Figure 1. Philippines in Its Asian Setting, 1991

IN EARLY SPRING 1992, as President Corazon C. Aquino approached the end of her term, there was no doubt that her administration had restored a functioning democratic system to the Philippines. Aquino herself had decided not to seek another term as president even though the one-term presidency limitation imposed by the constitution did not apply to her. There was, however, no dearth of aspirants for the position. Eight candidates, including former First Lady Imelda Marcos, who had returned to the Philippines in the fall of 1991 to face embezzlement charges, were considered serious contenders.

In 1992, although its citizens had many reasons to hope for a brighter future, the Philippines was a nation beset with numerous economic and political problems. These problems has been compounded by a series of natural disasters: in the wake of a massive earthquake in northern Luzon in July 1990 and a devastating typhoon in the central Visyas in November 1990, the Mount Pinatubo volcano in Central Luzon erupted for the first time in 600 years in early June 1991. The eruption covered the surrounding countryside with molten ash and caused serious damage to the infrastructure of the region, including United States military facilities at Clark Air Base and Subic Bay Naval Base. The economy, which had slowed to a 3-percent gross national product (GNP--see Glossary) growth in 1990, fell by 0.6 percent in the first six months of 1991 and by slightly more than that in the third quarter. Inflation peaked at 19.3 percent in August 1991, declined to 15.8 percent by November, but remained far above the 9.5-percent International Monetary Fund (IMF--see Glossary) target for the year. Investment, up 19.7 percent from January to September 1991, was nearly offset by the inflation rate, resulting in only a marginal increase. Unemployment was 10.3 percent in July 1991, nearly two percentage points higher than the previous year, and most economists estimated underemployment to be at least twice that rate.

In the early 1990s, the Philippines was rather densely populated (220 persons per square kilometer), and the annual population growth rate was 2.5 percent. Approximately 57 percent of the population was under twenty years of age. Education was very highly regarded, as it had been throughout most of the twentieth century. The literacy rate of the total population approached 90 percent, and compulsory, free education reached nearly all elementary school-age children, even in the remotest areas. Health care was adequate in urban areas, less so in the countryside.

Corazon Aquino had been swept into the presidency by the February 1986 "People's Power" uprising amid high expectations that she would be able to right all of the wrongs in the Philippine body politic. It soon became evident, however, that her goals were essentially limited to restoring democratic institutions. She renounced the dictatorial powers that she had inherited from President Ferdinand E. Marcos and returned the Philippines to the rule of law, replacing the Marcos constitution with a democratic, progressive document that won overwhelming popular approval in a nationwide plebiscite, and scheduling national legislative and local elections. The new constitution, ratified in 1987, gives the Philippines a presidential system of government similar to that of the United States. The constitution provides the checks and balances of a three-branch government. It provider for the presidency; a two-house Congress, the Senate and the House of Representatives; and an independent judiciary capped by the Supreme Court. The constitution also provides for regular elections and contains a bill of rights guaranteeing the same political freedoms found in the United States Constitution. Fueled by a constitutionally guaranteed free and open press, the freewheeling political life that had existed before the martial law period (1972-81) soon resumed. But most of the political problems, including widespread corruption, human rights abuses, and inequitable distribution of wealth and power, remained.

Many of the most intractable problems in the Philippines can be traced to the country's colonial past. One major source of tension and instability stems from the great disparity in wealth and power between the affluent upper social stratum and the mass of low-income, often impoverished, Filipinos. In 1988 the wealthiest 10 percent of the population received nearly 36 percent of the income, whereas the poorest 30 percent of the population received less than 15 percent of the income.

