Letter From Manila

Letter From Manila

Estrada is gone, but corruption remains.


The reign of Philippines President Joseph Estrada came to an abrupt end on January 20, when he vacated the presidential palace after being deserted by his key aides and under threat of physical eviction by hundreds of thousands of protesters. Even before his actual departure, Gloria Macapagal Arroyo, the vice president, was sworn in as his successor. The final crisis of the scandal-plagued presidency had been precipitated a few days earlier, when a majority of the senators acting as jurors in his impeachment trial voted to suppress evidence that Estrada kept billions of pesos in several secret bank accounts. The action triggered what many now call “People Power II,” after the popular uprising that ousted the dictatorship of Ferdinand Marcos in 1986.

For more than a month before his sudden exit, the impeachment trial of Estrada had transfixed this country of more than 70 million people. He was accused of bribery and corruption, the chief charge being that he had orchestrated a massive nationwide operation to siphon off to himself, his family and his cronies the proceeds of a popular illegal numbers game called jueteng.

Estrada’s bête noire was Luis “Chavit” Singson, a provincial governor and former sidekick who said he was assigned by Estrada to be the point man for collecting proceeds from jueteng, which rakes in billions of pesos yearly from lower-class Filipinos. What caused Singson to break with Estrada was his being cut out of the gambling take. An appeal to Estrada did not work, leading Singson to threaten that he would go public about his role. After he managed to foil what he claims was an attempt to assassinate him, Singson, realizing that he had to go for broke, put himself under the protection of Jaime Cardinal Sin and contacted the press. The country has not been the same since.

The impeachment trial was the nadir of a presidency that had very auspicious beginnings. Estrada, popularly known as “Erap,” swept the May 1998 elections with the largest plurality ever in presidential contests, riding on the slogan Erap para sa mahirap (“Erap’s for the poor”) and capitalizing on his image as an action star portraying Robin Hood characters in Manila’s mean streets. A man whose experience in administration was largely limited to serving as mayor of a small city, the ex-actor benefited from deep discontent with the performance of the two previous presidents, who had succeeded in squandering the promise of the 1986 “People Power Revolution” that overthrew the Marcos dictatorship. As a result of making repayment of foreign debt the national priority, slavishly implementing IMF-dictated structural-adjustment policies and failing to follow through on land reform, Corazon Aquino ended her term in 1992 with 47 percent of Filipinos living in poverty–about the same proportion as in 1965, when Marcos became president. Her successor, Fidel Ramos, put poverty alleviation and social reform behind neoliberal restructuring of the economy. An inflow of $19.4 billion in foreign investment between 1993 and 1997 triggered a boom that turned into a rout when, following the collapse of the Thai baht in July 1997, speculative investors in Manila, as in the rest of Southeast Asia, rushed for the exits and brought the economy down in the process [see Bello, “The End of the Asian Miracle,” January 12/19, 1998].

Estrada’s victory in 1998 was a veritable cri de coeur from the vast lower classes. He assembled around him a diverse cast of characters that included former backers of Marcos, former opponents of Marcos, well-known businessmen, figures from the left, arrivistes and interesting, if not sinister, people. The line between the legitimate world and the underworld became blurred. His cronies included Mark Jimenez, a Filipino-American businessman wanted by the US Justice Department in connection with illegal campaign donations to the Democratic Party. Also prominent in the presidential retinue were magnates and magnates-on-the-make from the increasingly economically powerful Filipino-Chinese community who were not reticent about bankrolling Estrada’s campaign or the favors they expected in return.

Though he was later accused of lying through his teeth, the candor of the new president when it came to his personal life seemed refreshing to many. He gloried in being a high school dropout and raised anti-intellectualism to a virtue. He admitted to having several wives–at last count, at least five–and a numerous brood. Estrada loved to recall his telling the scandal-scarred Bill Clinton, “I have the sex and you have the scandal.”

Upon assuming office, Estrada knew that one of the things he had to do was calm Washington’s worries about him in connection with the leading role he had played in seeking the termination of the US military bases agreement with the Philippines in 1991 and his flirtation with populist economics. Even before he won the election, he sent a high-level team to meet with World Bank and IMF officials to assure them that he would continue the free-market, antiprotectionist policies of his predecessors. And, indeed, over the next two years the most consistent policy of his administration, one that persisted through scandal after scandal, was its relentless push for more liberalization, deregulation and privatization. The IMF, World Bank and Asian Development Bank were reticent about Estrada’s record of governance even at the height of the crisis, and this was not unconnected to his having denationalized retail trade and nearly completed the privatization of the National Power Corporation.

