The Pandemic Depression
The Global Economy Will Never Be the Same
As Corazon Aquino begins the tasks of reuniting a divided Filipino people, rebuilding the institutions destroyed by a discredited dictatorship and reviving a devastated economy, she has chosen to combine the spirit of reconciliation with measures to place her new government in firm control.
In view of the Marcos legacy, her task will not be an easy one. Ferdinand Marcos divided Philippine society. In a country accustomed to frequent and peaceful alternation of power among competing political groups, Marcos and his followers used corruption, violence and fraud to entrench themselves as a permanent ruling group. Their opponents remained outside, in embittered frustration. Now that the tables are turned, bitterness is on the other side. It will not be easy to restore good feeling.
Marcos also leaves a legacy of institutional decay. Repeated constitutional changes, devised by the former president and pushed through by means of questionable legality, produced a presidentially dominated system of rule. Under Marcos, a clever lawyer adept at using legalistic forms to distort the spirit of the law, the system became a self-serving autocracy.
Long established and respected institutions were turned into caricatures. The Commission on Elections, once an impartial guardian of honest elections, became an instrument for the subversion of the electoral process on behalf of the regime. In the armed forces, heirs to the American tradition of nonpartisanship, major elements were transformed into a praetorian guard whose main task was to protect the president against his countrymen rather than the country against its enemies.
Other institutions lost their independence. The judiciary, including the Supreme Court, became a pliable instrument of the president’s will. Civil servants lost both security of tenure and the right to vote as they pleased. The financial agencies of the government, no longer subject to full accounting, became milch cows for members of the presidential circle, who appropriated huge sums for their private purposes. In a most cynical example of the president’s willingness to corrupt his countrymen, public school teachers, who traditionally serve as polling officials because of their presumed integrity and impartiality, were bribed in 1986 to help defraud the opposition. Thus these underpaid and overworked professionals were robbed of one of the few rewards of their calling, the respect of their pupils.
Private sector institutions, which in the past had served as checks against the government, lost their independence as well. Ownership of the news media was given to kinsmen and friends of the president who turned them into instruments for governmental propaganda. Business, labor and professional associations were consolidated into corporatist structures under governmental supervision. Radical student organizations were disbanded, replaced by a government-sponsored youth organization led by the president’s daughter.
A highly competitive two-party system was ended in 1972 with the imposition of a presidential dictatorship. Just before the restoration of national legislative elections in 1978, Marcos hastily created a regime party, the New Society Movement (KBL), and in the elections only limited opposition from several new minor parties was allowed. Provincial governors, municipal mayors and assemblymen who joined the KBL gave blind obedience to the president in return for electoral endorsement and patronage. The private armies of politicians that had been disbanded during the early reformist years of martial law (which began in 1972) were revived in order to provide muscle for Marcos’ local henchmen and help them to manipulate elections in the government’s favor.
In sum, the establishment of authoritarian rule allowed Marcos to politicize Philippine society to his own and his inner circle’s advantage, but the cost to his country and the challenge for his successors was great.
The legacy that Ferdinand Marcos was building through his 20 years in power was not always as grim as it became by the end. Indeed, the first years of the martial law period were an economic honeymoon. With a strengthened fiscal system and World Bank aid, the government was able to initiate a program of rural infrastructure development, including a major expansion of irrigation facilities and road construction. Farmers were encouraged to use new rice varieties and to improve cultivation methods generally. A program of land reform, limited to rice and corn lands but much more far reaching than any the pre-1972 Congress could enact, was imposed by presidential decree.
The results were impressive. Agricultural production increased by over 60 percent from 1970 to 1980. For the first time in history the Philippines was consistently producing a surplus of rice for export. Streamlined legal and administrative procedures led to a dramatic increase in direct foreign investment, which swelled to a half-billion dollars a year. The adoption of an export-oriented industrialization strategy produced an impressive increase in light manufactured exports. Tourism receipts grew tenfold. Foreign exchange receipts from Filipinos working in the Middle East and elsewhere abroad contributed another half-billion a year of hard currency.
In spite of these favorable developments, the twin problems of unemployment and declining real wage rates—what many economists consider the bottom line of Philippine economic development—were getting worse. The situation became so embarrassing by 1976 that the Marcos government was forced to drastically change the definition of employment used in official statistics in order to conceal the rising number of unemployed. In 1980, publication of the Central Bank index of wage rates was also discontinued. The decline in real wage rates that got under way in the 1960s reached truly alarming levels during the martial law era. It is noteworthy that the periods of low agricultural wage levels, particularly before 1954 and after 1970, roughly correspond to the two periods of communist insurgency, which has been most active in the rural areas.
