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November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

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JANUARY 21, 2000 VOL. 26 NO. 2

Act II for Estrada
The president strives to turn the page on his struggling administration

President Joseph Estrada chose all the right wordds in his Report to the Nation. Now he must deliver on his promises Edwin Tuyay for Asiaweek
President Joseph Ejercito Estrada was up until five a.m. on Saturday, Jan. 8, reviewing his Ulat sa Bayan, the annual Report to the Nation. He had reason to worry. A cabinet secretary and four under-secretaries had quit three days earlier, with the respected Edgardo Espiritu lashing out at corruption and cronyism in government after resigning as finance secretary. Business leaders and financial markets were moaning about unfocused policies and the mounting budget deficit. Opposition politicians and the Catholic Church were hammering non-stop at his plan to amend the Constitution. And his once sky-high approval rating looked doomed to sink below a rising tide of dissatisfaction. Estrada's 19-month-old administration was not drowning - yet - but it was starting to flounder. The movie star-turned-president had to deliver a dazzling performance. And he did.

But was Estrada's performance only meant to dazzle - and perk up his ratings - or did it signal a fresh commitment by the president to tackle the problems dogging his administration? "We hope and pray that he is really serious, that it is not just words," said Monsignor Hernando Coronel, spokesman for the Catholic Bishops' Conference of the Philippines. The Church's reservations were shared by business. "It's one thing when you announce changes, it's another thing how you implement these," notes executive director Guillermo Luz of the Makati Business Club, the nation's heaviest-weight organization of executives. Estrada says he has gotten the message. "This is not a ratings game," the president said. "I have taken these measures because that is what the people want." Clearly, Estrada's performance cannot end with the Ulat sa Bayan, because all the Philippines will be watching his every move from here on.

Estrada goes into damage-control mode with a new cabinet and agenda. Will it work?
• Law & Order
Mixed reviews for Manila's 'Dirty Harry'

Wahid is caught between the army and the Islamists
• Reporter's Notebook: Ambon
Reporting from the Ground Zero of sectarian violence

Why the old-style politicians refuse to fade away

The fallout from the Karmapa Lama's flight to India
• Bishops
Taking on the Vatican

As far as words go, Estrada delivered. The biggest and most-welcomed surprise was his decision to shelve plans to amend the Constitution, called "Concord" (Constitutional Correction for Development) by Estrada and "cha-cha" (charter change) by his opponents. "As a leader, I must listen," Estrada said, giving a nod to the tens of thousands, led by Cardinal Jaime Sin and former president Corazon Aquino, who marched through Manila in August to oppose any charter changes. The issue is highly emotional. Estrada wants Concord to lift provisions barring foreigners from owning land and controlling key industries like telecommunications - a step he says is essential to boosting investment and economic development. That is controversial enough. But Sin and Aquino fear cha-cha opens the door to rolling back democratic protections put in place to ensure no return to the authoritarianism of former president Ferdinand Marcos. The plunge in Estrada's popularity dates from the August rallies.

Beyond that, Estrada fired all 25 "one-peso-a-year" advisers without specific functions, who had been meant to be the president's idea factory but instead had contributed to an image of cronyism surrounding Malacañang. To ensure they could no longer flaunt their former access, he added: "I now ask them to destroy and discard all their calling cards and stationery" identifying them as presidential advisers. Estrada replaced Espiritu as finance secretary with the well-regarded Jose Pardo, who had held the trade and industry portfolio, named a six-man Economic Coordinating Council of top officials to bring badly-needed coherence and momentum to policy-making, and recruited five business elder statesmen as senior advisers. To combat fears about crime and graft, he named the Rambo-esque former mayor of Manila Alfredo Lim to head the department of interior and local government. "It will be a more powerful team," Estrada said of his new-look administration. "I expect to have more accomplishments this time."

So Estrada addressed just about every issue - from Concord to policy drift to corruption to crime - that had been eroding his popularity and his administration's effectiveness. But are his initiatives enough to boost his ratings, not to mention solving the challenges faced by the Philippines? "The steps taken by the president should at least arrest the decline in business confidence," says political scientist Alex Magno. Business was concerned that the Philippines, which weathered the Asian Crisis better than most of its neighbors, is now getting left behind as the region recovers. It worried that policy-making was stuck as former finance secretary Espiritu (who wanted easy money and strong public spending to boost growth) skirmished with central bank chief Rafael Buenaventura (who wanted to curb the budget deficit and keep the peso steady). Most of all, it feared that economic reform was being held hostage in the clash over the Constitution.