The other gesture toward Washington was the signing of the Visiting Forces Agreement, which allowed the reintroduction of US troops into the Philippines to participate in joint military exercises after an eight-year hiatus following the termination of the bases in 1991. With neighboring Indonesia collapsing into chaos and China perceived as an incipient threat to the US military presence in East Asia, normalizing the traditionally close military ties with Manila was important to Washington. The Clinton Administration was impressed with Estrada’s going against strong nationalist sentiment to secure a Senate vote ratifying the Visiting Forces Agreement, and over the next two years its posture toward Estrada and his foes was one of studied neutrality.

The “Presidency for the Poor” never got off the ground. Land reform was derailed by powerful landlords allied to Estrada, like former Marcos crony Eduardo Cojuangco Jr., while the Department of Agrarian Reform was deprived of funds for land acquisition by a Congress dominated by the president’s party. Policy-making as a collective Cabinet exercise practically disappeared. Karina Constantino-David, who resigned as Estrada’s top housing adviser after sixteen months, said that policy discussion at Cabinet meetings was aborted because “the president’s attention span would not go beyond ten minutes.”

The volatile mix of corruption and the disappearance of basic governance led to the collapse of the stock market, precipitate decline of foreign investment and rapid depreciation of the peso, as local and foreign businesses exchanged pesos for dollars and invested them in better climes. When the Singson revelations hit the public in early October of last year, the peso swiftly plunged to hit fifty pesos to one dollar, compared with forty to one at the beginning of the year. The Makati Business Club, the voice of the capitalist establishment, asked the president to resign, as did most of the country’s most influential trade associations. But it was not only the economic elite who turned against Estrada. He managed the feat of uniting against him both management and organized labor, the right and the left, while the middle class provided the fodder for the massive demonstrations that rocked Manila in the weeks leading up to the impeachment trial.

In response, Estrada initially tried to stoke the fires of class war, calling his opponents peninsulares, a nineteenth-century term for Spaniards posted by Madrid to govern the Philippines. But he discovered that his magic with the masses had waned, and while the poor were not joining the middle class in opposing him, neither could he drum up spontaneous support from them. His aides were reduced to renting crowds for his counterrallies, with the going rate being 500 pesos ($10) per head.

The crisis of the Estrada presidency has pushed Filipinos to come to terms with the fact that their system of governance has many flaws. It is, however, the nexus between crime and the state that has been highlighted by the recent events. Crime and corruption are prominent features of governments the world over, but in a “normal” state, the sources of corruption are forces that subvert the machinery of government from without; the mafia is not indigenous to the government. In the Philippines, on the other hand, the mafia is the state.

Even before the Marcos period, the pattern was for local or regional politicians to absorb petty criminals or toughs into their warlord bands, to be used to muscle into, control and expand lucrative sub rosa activities like illegal gambling, prostitution or protection rackets, which served as additional mechanisms to squeeze the economic surplus from the citizenry that could be deployed for increasingly expensive electoral struggles. The martial-law dictatorship of Ferdinand Marcos in the seventies and early eighties was another important step in the “mafiazation” of government. Marcos-linked political clans like the Singsons of Ilocos Sur were able to bring to a new level–the provincial and in some cases the regional–the organization and control of activities like jueteng, prostitution and drugs.

At the same time, the expansion and centralization of the central administrative machinery that marked the Marcos years opened up tremendous opportunities for economic mobility for middle- and lower-middle-class bureaucrats. With the traditional elite maintaining its tight control over land and the private sector, the state became the choice arena for entrepreneurship by restive and ambitious elements from the more modest classes.

Also volatile in its consequences was the massive expansion of the security forces amid economic stagnation. The result was the proliferation of thousands of low-paid condottieri who hired themselves out to local and national politicians. By the end of the Marcos regime, not a few officers had discovered that their command over men and firepower could be translated into successful entrepreneurship in the form of kidnapping the rich–especially rich Chinese–for ransom. Why, they reasoned, should this extremely profitable business be left to petty gangsters? Indeed, when regular gangsters sought to organize independently of the military and police, they found out the hard way that the men in uniform would brook no competition. Some observers contend that this was the significance of the total liquidation of a Jesse James-like outfit, the Kuratong Baleleng Gang, while under government custody in 1995, an operation carried out by security elites closely associated with then-Vice President Estrada.

From a sociological point of view, the most interesting item to come out of the revelations of Singson is that the main project of the Estrada administration was to centralize crime under the presidency. Under Estrada, the most profitable criminal activities, like jueteng, were to be rationalized, with a bureaucracy stretching from the president to the smallest jueteng collector, paralleling and intertwining at key points with the formal hierarchy of government. What was exposed in the jueteng scandal was probably only the tip of the iceberg. Many Filipinos are convinced that the worlds of prostitution, drugs and kidnapping were on their way to becoming equally centralized. Had the Estrada project not been disrupted, the president would have become the apex of both the state and the underworld. This was the real “Erap Revolution”–and Filipinos, particularly the middle class, had thought the man was stupid!