What went wrong? There was the disastrous fall in most Philippine export prices—sugar, coconut oil, copper and timber prices. But the root causes lay in the mismanagement of macroeconomic policy and the resultant decline in industrial efficiency. Since the early 1970s Philippine industry has registered large and uninterrupted declines in labor productivity. Output per unit of imported intermediate goods was declining rapidly too, creating a voracious demand for imports. Thus the Philippine balance of trade kept sliding into deficit even during years when primary commodity prices were peaking.
Added to this was the steady outflow of the Marcos’ capital abroad. When this situation began to be widely appreciated by the middle class, an outflow of capital of truly panic proportions began, fueled at first by high export prices and later by loans from American banks. As foreign exchange reserves dwindled, industrial growth continued to slow, falling even further behind the growth of the labor force. This effectively forced an increasing share of the labor force into low-productivity occupations in the service sector or on marginal farms. The fall in real wages and deterioration of labor income accelerated into its steepest decline in this century.
These ills did not go unrecognized. Filipino and foreign economists were known to agree that the heart of the problem was the complete politicization of entrepreneurship. "Cronyism" was not invented by the Marcos administration, but it was fine-tuned into a polished system for political and administrative control. Political reliability became the litmus test determining the government’s allocation of economic resources. Continual intervention in the economy became the accepted implementation strategy, as attested to by the stream of 688 presidential decrees and 284 letters of instruction dealing with economic and social matters between 1972 and 1980 (approximately one every two working days).
Thus, in spite of early gains in highly visible sectors, by the early 1980s the deteriorating condition of the overall economy had become obvious. The Marcos administration had lost credibility, not only in politics but also in its once promising management of the national economy.
As the inheritor of the Marcos legacy looks to the future, President Aquino benefits from her great popularity and the euphoria inspired by her victory. Most Filipinos are willing to give her an extended honeymoon, which she will need in order to deal with the major problems of her country.
To promote national unity she must look to her opponents as well as her supporters. The latter are a diverse coalition of parties, groups and independent voters. The breadth of this coalition was a source of electoral strength, yet its composite nature makes her task of governing more difficult. While all her predecessors came to power as leaders of well-established political parties that could govern alone, the new president won election as the candidate of an alliance of new parties and non-party groups. All of them are represented in her cabinet, and will want to share in decision-making.
The new cabinet includes members of different parties of the former democratic opposition. Mrs. Aquino heads Laban, founded by her late husband, Senator Benigno Aquino, Jr. Vice President Salvador Laurel heads the United Nationalist Democratic Organization (UNIDO), which held most opposition seats in the recently abolished National Assembly. Minister of Local Government Aquilino Pimentel is a founder of the Philippine Democratic Party (PDP). Commission on Good Government Chairman Jovito Salonga leads a faction of the old Liberal Party. Policy differences between these parties are bridgeable. However, the political ambitions of some of their leaders may pull them apart. Both Laurel and Pimentel see themselves as presidential timber. Already there have been unseemly struggles over patronage appointments, especially over the politically vital appointments of new provincial officials.
In addition, Aquino’s cabinet includes some recent defectors from the Marcos government, among them Defense Minister Juan Ponce Enrile, who is also regarded as a potential presidential aspirant. Finally, there are in the cabinet some non-politicians whose main ties are with the business community, the Catholic church, or the "sectoral" and "cause-oriented" groups such as those representing urban squatters, tribal minorities and rural "Basic Christian Communities."
Party and personal rivalries aside, divisions within Mrs. Aquino’s coalition also turn on fundamental questions of public policy, among them issues of nationalism and socioeconomic justice. During the Marcos years these issues divided opposition political parties into three distinct groups, the moderates, the nationalists and the communists. While the individual political parties may be ephemeral, these broader groups are enduring.
The moderates are relatively pro-American, support trade liberalization and are conservative in matters of social reform. The nationalists, who find their strongest support among intellectuals and the new Filipino manufacturing elite, oppose continued American military, political and cultural influence in the Philippines, favor economic protectionism, and give at least verbal support to social reform. The communists are bitterly anti-American and seek to ally themselves with the nationalists; but, unlike the latter, they are engaged in armed revolution.
The three groups differ from each other in their political tactics as well as their views about public policy. The moderates chose to run candidates in the 1984 legislative elections and the presidential election of last February in spite of the heavy odds against them. Most of the nationalists saw no hope in elections or revolution, but decided instead to confront Marcos by peaceful demonstrations in the "parliament of the streets." Some nationalists, however, threw their support behind Mrs. Aquino. The communists denounced the elections as a meaningless struggle among the bourgeois, and urged their followers to stay away from the polls.
