U.S.-Philippine Relations: Opportunities to Enhance Our Enduring Partnership

I recall the statement you made on January 26, together with Senators Helms, Biden, and Kerry, in which you applauded the people of the Philippines for addressing the events of the last few months in a peaceful manner and welcomed the opportunity to work with the new Philippine President, Gloria Macapagal-Arroyo. I gladly second those remarks. President Macapagal-Arroyo has underscored her intention to bolster U.S.-Philippine relations on all fronts, and we intend to support her efforts in whatever way possible to achieve her goal of bringing long-lasting peace and prosperity to the Philippines.

Even by Philippine standards, the last 6 months have been remarkably eventful. Only last July, then-President Joseph Estrada was here in Washington, conducting a successful official working visit that brought him to the White House as well as to Capitol Hill. As President, Mr. Estrada was a proponent of strong U.S.-Philippine ties, illustrated by his active support for the 1999 U.S.-Philippines Visiting Forces Agreement.

His domestic political difficulties deepened only a few months later. Allegations of corruption led to his impeachment by the Philippine House of Representatives, which set the stage for an impeachment trial in the Senate. Patterned after U.S. Senate impeachment trial proceedings, this unprecedented trial attracted extensive public and media attention in the Philippines and presented a parade of high-profile witnesses who testified to a range of corrupt activities that the prosecution sought to link to Mr. Estrada.

However, the trial was abruptly suspended when the prosecution team walked out in the aftermath of a controversial 11-10 Senate procedural vote, which prevented the introduction of certain banking records. Widespread anti-Estrada demonstrations in Manila and elsewhere in the Philippines ensued, with the nearly instant exchange of hundreds of thousands of anti-Estrada cell phone text messages helping to fuel public indignation -- a uniquely Philippine twist. Soon to follow were the dramatic events that culminated in Mrs. Macapagal-Arroyo's installation and Mr. Estrada's departure, which are now popularly known as "EDSA II," drawing from the legacy of the 1986 popular uprising that brought an end to the Marcos dictatorship.

Throughout this turbulent period, the United States made clear that it would not take sides. Unlike Marcos, who showed little respect for democratic processes in the latter years of his regime, Mr. Estrada had a democratic mandate, having obtained a large plurality in a field of six candidates in the May 1998 presidential election. As you pointed out in your January 26 statement Mr. Chairman, the United States and the Philippines share a common commitment to democratic values. Therefore, our primary interest at the time was for the Philippines to work through this crisis with full adherence to a peaceful, democratic process and in accordance with its constitutional framework. Both Mrs. Macapagal-Arroyo and Mr. Estrada assured us that they were fully committed to doing just that.

As public demonstrations crested and key government defections multiplied, the Philippine Supreme Court unanimously decided en banc on January 20 "to take judicial notice of the vacancy in the position of the Philippine President." The Supreme Court Chief Justice swore in Mrs. Macapagal-Arroyo as President a few hours later. Shortly thereafter, the United States recognized Mrs. Macapagal-Arroyo's peaceful assumption of the Presidency and promised to work with the new President to strengthen U.S.-Philippine ties.

As we now know, Mr. Estrada did not sign a formal letter of resignation, although he did vacate the presidential palace and it was clear that the defection of much of his administration, political support, the military establishment, and the police had effectively removed his ability to govern. I would add here that while the military and police leadership withdrew their support from President Estrada, at no time was overt force employed to cause his ouster. Mr. Estrada did appeal his removal to the Supreme Court. On March 2, the Court ruled unanimously that Mr. Estrada had "effectively resigned by his acts and statement," and a clear majority of justices ruled separately that Mr. Estrada had lost his Presidential immunity from suits. I would note that the Chief Justice, as well as another Justice closely identified with the Macapagal-Arroyo camp recused themselves from the case to underscore the impartiality of the Court's decision.

Mr. Chairman, your interest in the legal and constitutional issues surrounding the transfer of power is shared in another quarter -- among Filipinos themselves. I notice that the Philippine media and public have been openly discussing these issues, with the vigor and zeal that befit that nation's free press. As in our country, this debate will help shine the spotlight on the democratic process, and we hope that in the long run, it will strengthen democracy in the Philippines.

In any event, it is now immutably clear that Mrs. Macapagal-Arroyo is the President of the Philippines. Even before the March 2 Supreme Court ruling, Philippine polls indicated that an overwhelming majority of the Philippine public in all socio-economic classes had fully accepted the fact of the new President. The Philippine body politic had as well. The international community, including the United States, recognized the transfer of power, and most countries did so within a short period following Mrs. Macapagal-Arroyo's January 20 swearing in.

Therefore, it is in our interest to look to the future with President Macapagal-Arroyo, not to the past, as she addresses the multitude of tasks facing her nation. She has already assembled a capable administration prepared to move forward on her top priorities. At her January 20 oath-taking, she launched an ambitious agenda to put the Philippines securely on the reform track. That agenda is impressive but challenging: alleviating poverty, accelerating economic reform, combating corruption, enhancing transparency and good governance, and promoting peaceful national reconciliation. She has promised leadership by example, vowing to work seriously and diligently to develop a resilient nation capable of adapting to the demands of an increasingly globalized world.

An immediate priority for President Macapagal-Arroyo is achieving a peaceful resolution of the ongoing conflict in Mindanao. She has taken steps to reestablish the framework that led to the Philippine Government's 1996 peace agreement with the Moro National Liberation Front (MNLF). She has declared a suspension of military operations against an MNLF offshoot, the Moro Islamic Liberation Front (MILF), and proposed a resumption of peace talks. Concurrently, her administration announced its intention to accelerate economic development efforts in Mindanao, whose Muslim-majority provinces are the poorest in the Philippines.