The state-mafia nexus is the reason that many people in this country who felt Estrada should go evinced hesitations when it came to the question of succession. At the onset of the current crisis, Vice President Gloria Macapagal Arroyo left the president’s Cabinet and called for Estrada’s resignation. She did not, however, meet with enthusiastic support. The biggest apprehension stemmed from her political and personal ties to Bong Pineda, one of the country’s top gambling lords, from whom Singson collected jueteng proceeds meant for Estrada. In fact, she was the main sponsor at the wedding of one of Pineda’s children, and such ritual kinship in this country bespeaks close personal ties. Arroyo was also accused, like Estrada, of concealing her net worth by not declaring her ownership of property in San Francisco worth $4.6 million. So, not surprisingly, many feared that the country would be getting rid of Estrada only to deliver the presidency to somebody who might be equally compromised with crime.

As the country is caught up in euphoria over Estrada’s departure, such fears have momentarily subsided. But as a newly assertive citizenry gives the new president a long, hard look, it will be difficult for her to continue to give evasive answers about her links to the Pineda family. Prior to her ascent to power, she could get away with answers like the one she gave the South China Morning Post: that “she had no choice but to officially deal with Lubao mayor Lilia Pineda [Bong Pineda’s wife].” With the massive disgust with corruption that now prevails, she will find it hard to avoid a public accounting of her ties to the Pinedas and a public repudiation of the powerful gambling couple.

Many Filipinos also remember Arroyo as the person who led the fight to ratify the Uruguay Round establishing the World Trade Organization in the Senate. Accession to the WTO, she claimed, would bring about prosperity for the Philippines, especially for the agricultural sector. Opponents of GATT/WTO brought up solid empirical evidence that the treaty would have a negative net effect, but posing as the all-knowing economist, she dismissed them all as “protectionists” who would condemn the country to poverty.

Five years after accession to the WTO, the critics have been proved right: The WTO has been bad for the country, especially in agriculture, where it has had a devastating impact. The 300,000-person poultry industry is on its last legs, having been ravaged by cheap, subsidized US chicken-parts imports. Corn and vegetable farmers have also suffered irreparably from cheap imports. The safety nets that Arroyo promised farmers never materialized, and today Washington continually threatens to bring the Philippines to the court of the WTO on a variety of issues, including maintenance of the local-content policy in the automobile sector.

Prior to her becoming president, Arroyo said she would renegotiate commitments the Philippines made to the WTO. This remains to be seen. The United States will scream if she makes one move in this direction, and alienating the United States is probably something that is farthest from Arroyo’s agenda at this point. Indeed, pressures for accelerated liberalization will increase from Washington and from the World Bank, the IMF and the Asian Development Bank. The privatization of the National Power Corporation remains to be completed, and this is the top priority that these agencies are likely to push on Arroyo, as they did on Estrada.

The United States has made known its displeasure with Arroyo’s flirting with sectors of the left during the past three months, as she strove to garner the broadest support possible for her quest to oust Estrada. With containment of China likely to come to the top of Washington’s agenda for Asia and with the continuing instability in neighboring Indonesia preoccupying the Pentagon, the Bush Administration is likely to press for the expansion of joint military maneuvers begun under Estrada.

These issues, as well as those of land reform, income redistribution and environmental protection–all of which were rolled back or neglected under Estrada–will push Arroyo to make her policy preferences explicit, a move she has so far avoided with the excuse that she desires “consensus” from her supporters on the key points of a comprehensive agenda. Progressives are not confident that social reform will be a priority for Arroyo, citing her training as a neoclassical economist and her closeness to many of the same neoliberal advisers who surrounded her partymate, former President Fidel Ramos.

Nevertheless, the mere fact that the massive preoccupation with corruption and cronyism under Estrada may now give way to a resumption of debates on issues having to do with the country’s economic and political direction is very welcome. For one cannot help but feel that we Filipinos are back at square one. It is now fifteen years since the civilian-military uprising that ousted Marcos in 1986. Yet we are stuck in the politics of anticorruption and anticronyism, of good and evil, where the agenda remains the Marcos-era one of ousting a crook from power. Fifteen years have gone down the drain–fifteen years that could have been devoted to creating a political system that would lift the country from the mire of underdevelopment, inequality and poverty.

The hope is that debate over policies will now come to the forefront. But the continuing fear is that this will not come about unless the new regime makes decisive moves to roll back corruption and destroy the links between the state and organized crime. Periodic bouts of middle-class outrage, such as those of 1986 and 2001, are vital, but everyone knows that the traditional interest-groups that dominate politics in “normal times” are waiting for the current wave to recede before trying to reassert themselves.

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