The victory of Mrs. Aquino was a triumph for the moderates, who are best represented in the new cabinet. But a number of well-known nationalists, including human rights lawyers Jose Diokno and Jovito Salonga, have been appointed to prominent positions also. Their presence in the government will make the debate over nationalism and social reform an internal one. In the long run, however, differences over the issues of nationalism and social reform may well form the basis of a new two-party or multiparty system. As for the communists, while several cabinet members are alleged to have ties with the left (as was the case also in the Marcos government), the Communist Party of the Philippines is on the outside looking in.
In addition to organized political parties, several groups that in pre-Marcos times were not in the political arena have joined the Aquino coalition and will demand a voice in policymaking. The most important of these are the Catholic church, the sectoral and cause-oriented organizations, and the military officers whose revolt finally forced Ferdinand Marcos into exile.
A striking feature of the Marcos years was the emergence of the Catholic church, through the person of Manila’s Jaime Cardinal Sin, as a major political force. That was a break with the practice of nearly a century. During the Spanish colonial period, the church was a partner with the Crown in its mission of imperial expansion and religious conversion. During American colonial times, however, the separation of church and state was firmly established, and it was maintained after Philippine independence until 1972. Except for occasional defensive forays by its lay members to ward off secularist attacks, the church before martial law had little interest in politics and social issues. It was solidly conservative, content with the existing social and political order.
All this changed after September 1972, though in an incremental fashion. From the outset of martial law, the Task Force on Detainees, sponsored by the religious orders, began publicizing governmental abuses of human rights. Some rural priests organized Basic Christian Communities, and a few, inspired by liberation theology, joined the communist-led New People’s Army (NPA).
At the same time, Cardinal Sin led the church hierarchy into increasingly open opposition to the Marcos government. Beginning with limited protests against infringements of the rights of the clergy, he moved to broader criticisms of the financial profligacy and other abuses of power by the ruling family. The assassination of Benigno Aquino on August 21, 1983, led to a further escalation of the cardinal’s opposition, which included appeals to Marcos to step down.
By the end of 1985 he had made the church an active part of the political opposition. When snap presidential elections were announced, the cardinal helped bring together Cory Aquino and Doy Laurel, persuading the latter to accept second place on a joint ticket. During and after the election campaign it was the church that provided the main nonofficial means of communication through Radio Veritas and a succession of pastoral letters urging citizens to vote. It offered a venue to the National Movement for Free Elections, or NAMFREL. When Marcos would not yield his office to Aquino, the Council of Bishops called for passive resistance. Finally, it was Cardinal Sin who called out "people power" to protect the military rebels at Fort Aguinaldo and Camp Crame.
President Aquino now has among her advisers the "Jesuit Mafia," led by Fr. Joaquin Bernas, president of Ateneo de Manila University and editor of Veritas, directing their influence toward social responsibility and reform. In addition, a major part in providing expert advice to the new government is played by various lay organizations in the business and academic communities. Cardinal Sin still offers informal advice to the new president from time to time, in part as the final stage in the church’s role in recent events, but also as a reflection of Mrs. Aquino’s own religious orientation. Open political partisanship by the church is not likely to become a continuing feature of Philippine politics as long as things go well.
Other influences on President Aquino include a welter of self-help and protest organizations that sprang up during the Marcos years to serve the poor. Some were purely local, others show the guiding hand of the church or the Communist Party. Some are sectoral organizations, which at least initially confined their activity to defending the shared interests of their members. Others, the cause-oriented groups, announced from their inception broad social reformist and political goals.
After the Benigno Aquino assassination, these organizations of the poor were joined by groups of professional and business people in mounting a wave of antigovernment demonstrations. When Mrs. Aquino announced her presidential candidacy it was to such groups, no less than the opposition parties, that she looked for support.
Unlike the rank and file of the KBL and of most earlier Philippine political parties, these new political actors expected no direct personal rewards in return for their votes. While Marcos packed his political rallies by paying people to attend, the Aquino campaign produced the unprecedented spectacle of the poor contributing money to her campaign. In contrast to the bought voters of the past, however, they will expect Mrs. Aquino to repay them by instituting redistributive measures designed to improve the conditions of the lower income groups.
Not all of the non-party groups supported Mrs. Aquino. Those dominated by the Communist Party boycotted the elections. Like that party, they did not contribute significantly to the "people power" that protected the soldiers who rebelled against Marcos. That power was Aquino yellow, not red. Had army chief General Fabian Ver’s men seen red instead of yellow, clenched fists instead of rosaries and flowers, they might not have held their fire.
Still, while the "reds" may have missed the boat in February, their decade-long efforts to mobilize the poor helped to create the climate of political activism that in the end overwhelmed President Marcos. They will not be denied a voice in post-Marcos politics, whether it be within the Aquino coalition or in opposition to it.
Latecomers to the Aquino coalition include those leaders and members of the armed forces who rebelled against Marcos between February 22 and 25 and ultimately forced him into exile.
