), is involved in the China-dominated Regional Comprehensive Economic Partnership (RCEP).  Government refused to heed that the economy has not benefited from earlier such deals as the Japan Philippine Economic Partnership Agreement. Membership in same-principled World Trade Organization has also resulted in more extensive damage to the country’s economy, especially agriculture and industry, and thus to prospects for national development.

Exclusive path. Daang Matuwid was a straight path for elite politics characterized by exclusionary and pro-foreign decision-making. Its brand of leadership championing elite interests over that of the people’s figured throughout Aquino’s term.

Daang Matuwid brandished symbols of democracy. Yet on Daang Matuwid wealthy families’ political dynasties flourished, eventually corrupting most of the party-list system and keeping landlord and compradore families in control of government. Almost seven of 10 Senators and six of 10 lower house representatives come from political dynasties.

Human rights violations. The ‘straight path” boasts of a vibrant civil society and is internationally known for its ‘good governance’ mantra. But contingent to its continued implementation of neoliberal policies that have kept the people poor and the economy backward are the Liberal Party-led administration’s repeated attacks on the people’s civil and political rights, especially against those that asserted them. Since December 2015 it has 304 extrajudicial killings (of whom 223 were peasants, 80 indigenous people and 28 children), 304 illegally arrested and detained and at least 19 incidents and 7,000 victims of forced evacuation in Mindanao, Southern Tagalog and Cagayan Valley in 2015 alone.

Haciendero leadership. The Kidapawan massacre that felled two of more than 6,000 drought-stricken farmers demanding government to release promised rice provisions would only be the among most recent display of the ruling party’s marginalization of farmers and other people’s sectors. The administration’s lack of decisive action whether on the Supreme Court’s order to distribute the Aquino-Cojuangco-owned Hacienda Luisita or on Lumad killings in mineral-and-resource-rich Mindanao where several farmers and indigenous folk had also been killed by State forces highlights its bias for big landlord and business interests and against the people’s assertion for land, jobs and broad-based development.

Corruption. Belying its anti-corruption stance, Daang Matuwid also bent the high court’s decisions declaring the priority development assistance fund (PDAF) and the Disbursement Acceleration Program (DAP) illegal, still retaining and even increasing huge lump sum funds and maintaining DAP in the 2015 and 2016 budgets. This reeks of bureaucrat capitalism and fans suspicion that people’s money may be used to fund the ruling party’s election campaign.

Zero accountability and neglect. Daang Matuwid never owned up to its accountability in the tragedies that beset the nation during its administration. So-called probe bodies have absolved the president of command responsibility in the Mamasapano incident and covered-up US troops’ illegal participation in the botched operations where 44 of the PNP’s elite forces perished.

Government’s implementation of neoliberal policies have kept communities inresilient to calamity hazards. Meanwhile, according to recent data, only 30% of families affected by super typhoon Yolanda have received livelihood assistance and 6% of damaged coconut farms have been replanted while millions of dollars and pesos in cash and material aid have not reached the calamity victims.

Mary Jane Veloso who remains in the death row is a picture of thousands of Overseas Filipino Workers encouraged by Daang Matuwid to respond to the global ‘steady demand’ for cheap labor. The fire that razed footwear factory Kentex killing 72 mostly contractual  and irregular workers highlighted Filipinos’ labor woes: measly wages even pulled down lower by the two-tiered wage system, labor flexibilization, lack or absence of benefits, poor working conditions and the criminalization of unions.

War for profit.The same pro-business bias defines the incumbent administration’s approach to peace which has been reduced to the surrender of arms and principles: The imminent passing of a watered-down Bangsamoro Basic Law presupposes big business and foreign institutions’ corporate expansion plans for Mindanao. It undermines the Moro people’s aspiration for self-determination and sovereignty over ancestral land and resources. Government’s refusal to resume peace talks with the National Democratic Front of the Philippines delays discussion and thus action on pro-people socio-economic reforms.

Cronyism, selective prosecution. In Daang Matuwid those who have been charged with allegations of corruption within the ruling camp and the previous administration were not brought to justice. It did not prosecute for instance presidential best friend Paquito Ochoa regarding the waterways projects and Alan Purisima who even led sensitive police operations amid suspension. Though former Chief Justice Renato Corona was convicted for corruption, his boss former president Gloria Arroyo’s conviction for electoral fraud and funds misuse was ambiguous and the fallen dictator’s son Bongbong Marcos and his family are at large and even leading in the vice presidential race in poll surveys. Presidential friends who were former corporate executives have also been given top cabinet posts such as Roberto Singson and Jose Almendras.

The president’s vetoing the proposed Php2,000 Social Security System (SSS) pension hike despite the abundance of possible sources of funds starkly contrasts to Daang Matuwid standard bearer Mar Roxas’ former chief-of-staff Eliza Antonino’s getting a Php6 million annual salary as SSS commissioner.