The roots of the disparity between the affluent and the impoverished lie in the structure established under Spanish rule, lasting from the first settlement under Miguel López de Legazpi in 1565 to the beginning of United States rule in 1898. Friars of various Roman Catholic orders, acting as surrogates of the Spanish government, had integrated the scattered peoples of the barangays (see Glossary) into administrative entities and firmly implanted Roman Catholicism among them as the dominant faith--except in the southern Muslim-dominated portion of the archipelago. Over the centuries, these orders acquired huge landed estates and became wealthy, sometimes corrupt, and very powerful. Eventually, their estates were acquired by principales (literally, principal ones; a term for the indigenous local elite) and Chinese mestizos (see Glossary) eager to take advantage of expanding opportunities in agriculture and commerce. The children of these new entrepreneurs and landlords were provided education opportunities not available to the general populace and formed the nucleus of an emerging, largely provincially based, sociocultural elite--the ilustrados (see Glossary)-- who dominated almost all aspects of national life in later generations.

The peasants revolted from time to time against their growing impoverishment on the landed estates. They were aided by some reform-minded ilustrados, who made persistent demands for better treatment of the colony and its eventual assimilation with Spain. In the late nineteenth century, inflamed by various developments, including the martyrdom of three Filipino priests, a number of young ilustrados took up the nationalist banner in their writings, published chiefly in Europe. During the struggle for independence against Spain (1896-98), ilustrados and peasants made common cause against the colonial power, but not before a period of ilustrado vacillation, reflective of doubts about the outcome of a confrontation that had begun as a mass movement among workers and peasants around Manila. Once committed to the struggle, however, the ilustrados took over, becoming the articulators and leaders of the fight for independence--first against Spain, then against the United States.

Philippine peasant guerrilla forces contributed to the defeat of the Spanish. When the Filipinos were denied independence by the United States, they focused their revolutionary activity on United States forces, holding out in the hills for several years. The ilustrado leadership chose to accommodate to the seemingly futile situation. Once again, ilustrados found themselves in an intermediary position as arbiters between the colonial power and the rest of the population. Ilustrados responded eagerly to United States tutelage in democratic values and process in preparation for eventual Philippine self-rule, and, in return for their allegiance, United States authorities began to yield control to the ilustrados. Although a massive United States-sponsored popular education program exposed millions of Filipinos to the basic workings of democratic government, political leadership at the regional and national levels became almost entirely the province of families of the sociocultural elite. Even into the 1990s, most Philippine political leaders belonged to this group.

Members of the peasantry, for their part, continued to stage periodic uprisings in protest against their difficult situation. As the twentieth century progressed, their standard of living worsened as a result of population growth, usury, the spread of absentee landlordism, and the weakening of the traditional patron-client bonds of reciprocal obligation.

Whereas the economic legacy of colonialism, including the relative impoverishment of a very large segment of the population, left seeds of dissension in its wake, not all of the enduring features of colonial rule were destabilizing forces. Improvements in education and health had done much to enhance the quality of life. More important in the context of stabilizing influences was the profound impact of Roman Catholicism. The great majority of the Filipino people became Catholic, and the prelates of the church profoundly influenced the society.

Beginning with independence in 1946, the church was a source of stability to the infant nation. Throughout the period of constitutional government up to the declaration of martial law in 1972, however, the church remained outside of politics; its largely conservative clergy was occupied almost exclusively with religious matters.

Democracy functioned fairly well in the Philippines until 1972. National elections were held regularly under the framework of the 1935 constitution, which established checks and balances among the principal branches of government. Elections provided freewheeling, sometimes violent, exchanges between two loosely structured political parties, with one succeeding the other at the apex of power in a remarkably consistent cycle of alternation. Ferdinand Marcos, first elected to the presidency in 1965, was reelected by a large margin in 1969, the first president since independence to be elected to a second term.