At first sight, it seems remarkable that there were enough anti-Marcos officers to attempt a revolt. Since martial law, Marcos had taken pains to ensure the loyalty of the armed forces by showering them with unprecedented authority, prestige and favor.
The flaw in favoritism as a method of control, however, is that favor for some means disfavor for others. Marcos gave preference in honors, promotions and resources to his praetorian guard, the Presidential Security Command, and thus offended the sense of fairness and professionalism of the slighted officers who had the less valued task of combating the New People’s Army. This led to the formation of the Reform the Armed Forces Movement (RAM). Among his closest advisers, Marcos favored General Ver over Defense Minister Enrile and General Fidel Ramos. When Ver and Marcos, suspicious of RAM as well as Enrile and Ramos, laid plans to arrest them all after the elections, they acted preemptively and launched their revolt.
Having helped bring a new government to power, will men in uniform continue to involve themselves in politics and become accustomed to making coups? They will certainly expect to have a voice in policymaking, especially in matters affecting the communist and Muslim insurgencies, and the future of the U.S. military facilities, Clark Air Base and Subic Bay Naval Base. They were strongly opposed to the release in March of four prominent imprisoned communists, but accepted the new president’s decision in this matter with good grace.
New military coups seem unlikely except in extraordinary times. The pre-Marcos tradition in Philippine politics was one of civilian supremacy. RAM was organized to restore professionalism in the armed forces—which had been eroded by their politicization under Marcos—not to assert a military role in politics. RAM members know that they could not have overthrown Marcos unless the ground had been prepared in a civilian-dominated election campaign led by an immensely popular woman. They know also that they would have been crushed even then, if they had not been protected by massed civilians. In the aftermath of that event, much goodwill between soldiers and civilians has been restored. The military will not wish to throw that gain away.
There would appear to be only one development that could lead the soldiers to rebel against civilian authority: if a future government were to make disastrous and, in their own view, unnecessary concessions to the communists. That at present is most unlikely. In the meantime, General Ramos has taken measures against a possible pro-Marcos coup by retiring or transferring most overstaying generals. In addition, he has abolished General Ver’s National Intelligence Security Authority and Presidential Security Command. Former presidential guardsmen have been assigned to combat units in the provinces. Some have fled abroad.
To hold her coalition together, the new president will have to devise a program acceptable to this diverse group of members. A likely area of policy conflict is land reform, which is at the top of the policy agenda of her social reformist supporters but goes against the interests of her middle-class followers. Many of these own land that is cultivated by agricultural tenants, and find it hard to accept the logic of land reform. Another possible source of strain among the liberal and conservative members of the coalition may be the treatment of three groups who now are opposed to the new government.
These groups are the Communist Party, the Muslim rebels of the southern Philippines and the unreconciled followers of Ferdinand Marcos. President Aquino must either win their support or prevent them from sabotaging her programs. She is attempting to do both by combining firm action with reconciliation.
The New People’s Army is not the first manifestation of armed communist power in the Philippines, but it is by far the most serious one to date. Unlike the Hukbalahap rebellion of the late 1940s, which was confined to the high-tenancy rice growing regions of central and southern Luzon, the NPA now has active guerrilla bands in most of the country’s 73 provinces. According to American estimates, these control some 20 percent of the country’s territory.
When Marcos declared martial law, he justified it largely as a measure necessary to put down a newly resurgent communist movement. At that time the NPA had less than 2,000 armed guerrillas; Pentagon estimates put its armed strength as of January 1986 at 20,000 regulars. Its growth rate since the assassination of Benigno Aquino is estimated to be 20 percent per year. Marcos’ seeming inability to stem that growth was among the reasons why U.S. policymakers turned against him.
The growth of the NPA may be explained partly by longstanding peasant grievances, notably the exploitation of agricultural tenants and day laborers. It must also be explained in part by developments linked to the Marcos government: the post-1970 economic decline; the displacement of smallholders during the Marcos years to make way for large-scale public and private development projects; abuses of power by poorly led and ill-supplied soldiers and by the undisciplined Civilian Home Defense Forces; the frustration of those who saw no other way of removing the Marcos government.
Faced with the Herculean task of reviving the economy, President Aquino would prefer not to be diverted from that effort by a continued war against an insurgency inherited from her predecessor. She is attempting to attack the problem, at least initially, by political means. During her election campaign she promised the release of all political prisoners and an immediate cease-fire and dialogue with the NPA. The political prisoners have been released, among them the founder of the Communist Party, José Maria Sison, and his most famous military commander, Bernabé Buscayno. Now her government is preparing concrete proposals for a cease-fire and an amnesty.