Subservience. The Aquino administration also unflinchingly disregarded the Filipino people’s struggle for sovereignty and patrimony against US imperialist aggression in legalizing the Enhanced Defense Cooperation Agreement and offering agreed locations which US military troops may use at liberty. As the US strengthens its foothold on Asia Pacific, it benefits from the Philippine government’s use of China’s affront regarding the Scarborough Shoal to seek tighter ties with the US military. The US has been allowed to elude Philippine laws in cases where Filipinos were victims of US troops abuses as in the case of Gregan Cardeno, Nicole and Jennifer Laude. It has no commitment whatsoever to defend the Philippines much less its sovereignty. Its commitment is in ensuring that the Philippine economy is shaped according to the interests of foreign, especially US, corporations through globalization policies.

Through their daily struggles for livelihood, social justice and rights, the Filipino people have increasingly rejected Daang Matuwid. The elections may be another opportunity to register this rejection, however throughout their campaign, candidates other than the bearers of the Daang Matuwid flag have not shown their platforms to differ. Under this administration this would also be the second round of discredited, privatized automated polls featuring machines supplied by a multinational firm.

Beyond the 2016 elections, this brings the nation to pursue the path that will muster the people’s collective capacity to push meaningful and lasting change that will truly benefit the majority.



By Sonny Africa

IBON Features | #BeyondElections2016 | The Marcos dictatorship started the Philippines on a path of economic decline that remains until today. This has already had the worst consequences for tens of millions of Filipinos across two generations. Unless corrected, it will burden generations to come.

The Philippine economy’s decline since the 1980s is commonly attributed to the Marcos regime’s corruption and cronyism. For instance the bloating of the country’s foreign debt is often used to dramatically illustrate this: Marcos took out loans to enrich himself and his cronies. These loans became unpayable because they were pocketed or used by inefficient enterprises. The resulting financial burden drove the protected crony-dominated economy into the ground.

This narrative highlights the evils of dictatorship and abuse of power. But it falters in explaining why, over three decades after the end of the Marcos regime, the economy still remains so backward in the things that matter – job creation, poverty reduction, agricultural and industrial development, and policy sovereignty.

Bureaucrat capitalism under Marcos was undoubtedly world class and certainly added to the country’s economic problems. But the real cause of economic failure lies somewhere else – in the neoliberal “free market” policies forced on the Filipino people using the vast powers of the dictatorship.

Economic collapse

The Philippine economy was by no means strong, self-reliant or independent at the start of the Marcos regime in 1965. Unlike so many countries in Asia, Latin America and Africa whose post-World War Two post-colonial governments were bold enough to implement nationalist and even Socialist policies, post-1946 Philippines remained a political and economic neocolony of United States (US) imperialism.

Like the rest of the world in the 1950s and 1960s, the Philippines had at least some degree of protectionist policies. But unlike most other countries, the Philippines let foreigners benefit from these same protections. Specifically, when the Philippines was granted “independence” in 1946 the US colonizers made sure that treaties were in place giving American capitalists the same economic rights (i.e. parity) as Filipinos until the early 1970s.

The rule of Nacionalista Party’s Ferdinand E. Marcos which began in 1965 was strong on nationalist and patriotic rhetoric. Yet Pres. Marcos was by no means a nationalist if ‘nation’ is understood as the majority of Filipinos and ‘nationalism’ as upholding their interests and asserting Filipino sovereignty over foreign powers.

The trajectory of the economy under Marcos was straightforward. The long period 1966-1980 saw a steady increase in gross domestic product (GDP) per capita which merely continued a trend since 1948. Any claims of the Marcos time being “golden years” probably refers to this period which also included the debt-driven infrastructure spree starting around 1975.

However, GDP per capita is an aggregate measure that assumes economic gains are equally distributed across the population. It muddles the gross inequity in the economy. In any case, GDP per capita levelled off in 1981-1983 and its dramatic collapse in 1984 ushered in 15 years of volatility. There were recessions and stagnation in 1983-1985, 1991-1993, and 1998-1999. GDP per capita only started to increase steadily again after 2000.

The decade 1975-1986 was actually a time of intense social crisis and economic difficulty for most Filipinos. The unemployment rate was falling in the early years of the Marcos regime – from 7.1% in 1966 to 3.9% in 1975. But this reversed in the mid-1970s to rapidly rise back to 7.9% in 1980. The prices of goods and services also soared with the 6.8% inflation rate in 1975 almost doubling to 12.1% in 1980.

The situation was worst in the 1981-1985 period: unemployment averaged nearly 11% including a high of 12.6% in 1985; inflation averaged nearly 20% including, also in 1985, a high of nearly 30 percent. By 1985, anywhere from two-thirds to three-fourths of some 54 million Filipinos were poor; at least 27 million Filipinos or up to half (49%) of the population were in extreme poverty (i.e. those deemed “poor” according to the low official poverty line). These conditions fuelled the storm of protest and opposition to the dictatorship and precipitated its overthrow through a people’s uprising in February 1986.

Neoliberal disaster

Blaming all these on the Marcos regime’s corruption and cronyism is convenient especially with the Marcos family and their cronies visibly behaving so villainously. Yet there were other Asian countries in the 1970s and 1980s that also suffered corruption and cronyism – some even dictatorial rule – but that did not experience as severe crisis. Korea and China come to mind and, closer to home, of course Indonesia, Thailand and Malaysia.