Discontent rooted in economic disparity and religious differences grew in the late 1960s. The New People's Army (NPA), a guerrilla force formed in 1968 in Tarlac Province, north of Manila, by the newly established Communist Party of the Philippines-Marxist Leninist, soon spread to other parts of Luzon and throughout the archipelago. In the south, demands for Muslim autonomy and violence, often between indigenous Muslims and government-sponsored Christian immigrants who had begun to move down from the north, were on the rise. In 1969 the Moro National Liberation Front (MNLF) was organized as a guerrilla force for the Muslim cause. The volatile political situation came to a head when grenade explosions in the Plaza Miranda in Manila during an opposition Liberal Party rally on August 21, 1971, killed 9 people and wounded 100. Marcos blamed the leftists and suspended habeas corpus. Thirteen months later, on September 21, 1972, Marcos used a provision of the 1935 constitution to declare martial law after an attempt was reportedly made to assassinate Minister of National Defense Juan Ponce Enrile. In 1986, after Marcos's downfall, Enrile admitted that his unoccupied car had been riddled by machine-gun bullets fired by his own people.

Under the provisions of martial law, Marcos shut down Congress and most newspapers, jailed his major political opponents, assumed dictatorial powers, and ruled by presidential decree. During the early years of martial law, the economy improved, benefiting from increased business confidence and Marcos's appointment of talented technocrats to economic planning posts. But over the next few years, major segments of the economy gradually were brought under the control of the Marcos crony (see Glossary) group. Monopolies controlled by Marcos cronies were subsidized heavily, seriously depleting the national treasury. The previously apolitical, professional armed forces were used by Marcos to enforce martial law and ensure his political survival. Even after Marcos rescinded martial law in January 1981, he continued to rule with virtual dictatorial powers. Thus, it came as no surprise that Marcos won an overwhelming victory in the June 1981 presidential election, an election that was boycotted by most opposition forces.

In the late 1970s and early 1980s, as the economic and political situation deteriorated, opposition to the Marcos government grew. The Catholic Church, the country's strongest and most independent nongovernmental institution, became increasingly critical of the government. Priests, nuns, and the church hierarchy, motivated by their commitment to human rights and social justice, became involved in redressing the sufferings of the common people through the political process. The business community became increasingly apprehensive during this period, as inflation and unemployment soared and the GNP stagnated and declined. Young military officers, desirous of a return to pre- martial law professionalism, allied with Minister of National Defense Enrile to oppose close Marcos associates in the military.

One of Marcos's first acts under martial law was to jail Senator Benigno "Ninoy" Aquino , his main opponent and most likely successor. But even in his imprisonment, Aquino maintained a large following, and when he was allowed to go to the United States for medical treatment in 1980, he became a more formidable leader of the opposition in exile. By 1983 the deteriorating economic and political situation and Marcos's worsening health convinced Aquino that in order to prevent civil war he must return to the Philippines to build a responsible united opposition and persuade Marcos to relinquish power.

Despite the obvious danger to his personal safety, Aquino returned. He was shot in the head and killed on August 21, 1983, as he was escorted off an airplane at Manila International Airport by soldiers of the Aviation Security Command. As a martyr, Aquino became the focus of popular indignation against the corrupt Marcos regime, a more formidable opponent in death than in life. The opposition, initially consisted primarily of the Catholic hierarchy, the business elite, and a faction of the armed forces. It grew into the People's Power movement with millions of rural, working class, middle class, and professional supporters, when Aquino's widow, Corazon "Cory" Aquino, returned to the Philippines to take over, first symbolically and then substantively, as leader of the opposition.

In November 1985, Marcos, still convinced that he had control of the political situation, announced a presidential election for February 7, 1986, one year before the expiration of his presidential term. Cardinal Jaime Sin, the archbishop of Manila, arranged a political alliance of convenience that ran the immensely popular Cory Aquino as candidate for president and politically astute Salvador "Doy" Laurel as vice president. The Aquino-Laurel ticket gained the support of the Catholic Church and a substantial part of the electorate and, despite widespread fraud by Marcos supporters, garnered a majority of votes in the election. Nevertheless, the Marcos-dominated National Assembly declared Marcos the winner on February 15.