If the NPA proves unwilling to come to terms, Mrs. Aquino can draw on the experience of an earlier president, Ramón Magsaysay. That immensely popular leader, faced with the Hukbalahap rebellion, addressed peasant grievances with a promise of land reform and the provision of homesteads to those guerrillas who surrendered. At the same time, he confronted the Huks with soldiers better trained and more disciplined than they had been under his predecessor. Magsaysay had the advantage of an economic environment of steadily rising peasant and worker incomes, expanding employment and the stabilization of prices. Such times are not conducive to agrarian revolt, which may partly explain Magsaysay’s success in putting down the Huk rebellion.
The same conditions do not exist today. The economy has hit rock bottom. In spite of Mrs. Aquino’s best efforts, it will not recover quickly. No land remains for frontier homesteads. It is now on the former frontier that the NPA is strongest. Finally, while the Hukbalahap was overwhelmingly a peasant movement, the NPA is dominated by intellectuals. Peasants, as Samuel Huntington has noted, lose interest in revolution when their grievances are redressed. Revolutionary intellectuals strive for utopian goals and are not placated by reforms.
Still, President Aquino, like Magsaysay, has the affection and trust of great numbers of ordinary Filipinos. That will enable her to win back many of those who had gone into rebellion because they had lost confidence in the Philippine government.
The Communist Party now finds itself in a dilemma. The NPA has come very far by force of arms. Its military dominance in parts of the countryside gives it control of a large, albeit partly unwilling, peasant population. If it lays down its arms in return for a chance to compete electorally against a popular new president, it may find itself with disappointingly little voter support.
But there are risks too in continuing the guerrilla war. The NPA’s past military successes were due partly to the unpopularity of the government and its armed forces. Had Marcos held on to power after the recent elections, many more of his frustrated opponents would have joined the NPA. That condition has changed dramatically since the events of February 1986. The new president is immensely popular. Worse, in the minds of the public, the armed forces have been transformed from "goons" into heroes. In parts of the country NPA members are surrendering to the government on their own. If NPA leaders insist on continuing their fight, they may see defections of their followers on a much larger scale.
In retrospect, the party leaders recognized that their election boycott was a grave mistake. They have responded to President Aquino’s overtures with decided caution. They have applauded her release of prisoners, but have responded to her cease-fire proposals with counterproposals calling for policy concessions and some share in governmental power for themselves. In the interim, the NPA continues its armed attacks on her soldiers.
The military, for its part, is skeptical about the prospects for a peaceful solution to the insurgency and, with its improved leadership, morale and popularity, wants to press the battle against the NPA. The United States, which shares its skepticism, stands ready to provide increased supplies for the anti-insurgency campaign. If the pessimists are right, then one may expect a protracted period of negotiations, accompanied by continued if intermittent warfare.
No longer serious as a military threat but still important as a political and social problem for the Aquino government are the remnants of an armed secessionist movement among the Muslim minority in the country’s southern islands of Mindanao and Sulu. Its fundamental cause was the migration into previously wholly Muslim regions of land-hungry Christian settlers from the north. It was exacerbated by the application to Muslims of a nationwide policy of arms confiscation imposed at the beginning of martial law. Further upsetting the Muslims was Marcos’ policy of granting large blocks of land in the south to Christian and foreign plantation developers and timber concessionaires. At one time the main military threat to the Marcos government, the Muslim insurgency was reduced to minor proportions after the mid-1970s by Marcos’ skillful cooptation of traditional Muslim political leaders, and by the granting of partial autonomy and development aid to the predominately Muslim provinces. This led, with the help of Imelda Marcos’ Middle East diplomacy, to a decline in arms aid from Muslim countries abroad. Leaders of some, though not all, Muslim rebel groups have offered to support the new president. She will have to continue and extend Marcos’ policy if she hopes to discourage new resistance from the Muslim minorities.
Another serious challenge to the new president will come from the followers of Marcos who held appointed or elected offices when he left the country. Some of them have sought an accommodation with the new government, but on terms the latter could not accept without placing its own effectiveness in jeopardy. Rebuffed, Marcos’ followers have changed their tactics to ones of confrontation by organizing antigovernment "people power" demonstrations of their own.
The issues for Mrs. Aquino in dealing with the remnants of Marcos’ political machine are both constitutional and political in nature: Would she accept the validity of the 1973 "Marcos Constitution"? What is to be the future of Marcos’ political party? The two issues are interrelated. Her decision to suspend the constitution is unacceptable to her opposition critics and will doubtless be challenged in the courts. The future of the KBL remains an open question and will be decided in large part by the country’s voters.
Mrs. Aquino ran for the presidency in an election called under the provisions of the 1973 constitution. That document was adopted, amid charges of corruption, by a convention held under martial law conditions and was ratified by a show of hands at hastily called public meetings instead of through a plebescite as required in the constitution. These circumstances discredited it among the democratic opposition.
