Monday, July 11, 2005

Understanding the 2005 Philippine Crisis

What is there much to do about the Philippines again this time around? President Gloria Macapagal-Arroyo has been under siege from various factions, most notably, the Political Opposition to relinquish power because of alleged fraud during the elections. But what is different this time?

As a matter of semantics, President Macapagal-Arroyo had apologized for improprieties in relation with calling a Commissioner of Elections during the weeks following the vote counting. But did not claim it was that conversation. Yet either way, these alleged recordings were supposedly illegally obtained--- which begs the question whether or not these are admissible in a court of law. There are just too many facts to look into.

In the past four and a half weeks we have seen huge decline in the Philippine Exchange Rate, the fall of the stock market. Yet when we look at the data from the National Economic Development Authority, we find that this information makes no difference. We are in the same position as we were in June 2004.

Last Friday, a new attempt by the Political Opposition was made--- to try to force President Arroyo to resign. First up where Seven Members of her Official Family called it quits, citing the President's lack of resolve to push for changes, putting political considerations and personal interest above the nation's. This was followed by the withdrawal of support by some members of the Liberal Party most of whom are in the Upper Chamber of Congress and the Makati Business Club. By mid-afternoon, former President Aquino had also requested that President Arroyo tender her resignation.

Like sharks in an open sea, they could smell blood in the water.

By four o'clock in the afternoon that Friday, it seemed the curtain was about to fall on President Arroyo's Administration. But the timely unified stand by the majority of her Cabinet, followed by the support displayed by local government officials, by members of her Lakas (meaning strength in English) and by former President Fidel Ramos saved her.

But what exactly is the hoopla about? Sure there may be improprieties made by the President but no complaint has been filed against her. She has made time and again an announcement that she would face these allegations in the proper forum. Yet the Political Opposition is adamant that these charges be answered in the court of the streets.

For four agonizing weeks, we have been spectators in a war between those who rule this country--- the rich and powerful. They have in a manner of speaking drawn the line in the sand--- the Makati Business Club for example is for the president's resignation but the the Philippine Chamber of Commerce and Industries is leaving it up to the President to decide. The Liberal Party, a member of President Arroyo's coalition of parties wants her to resign but a majority of those same members of that party do not.

The Catholic Bishops' Conference of the Philippines--- has chosen not to interfere with the political process being undertaken and with this given President Gloria Macapagal-Arroyo more breathing room. It was probably the best thing they could do to provide a respite for the Philippines.

You see, all these parties---- pro-administration and political opposition have their own vested interests.

The matter is a complicated thing. Should the president resign, the vice president will take over as constitutional successor--- but waiting in the wings is Fernando Poe's running mate--- former Senator Loren Legarda with her own complaints to the Supreme Court against De Castro. And so, a De Castro Presidency will not really solve the problem but will merely be a respite in an already long tiring political process.

In the past four weeks, no critical mass has been achieved. Sure ordinary people are appalled and now more likely mistrust President Arroyo (though I personally believe the survey made by Pulse Asia is not conclusive of the country's general outlook), who wouldn't when allegations of ethical violations occur? But the people also can not be deceived that easily. Let the rule of law happen, file a complaint at the proper forum so that President Macapagal-Arroyo can answer those charges properly.

In the past twenty years--- we have seen that the Filipino would choose the proper course, the rule of law over People Power. It was the same with Marcos, people went to the polls to vote. It was true with Estrada, people watched anxiously as the Impeachment Trial drama unfolded in Television. But what sparked outrage was the blatant violations by the elected officials at the time. Marcos' own Commission on Elections resigned. Estrada's senators refused to open the envelope and gloated in front of the cameras. President Arroyo should not make the same mistake her predecessors made.

This latest drama that is unfolding in the Philippines is a jocking of position--- for self interests by the powerful parties in country.

People fear that this crisis will further deteriorate the nation's economy. In the first quarter of 2005, before this crisis, the economy did a lackluster 4.7% GDP performance and steadily rising inflation which is now close to 8%, according to NEDA. With rising world crude prices and maintaining its US$60 a barrel cost, and continued downtrend of the Philippine Peso (now in the same level as June 2004), inflation will, I think will hold at 7% to 8% going into the final quarter of 2005.

On the macro-scale, the Economy will still be doing (at best) 5% GDP and will finish 2005 with average performance, this amidst such political crisis it is experiencing today. More likely it will finish at 4.5%.

blog update, 19 August 2005: based on current and projected oil prices until year end, we must adjust our economic projections. The Philippine Economy will most likely stand at best 4% GDP and inflation will rise and hover between 8.5% to 10% until year end.

Translating in plain simple English, this means that for the common Filipino, his per capita income of US$1,000 will mean lesser purchasing power amidst rising cost.

In conclusion, we can say that this storm the Philippines is experiencing is not a battle between ideologies--- liberal v. conservative or right v. wrong. It is a battle for power and money. The effect of this “crisis” to the economy is limited to its unremarkable performance and waste of the Philippines economic potential. And to common Filipino, it translates to an even lesser purchasing power of an already low income. At the end of the day, this jocking for position and power is limited to the powers-that-be in the Philippines. Too bad it is the Filipino people who are caught in between.