The United States applauds this comprehensive, peaceful approach to resolving the Mindanao insurgency, particularly the emphasis on addressing the root economic and social causes of this long-running conflict. Since the early 1990s, Mindanao has been a key focus of U.S. development aid to the Philippines. In support of the 1996 peace agreement, USAID has been implementing several highly effective programs that encourage former combatants to take up peaceful pursuits, such as farming and small business. With the MILF still fighting and the flow of displaced persons continuing, these programs remain equally vital today to safeguard and strengthen hard-won areas of stability. I am pleased to note that State and USAID are working together to ensure continued funding for these programs this year and in future years.

I would note, Mr. Chairman, that insurgents with the Abu Sayyaf Group (ASG), which the State Department has designated as a terrorist group, continue to operate in southern and western areas of Mindanao and still hold a handful of hostages, including a U.S. citizen. We are cooperating closely with the Philippine Government, which has the lead on this matter, and we continue to call for the safe and unconditional release of the hostages. Separately, we are providing the Philippines long-term counter-terrorism training to upgrade Philippine capabilities to handle hostage-taking and other terrorist incidents such as those generated by the ASG in Mindanao.

Mr. Chairman, President Macapagal-Arroyo has underscored her interest in enhancing U.S.-Philippine ties, which we warmly welcome. The character of our relationship has become considerably more multifaceted since the United States withdrew from its military bases in the Philippines in 1992. Economic, trade, and investment issues are increasingly central to our relations. The United States is the Philippines' largest trading partner and top export market. We take in approximately one-third of all Philippine exports, and some 20% of all Philippine imports -- valued at over $8 billion -- are from the United States. The United States is the Philippines' largest foreign investor, with an estimated 25% share of the Philippines' foreign direct investment stock, worth over $3 billion.

Because of our burgeoning economic links, the United States is following with great interest the Macapagal-Arroyo administration's economic reform efforts. For more than a decade, the Philippines has been moving forward on this front. As a Senator, Mrs. Macapagal-Arroyo authored some 55 laws on social and economic reform, many of which helped the Philippines qualify for WTO membership and meet its multilateral trade commitments.

We hope that the Philippines will continue to pursue this reform trend. Further steps to liberalize the Philippine economy will spur more investment, including from U.S. businesses, which highly value the Philippines' educated and English-speaking workforce. A more open economy will generate significant new employment and sharpen Philippine competitiveness. Other steps, such as accelerating reform in the power sector, improving intellectual property rights enforcement, implementing trade obligations in full and on time, strengthening the banking sector, and combating money laundering, would also have far-reaching positive benefits.

President Macapagal-Arroyo's experienced economic team has been moving quickly to address economic problems that the last several months of political turmoil had exacerbated. Her well-respected Finance Minister, Alberto Romulo, has announced plans to curb spending and improve tax collection to help lower a large budget deficit. Alongside these moves is her effort to fight corruption. The Department of State and USAID are working together to provide assistance to the Philippines in this area, pooling resources to support a USAID program that encourages reforms which reduce corruption and increase transparency and probity in economic governance.

Mr. Chairman, one clear fact has undergirded and sustained the vibrant economic relationship I have just been describing -- the United States and the Philippines are treaty allies, and we have been so for over five decades. Following the 1992 withdrawal of U.S. military bases in the Philippines, our security relations rebounded with the 1999 ratification of the Visiting Forces Agreement (VFA), which allows us to resume normal military-to-military contacts, including regular ship visits and periodic joint exercises. For example, in February 2000, the Philippines hosted the "Balikatan" exercise, which involved over 4,000 U.S. and Philippine troops. The next "Balikatan" exercise takes place this spring.

I would mention that while neither side seeks a return to past levels of military interaction, the VFA gives us the framework to develop an effective program of activities that best meets the requirements of current tasks in the Philippines and in the region. The Philippines provided 750 troops to the International Force in East Timor (INTERFET) and supplied the first military commander to the multinational peacekeeping force of the United Nations Transitional Administration in East Timor (UNTAET). Philippine interest in participating in such peacekeeping operations is likely to continue, and our cooperation under the VFA will help to build Philippine capabilities to contribute more actively to regional security.

In this context, accelerating Philippine military modernization is key. Philippine funding shortages have hampered past modernization efforts, and this problem is certain to continue in the Philippines' current constrained budget environment. Nevertheless, President Macapagal-Arroyo has highlighted her administration's strong desire to rationalize defense spending and implement effective modernization. During the Estrada administration, we established a Defense Experts Exchange and undertook a Joint Defense Assessment to catalogue Philippine Armed Forces' capabilities and requirements. We should continue to build on this. We are particularly interested in enhancing the Philippine Armed Forces' operations and maintenance (O&M) capabilities. While we have supplied Excess Defense Articles to the Philippines in the past, the best way to address these vital O&M needs and build the right capabilities is through continued funding of the Philippines' FMF and IMET programs. The Philippines' FMF level for FY 2001 is $2 million.

Mr. Chairman, in a broader sense, our interest in the Philippines and the prospects for the Macapagal-Arroyo administration is based not only on these extensive political and economic ties. There are over two million Americans of Philippine descent in the United States and over 100,000 American citizens living in the Philippines, forming a comprehensive network of informal, people-to-people ties that further enhances our long-standing partnership. Filipinos and Americans continue to mix freely, thanks to a constant flow of tourists, relatives, scholars, veterans, artists, performers, and businesspersons. It is to this vibrant constituency that we owe our best efforts to ensure that the bonds between our nations remain strong and that both of our new administrations work together closely to help our people meet the challenges of the new millennium.

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