Opposition at home and abroad was immediate and vociferous. On February 22, Minister of National Defense Juan Ponce Enrile and the commander of the Philippine Constabulary, Fidel V. Ramos, issued a joint statement demanding Marcos's resignation and set up a rebel headquarters inside Camp Aguinaldo and the adjoining Camp Crame in Metro Manila (see Glossary). When Marcos called out troops loyal to him to put down the rebellion, Cardinal Sin broadcast an appeal over the church-run Radio Veritas calling on the people to render nonviolent support to the rebels. Hundreds of thousands of unamed priests, nuns, and ordinary citizens faced down the tanks and machine guns of the government troops. Violent confrontation was prevented and many government troops turned back or defected. By the evening of February 25, Marcos and his family were enroute to exile in Hawaii, and Corazon Aquino had assumed power.

The Aquino government had been in office only five months when it was challenged by the first of six coup attempts led by dissatisfied armed forces factions. The first attempt, a relatively minor affair, was quickly put down, but later attempts in August 1987 and December 1989, led by the same reformist officers that had helped bring Aquino to power, came very close to toppling her government. In the 1989 attempt, elite rebel units seized a major air base in Cebu, held parts of army and air force headquarters and the international airport, and were preparing to move on armed forces headquarters in Camp Aguinaldo when they were turned back. The threat of another coup attempt hung over the capital in 1990, but as Aquino's term drew to a close in 1991 and 1992, the threat had considerably diminished. Most disaffected military officers seemed content to seek change through the political process, and many officers involved in earlier coup attempts had been persuaded to give themselves up, confident of lenient treatment.

In 1992 the threat from domestic insurgents was somewhat reduced. Although the MNLF and other Moro insurgent groups were a major threat in the southern Philippines in the early 1970s, since that time, internal divisions, reduced external support, pressure by the armed forces, and government accommodations-- including the creation of an Autonomous Region in Muslim Mindanao in 1990--had greatly reduced that threat. The communist NPA peaked in 1987, when there were 26,000 guerrillas active in the field. In 1992, with approximately 20,000 full-time guerrilla troops, the NPA remained a formidable threat to the government. Arrest of a number of top insurgent cadres and major internal purges, however, had greatly reduced its power.

Despite Filipinos' serious concern for maintaining national identity and avoiding any appearance of foreign subjugation, in 1992 congruent interests and a long history of friendly relations made it seem likely that the United States would remain the Philippines' closest ally--even after the long, difficult, and ultimately unsuccessful negotiations to extend the Military Bases Agreement. The original Military Bases Agreement of 1947, amended in 1959 and again in 1979, was scheduled to expire in 1991 unless an extension was negotiated. Negotiations for continued United States use of the two major bases in the Philippines--Clark Air Base in Pampanga Province and Subic Bay Naval Base in Zambales Province--had begun in 1990. The tenor of the negotiations changed significantly, however, in 1991, when the end of the Cold War made the bases less important and the eruption of the Mount Pinatubo volcano rendered Clark Air Base unusable. By the end of August 1991, United States and Philippine negotiators had agreed to extend the United States lease of Subic Bay Naval Base for another ten years in return for US$360 million in direct compensation for the first year and US$203 million for the remaining nine years of the lease. But in September 1991, the Philippine Senate rejected the agreement. As a result, the United States was expected to vacate Subic Bay Naval Base, its only remaining base in the Philippines, by the end of 1992.

In early spring 1992, everyone's attention was turned to the upcoming national elections. Who would be the first president elected since the restoration of democracy? What would be the composition of the new Congress? Would the new president and the new Congress strike out in bold new directions or would it be more business as usual? The future of the Philippines depended on the answers to these questions.

March 23, 1992

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Fidel Ramos succeeded Corazon Aquino as president of the Philippines on June 30, 1992, after winning a 23.6 percent plurality in the May 11, 1992, general election. Ramos, secretary of national defense in the Aquino administration and handpicked by Aquino to succeed her, narrowly defeated Secretary of Agrarian Reform Miriam Defensor Santiago, who received 19.8 percent of the vote, and former Marcos crony Eduardo Cojuangco, who received 18.1 percent.