Had President Aquino retained the 1973 constitution, all officials elected or appointed under its provisions would have been entitled to keep their offices. Among those officeholders were members of the KBL majority in the National Assembly who could have wrecked the new president’s legislative program. Among them also were judges with permanent appointments who might have blocked the confiscation of the dubiously acquired wealth of the Marcos cronies and who could have protected presidential subordinates accused of committing crimes under his authority. Finally, they included KBL provincial governors and local mayors who could have impeded the new government’s efforts to establish its rule in the outlying provinces.
While a few Marcos officials fled the country and some others offered their resignations, most insisted on the right to keep their jobs. Those holding appointed posts appealed to the rules of tenure. Those in elected positions argued that Mrs. Aquino’s promise to restore democracy obligated her to respect the earlier choices of the voters. Leaders of the KBL majority in the National Assembly offered to reverse their earlier proclamation of Marcos as president and to endorse Mrs. Aquino instead, but only on condition that she not abolish the assembly.
After extended cabinet debate, Mrs. Aquino cut the Gordian knot by suspending the Marcos Constitution and proclaiming a new interim "Freedom Constitution" in its place. Her own authority, it was argued, rested not only on her election but also on revolution. The new constitution will remain in effect until a permanent one can be adopted. A committee to draft such a document, for later submission to the voters, will be appointed by the president. By suspending the old constitution Aquino has been able to replace most KBL governors, mayors and lesser elected officials with her own appointees. These "officers in charge" will serve until new local officials can be elected. Invalidation of the Marcos Constitution also allowed her to abolish the National Assembly and to assume the power to legislate alone. Marcos has assailed her for this and has accused her of being a dictator.
The political question, which will be resolved over a longer span of time, is whether those who helped Marcos maintain his dictatorship should now be allowed to play the role of a loyal opposition, or whether their past offenses justify their exclusion from the political game.
Marcos’ KBL followers will try to win back their offices in future elections, either as members of a separate party or by joining one of the new ruling parties. Philippine history suggests that many will be able to do so, for the society places high value on reconciliation. After World War II, a brief attempt was made, largely under American pressure, to prosecute those who had collaborated with the Japanese rulers. That effort was quickly abandoned. In a few years, most collaborators among prewar members of the legislature had won back their seats. Marcos followers see themselves as local leaders in their own right, who had to maintain their "power bases" by working with whatever national government was in place. Some refused for a time to give up their offices. The issue of participation in the Marcos dictatorship is clouded, furthermore, by the presence within the new Aquino administration of several recent defectors from the Marcos government. If they and the communist insurgents are forgiven, why not also those Marcos supporters who confess their error at a later date? If those who run for office are elected, their rehabilitation will be confirmed; this would restore the web of harmony among the rural elite but lessen the prospects for major social and political reform.
President Aquino has to impose her government’s control in the provinces. In order to do this, local private armies will need to be disbanded. Such armed groups have been a perennial impediment to peace and order in the rural Philippines. It was the armed "goons" of local KBL officials, more than the government’s military forces, who intimidated voters at the recent elections.
Some of the very large private armies are controlled by Marcos’ closest associates. Top crony Eduardo Cojuangco had several thousand men under arms on his various plantations. The new government has seized 900 M-16 armalite rifles from him alone. Defense Minister Enrile, too, is reputed to have a large private army: the task of disarming such a force will present a great challenge to his subordinate, Chief of Staff General Ramos.
Armed rebellion remains a danger in Marcos’ native Ilocos provinces of northern Luzon, where loyalty to the former president rests on strong regional sentiment. Had Marcos flown to the Ilocos as he now says was his intention, instead of leaving the country as demanded by Mrs. Aquino and the American government, he might have organized armed resistance there. Such a rebellion could still occur.
There is no simple solution for the problem of "loose firearms" in the rural areas. Local officials, of whatever party, want to be protected by armed men they can trust. That wish has been given special urgency by the rapid growth of the NPA. Defensive armament usually leads to its offensive use, i.e., the bullying of political opponents. These want to arm themselves in turn. Unless an overworked army and constabulary can ensure the safety of everyone, a state of semi-anarchy will result. Maintaining peace and order therefore is a major challenge for the new government.
When Marcos fled the Philippines in February 1986 he left a nation stripped and impoverished beyond anything known in Philippine history with the possible exception of the close of World War II. The fiscal deficit will amount to nearly $2 billion this year. The balance of payments is in deficit. Industry is operating at 35 percent of capacity, real unemployment is running at 15 percent or more, with probably an equal percentage of the labor force underemployed. What are the plans of the Aquino administration for dealing with these problems?