The biggest difference is that the Philippines under Marcos started implementing neoliberal “free market” policies. More than anything else this is what prevented the Philippines from becoming any sort of East Asian success story.

Most anti-nationalist president. The “nationalist” Marcos was the most anti-nationalist president the country had ever seen. Martial Law was declared not just for personal political survival but to use the coercive powers of the state to open up and restructure the Philippine economy according to the needs of foreign monopoly capital, especially the US whose post-colonial treaties were coming to an end. No less was needed to confront certain resistance from the resurgent nationalist and armed revolutionary movements – resulting in monumental human rights violations.

Leftist activists gave justified attention to US-directed International Monetary Fund (IMF) and World Bank (WB) intervention in Philippine economic policymaking and their collusion with the Marcos regime. Two-thirds or 16 of the 24 IMF programs the country has ever had were during the Marcos regime, six of which were during his first term before declaring Martial Law in 1972. It also accounted for nearly a hundred World Bank projects, with loans worth some US$5.2 billion, out of 250 such projects to date.

In 1980, the Marcos regime actually made the Philippines the first country in Asia and the second country in the world, after Turkey, to be at the receiving end of a World Bank structural adjustment loan (SAL). The conditionalities of the US$200 million loan included among others tariff cuts, removal of import licenses and quantitative restrictions, lowering protections, and export-promotion – all in line with the market-oriented restructuring of the economy. This first SAL and another US$302 million one in 1984 were the historic spearheads of subsequent decades of trade and investment liberalization in the country.

Cheap labor export, foreign plunder of PH resources. Pres. Marcos’ neoliberal measures are familiar today but were novel for their time. He institutionalized cheap labor export, starting with various measures to get Filipino seamen employed and workers hired in the Middle East. The Marcos regime devised the service contract scheme that creatively bypassed Constitutional restrictions on foreign exploitation of Filipino petroleum and gas resources, resulting in the virtually complete turnover of Malampaya resources to foreign oil and gas giants.

The regime worked hard to give foreign capital profitable opportunities. It enacted laws on investment and export incentives for foreign investors and created the country’s first special economic zones, then called export processing zones. Martial law and trade union repression also let the regime cut real wages virtually in half between 1970 and 1975 where they remained for over a decade until after 1986.

The sum of all these neoliberal measures interacted with crony corruption and self-centered monopolization to cause the economy to weaken in the 1970s and then, upon the debt crisis in the early 1980s, to completely collapse. The financial stranglehold of foreign monopoly capital on the Philippine economy was by that time complete where all public and private flows became contingent on the IMF’s so-called seal of “good housekeeping”.

Fiscal austerity. The IMF enforced fiscal austerity so that foreign debt would continue to be paid, choked liquidity to stem capital outflows, and devalued the currency which only drove prices ever higher. The debt problem was certainly severe and increased fifty-fold from US$599 million in 1965 when Pres. Marcos entered Malacañang as president to US$28.3 billion when he left it as a deposed dictator. But there are no debtors without creditors and banks and governments lent freely to what it knew was a dictatorial regime.

The economy in the final years of the Marcos regime was in neoliberal-induced ruin. Unemployment and poverty were at historic highs. The rural economy remained poor and backward from the lack of real agrarian reform and support for the peasantry. The neoliberal structural adjustment and stabilization measures however caused firms to close and greatly accelerated Philippine deindustrialization. The manufacturing sector remained steady at an average of more or less 28% of GDP in the decade 1971-1980, albeit with a growing share of foreign rather than domestic firms, but then rapidly fell to less than 25% in 1986.

Never again

In hindsight the arc of neoliberal globalization of the Philippine economy is clear. The Martial Law regime started the market-oriented restructuring of the Philippine economy and its debilitating effects were immediately felt. After Marcos, cronyism was craftily used to justify even greater liberalization, privatization and deregulation as early as the Corazon Aquino administration but especially during the Ramos administration in the 1990s. This continued through the Estrada, Arroyo and the current outgoing Aquino administration to explain the stubborn poverty and chronic backwardness of domestic production.

What then to make of the Marcos era? The Marcos regime implemented the neoliberal economic policies demanded by the US-dominated IMF and WB in exchange for a share in the foreign loans and comprador business opportunities. Marcos and his cronies were allowed to directly control and profit from large portions of the national economy – sugar, coconut, bananas, tobacco, logging, mining, telecommunications, banking, construction, vehicle assembly, energy, shipping, pharmaceuticals, medical supplies, gambling, and others.

There was no contradiction between neoliberalism and crony capitalism. Even with the oligarchs, foreign monopoly capital still benefited from the cheap labor, raw materials, and domestic market of the Philippines. At the same time the country remained a bulwark of US imperialist aggression in the region including from hosting the largest American overseas military bases at the time.

This experience under the Marcos dictatorship is relevant as the country elects its leaders on May 9. The Marcos years were an unmitigated tragedy and having its unrepentant vestiges in the political scene is not “moving on” but an affirmation of how much still needs to be done to overturn elite and undemocratic rule in the country. But the grip of neoliberalism on the country which started under Marcos also needs to be underscored as its real economic legacy for the Filipino people. – IBON Features

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