By shelving Concord, Estrada cleared the decks to fight for piecemeal, but just as necessary, reforms. He urged Congress to quickly pass the 2000 budget, held over from last year. Bills to raise tax revenues, relax limits on foreign investment in banks and to privatize power generation are languishing, although a proposal to open the retail industry to foreigners is ready for signing. There is some concern that backing off Concord sent the wrong signal. "It does remove a sensitive issue, thus some relief is understandable," says a report by Barclays Capital. "But constitutional reform is a long-term positive." However, central bank governor Buenaventura says foreign investors understand that the retreat is politically expedient right now. Estrada himself said he was only "for the moment yield[ing] to more urgent, more short-term and, yes, more feasible concerns." Moreover, the appointment as finance secretary of Jose Pardo - who in addition to being a respected businessman sees eye-to-eye with Buenaventura on the need to control the budget deficit - is expected to bring policy coherence into the cabinet. And the naming of five prominent Makati businessmen, including management consultant Washington SyCip, former central bank governor Gabriel Singson and real estate tycoon Jaime Augusto Zobel de Ayala, as senior economic advisers should end clashes with the business establishment.

Dropping Concord should also earn Estrada some breathing room with the influential Catholic Church and the public. The latter was also pleased by the appointment of Alfredo Lim as interior secretary. Lim is the two of a one-two punch against crime as the boss of tough-as-nails national police chief Panfilo Lacson. "What Ping Lacson cannot finish, I will finish," Lim says, ominous words given their reputation - policemen under their command have had a penchant for shooting first and asking questions later. Their first order was to deploy uniformed marines in Manila shopping centers and other busy spots to show criminals they mean business. That immediately earned the wrath of the Church, which called the move an overreaction. But Lim's appointment may be an olive branch to Cardinal Sin and ex-president Aquino. They both supported Lim's losing presidential campaign against Estrada in 1998.

Changing the image of Malacañang as a palace for cronies and wheeler-dealers will be much harder. "The access of the so-called peso-a-year advisers will be limited - this is good for the administration," says Quezon congressman Danilo Suarez. The advisors allegedly acted as a so-called "night-shift cabinet" for Estrada, who rarely held meetings of his real cabinet, wielding power without accountability. A Malacañang source says the former advisers will have very limited access to the presidential residence from now on. That, plus the renewed cohesiveness of the cabinet, and the formation of the powerful economic council, could end the "night shift." But doubts die hard. "We still have to wait and see whether the appointment of senior economic advisers from the private sector will be of much help to the president," says Suarez. "These people have their own private business interests to protect."

So far it is all just promises. But even if Estrada follows up, he cannot expect public approval to jump quickly. For one thing, some factors are out of his control. The public blamed him for hikes in gasoline prices late last year - following higher world oil prices - and further increases are pending. Voluntary price restraints by manufacturers put in place during the Asian Crisis will not last much longer, and the government is phasing out subsidies for rice. With all these negatives, says political scientist Magno, "We can expect Estrada's ratings to drop further before they recover." Beyond that, if Estrada brings Concord back to the front burner, he can expect another war with the Church and Aquino. And he may have a tough time keeping at arm's length longtime associates and political supporters like Philippine Airlines boss Lucio Tan and San Miguel tycoon Eduardo "Danding" Cojuangco - both Marcos-era cronies whose many business interests necessarily involve government.

President Estrada still cannot understand why his approval ratings went down so disastrously in the first place. "I have done my best," he asserts. In his report to the nation, he pointed to 3% economic growth in the first three quarters of 1999, up from near zero the previous year, an inflation rate of 6.6%, the lowest in two decades, interest rates under 9%, the lowest in 12 years, and 19% growth in exports. "These achievements do not always produce sensational headlines," he notes dryly. Critics counter that the problem is not just achievements but missed opportunities - like the 4%-to-5% economic growth rates being reported by other Southeast Asian economies - as well as the sense that Estrada does not have a handle on either his administration or his country's problems. Now the president is fighting back. "Watch me," he challenges. "I am in control. I will recover strongly." Hopefully, the Philippines will recover strongly as well.

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