The broad outlines of a program to revitalize the economy have been sketched out by the president and her new finance minister, Jaime Ongpin. One aspect of the plan is to stimulate domestic business by demonopolizing markets, particularly sugar and coconuts; another is a thrust toward privatization of government corporations. Both these measures are intended to unshackle private entrepreneurs from the uncertainty of government regulation and the threat of government competition. A third aspect of the program to revitalize the economy contemplates an injection of hard currency aid from outside to facilitate the reflation of domestic incomes without generating more inflation.
The Aquino administration intends to renegotiate the terms of its foreign debt so that annual interest and amortization payments are reduced from the present level of one-half of export receipts to no more than 20-25 percent of receipts. Additional external assistance in the form of a "mini Marshall Plan" from the United States and Japan will be sought to cover the foreign exchange needs of the economy as industrial output levels are raised from their present level of 35 percent of capacity to, say, 75 percent. These measures can be implemented within the year, and it is reasonable to expect that they will have significant positive effects.
Over the longer term the new government looks to agriculture for a substantial increase in domestic food production. This constitutes the central thrust of President Aquino’s development policy. The increase in nontraditional exports, including light manufactures, is viewed as a secondary aim. The Aquino policymakers say that they are more concerned with feeding people and providing employment than with earning foreign exchange. Philippine industry, overprotected with tariffs in the past, will continue to receive protection at present levels for a time. However, Finance Minister Ongpin has indicated that over the longer run he opposes protectionist measures and will work to reduce them, although exactly how this is to be done has not yet been clarified.
It is too early to make a critical assessment of the chances for overall success of the Aquino program. In the near term, the demonopolization of markets, the privatization of government enterprises and the provision of external assistance could raise aggregate income levels and reduce the large internal fiscal deficit of the government. In addition, if there should be enough improvement of investor confidence, there could well be a return of some of the estimated $10 billion that private Filipino investors have sent abroad during the Marcos years. This would greatly strengthen the country’s external accounts, stabilize the exchange rate and remove the threat of inflation. Such a scenario is entirely possible and would provide the Aquino administration with an economic honeymoon during its first year or so in office, but this requires effective political control for its implementation.
Further down the road we see potential problems with depending too heavily on agriculture to lead the country’s development thrust. Today, only about one-third of Philippine GNP is produced by agriculture. The remaining two-thirds comes from industry and services. Moreover, agriculture provides new jobs for barely half of the country’s 750,000 annual entrants into the labor force; at least 325,000 new jobs have to be found outside agriculture each year. Clearly, the Aquino administration will need to make some major policy decisions to spur the expansion of industry (including rural industry) and the service sector if the aims of alleviating unemployment and raising worker incomes are to be achieved.
While the new president has devoted much effort to achieving an end to the war with the NPA, less attention appears to have been given to redressing the social and economic grievances that have allowed the NPA to expand its support among the landless rural poor. In her campaign speeches, Mrs. Aquino appeared to American observers to equivocate on land reform. While Marcos made land reform the subject of his second martial law decree, Mrs. Aquino’s advisers were still squabbling over the choice of a minister of agrarian reform almost two months after she came to power. Foreign land tenure specialists stress the need to expand land reform beyond the rice- and corn-growing regions to which Marcos’ program was confined. Mrs. Aquino hinted during her campaign that this might be done. But her advisers appear to value productivity above land redistribution. Thus reform may be slow in coming to large plantations that use wage laborers to produce export crops.
And what about industry? Will a new, less protectionist oriented group of entrepreneurs emerge? If they do, will they be permitted to wrest control of industry from the scions of old families? Such changes would obviously increase the strains on President Aquino’s middle-class coalition. If Philippine industry is required to become more competitive, to what extent will the new entrepreneurial group be dominated by resident Chinese and foreigners? All these potential directions of socio-economic reform bring with them a thicket of divisive economic and political issues with which the Aquino administration would understandably prefer not to tangle. It may be forced to deal with them, however, if it remains in power for long.
A controversial foreign policy decision on Mrs. Aquino’s horizon involves the two major American military bases at Clark and Subic Bay. The five-year agreement on these bases will expire in 1991. Before that time, both governments must decide whether and on what terms they wish to renew it.
Even before martial law, the bases were criticized by Filipino nationalists as potential magnets for Soviet attack in case of a war between the superpowers. After 1972 they were criticized on the grounds that the rental payments, partly paid in the form of military aid, provided weapons and massive economic underpinnings for a repressive regime. American support for that regime, it was suggested, showed that the United States was more interested in its bases than in the welfare of the Filipino people or the survival of their democracy.
Any centrist Philippine government in the foreseeable future is likely to make every effort to retain the bases simply out of fiscal pressure. The annual rental amounts to nearly ten percent of total Philippine government domestic tax collections. In addition, American expenditures in the base regions create an enormous multiplier effect in the local economy. At a time when the Philippines is hard pressed to earn enough foreign exchange to pay even interest on its foreign debt, the bases’ rental is much too valuable to be jettisoned for ideological reasons alone.