The election proved that Corazon Aquino had succeeded in the primary goal of her presidency, restoring democracy to the Philippines. Nearly 85 percent of eligible voters turned out to elect 17,205 officials, including the president, the vice president, 24 members of the Senate, 200 members of the House of Representatives, 73 governors, and 1,602 mayors. The election was relatively peaceful; there was no threat of a military coup before, during, or after the election and only 52 election- related deaths were reported, compared to 150 in the 1986 presidential election. Despite claims of election fraud from losing candidates, the Commission on Elections apparently exercised effective control and relatively few voting irregularities were substantiated. Ramos won the election on his appeal for stability and a continuation of Aquino policies, and Santiago received strong support for her anticorruption candidacy. Cojuangco's substantial support, however, suggested that a large share of the electorate favored a return to the economic policies and the traditional patronage system of the Marcos era.

Shortly after his inauguration, Ramos sought a reconciliation with his former rivals from the presidential election, Imelda Marcos and Eduardo Cojuangco. In the House of Representatives, Ramos gained the position of speaker of the House for Jose de Venecia, his close political ally and secretary of the Lakas ng Edsa-National Union of Christian Democrats (Lakas-NUCD). Ramos received support from the fifty-one members of the House elected under the banner of the Lakas-NUCD alliance, which he had formed when he failed to get the nomination of the Laban Demokratikong Pilipino (LDP) party. In part because of his conciliatory approach, Ramos was also able to marshal support from a substantial share of LDP members, from members of Eduardo Cojuangco's Nationalist People's Party, and from members of the Liberal Party. He was less successful in the Senate, where LDP chairman Neptali Gonzales was elected president. Ramos seemed likely to face a major challenge getting his program to stimulate economic growth and restore order to the Philippines through a divided and potentially hostile Congress.

The Philippine economy showed some improvement in early 1992, spurred by increases in agricultural production and in consumer and government spending. Budget deficits were well within IMF guidelines--P3.2 billion in the first two months. At the end of April, the treasury posted a P5.5 billion surplus as a result of higher than programmed revenue receipts, mainly from the sale of Philippine Airlines. The increased revenue permitted the early repeal of the 5 percent import surcharge, stimulating both import spending and export growth. The money supply grew more rapidly than desired, but was kept under control. Treasury bill rates fell to 17.3 percent in March 1992 from 23 percent in November 1991, and inflation was down to 9.4 percent for the first quarter of 1992, from 18.7 percent in 1991.

One of the greatest threats to the Philippine economy in 1992 was the power shortage. The fall in the water level in Lake Lanao caused a 50 percent reduction in the power supply to Mindanao in December 1991, and the resumption of full power was not expected until almost the end of 1992. The power shortage in Luzon continued to be chronic. Power cuts of four to five hours per day have been common; in May they reached six hours on some days in Manila, the country's industrial hub. To help to meet this chronic shortage, the government reactivated the contract with Westinghouse Corporation to restart construction on a 620 megawatt nuclear power plant on the Bataan Peninsula that had been abandoned in 1986. This plant, however, will not be on line until 1995.

The conversion to civilian use of the military bases vacated by the United States poses another major economic challenge. The United States forces departed from the huge Subic Bay Naval Base on September 30, 1992, and the United States was expected to leave Cubi Point Naval Air Station, its last base in the Philippines, in November 1992. The Philippine Congress ratified a base conversion bill in February 1992 that created five special economic zones at the vacated United States bases under the Base Conversion Development Authority. The authority, which will exist for five years, will sell the land connected with the bases within six months and use half the proceeds to convert the bases to civilian use. One plan envisions converting the former Subic Bay Naval Base into a tourist center, industrial zone, container port, and commercial shipyard. But this plan will be hampered by the United States removal of major equipment, including three dry docks, from the base.

In late 1992, a new Philippine president and a new Congress, the first elected under the 1987 constitution, faced major economic and political challenges. An anxious Philippine citizenry waited to see how well its leader and elected representatives would cooperate in an attempt to meet these challenges.

October 21, 1992
Ronald E. Dolan

Data as of June 1991