President Aquino has stated that she will abide by the bases agreement until it expires in 1991. After that she will "keep her options open." Earlier she favored Salvador Laurel’s proposal that the matter be left to a plebiscite. A mid-1985 national survey commissioned by the Philippine Bishops-Business Conference found 43 percent favoring the retention of the bases, with 23 percent opposed. It appears in any case that the bases are a real issue only for a minority on the nationalist left.
Until the time comes for a new bases agreement, the less said about them by the United States the better. To the degree that Washington appears to give its highest priority to these installations, to that degree the nationalist case against them is strengthened. Similarly, the new Philippine government, in seeking to defuse the NPA rebellion by offering reconciliation, does not want to be pushed by the United States into continuing the war, at least until reconciliation has been rejected by the communists. Thus the dispatch to Manila of Defense Secretary Caspar Weinberger and Joint Chiefs of Staff Chairman Admiral William Crowe, Jr., as the first high-level Reagan Administration emissaries to the new government, suggests a misunderstanding in Washington of the nuances of current Philippine politics.
Of the major political problems facing President Aquino, the most intractable is national unity. Mrs. Aquino’s charismatic candidacy brought together for a historical moment dissatisfied majorities among all social classes: the middle class, which has seen an erosion in its quality of life and wants an active part in decision-making after being dominated too long by a paternalistic strong man; the old wealthy class, whose once exalted position was taken away by Marcos’ new crony elite; and the urban and rural poor, whose first concern must be survival. Will the coalition hold together in facing hard policy decisions that favor one class over another?
Throughout Philippine history, national unity has been held back by the separate linguistic-regional loyalties of the country’s many distinct language regions. Before martial law, interregional political rivalries were kept within bounds by the dispersion and periodic rotation of positions of power. In attempting to ensure a solid body of supporters for his rule, Marcos strongly favored his native Ilocos region through lavish public works expenditures, thus alienating other areas. With the fall of Marcos, the tables have been turned and Ilocos has become the locus of potential rebellion. By offering reconciliation instead of retaliation, President Aquino hopes to lessen that danger. Will she also be able to offer policies that will unite all regions around shared national goals?
Marcos built both a rational modernizing government and a thoroughly traditional regime, occupied with the personal gratifications and familial interests of the ruler. The public behavior of Ferdinand and Imelda Marcos reflected the cultural patterns of the old elite families who had come to power under the Spanish regime and consolidated their control during the American colonial period. The old elites relied on land ownership for their status and assumed that the level of worker wages and income were institutionally given, permitting them a lifestyle aimed at the display of familial wealth.
In a show of assertiveness unequalled in Philippine history, the Marcoses forced their way into this elite, destroying those families who resisted while making the remainder wholly dependent on them. From their aggressive accumulation of wealth down to the bouffant hairstyles of Imelda, they exaggerated and sometimes caricatured the behavior of the old elite. In their fixation with money and "beautiful living," in their fascination with public buildings as monuments, in their neglect of finance, they were super-clones of an increasingly outdated elite. In the eyes of the modern world, including the new professional middle class, that behavior was seen as standing somewhere between the incredible and the indecent.
Among those forces supporting Mrs. Aquino there are also elements that are not in tune with the mood or the needs of the day. For these the clock stopped in 1972, when Marcos brought a halt to competitive politics and ended the influence of the previously powerful elites. They want to pick up the pieces as they fell at that frozen moment in history. These elements include the old provincial politicians, who now hope to rebuild their political power bases.
Also backward-looking are economic protectionists, who long for a return to the import substitution policies of the 1960s, and landowners whose style of life so impressed the Marcoses. There are the Maoist intellectuals who still cling doggedly to formulas that have lost their persuasiveness for the left in almost all of the rest of the developing world. Finally, in debates on Philippine-American relations, there is a continuation of 1960s-era attitudes, polarized between equally unrealistic hostility toward and trusting dependence on a foreign country that, like all others, pursues its own national interest yet remains an essential source of economic trade, aid and capital.
The clock of social, economic and political change did not stop during the Marcos years. It raced ahead at double speed. Since 1965, when Marcos came to power, the population has nearly doubled. Urbanization and industrialization have increased at even faster rates. So have the attitudes and needs of a relatively modern population. Even rural society has become more complex, after Marcos’ land reform and rural development programs.
Must the return of democracy to such a society mean a restoration of the old contests between local kingpins now freed of a national kingpin’s dominance but still unable to look beyond the old patronage game? Or is the Philippines ready for policy-oriented political parties that can enact programs of deep social reform? An Aquino dictatorship can initiate reforms. To continue them under conditions of democracy will depend on the president’s ability to forge a political movement that can organize sustained public support.