Manila:  President Estrada's stateof the nation address  illustrated how far and fast suspicion has grown of a resurgence of cronyism, abuse of power and populist authoritarianism. His problem is his pals.

by Philip Bowring 

Manila: Doth he protest too much? In his annual State of the 
Nation address to Congress on July 26, President Joseph "Erap" 
Estrada vowed to "stake my life" on the defence of the 
constitution and upholding "freedom in all its various forms". 

That he found it necessary to say this at all was a direct 
response to mounting criticism of the style of his year-old 
administration. Elsewhere in the region there is debate about 
how much has been learned from the Asian crisis. Here, people 
are beginning to ask: have we forgotten what was learned from 
the Marcos era? 

Few imagine that Estrada is planning a return to Marcos-style 
martial law administration. The concern is threefold: 
* That cronyism in government to business relationships is 
galloping back. 
* That improper methods are being used to silence critics of 
the administration 
* That Estrada is planning changes in the constitution to 
consolidate his own power and perhaps make possible a second 

The most immediate issue concerns media freedom and abuse of 
government power. Last week the venerable, but often highly 
critical, Manila Times newspaper was closed down after it had 
been sold to interests believed connected to the palace. The 
vendor was the Gokongwei family whose property, food and 
banking interests were seen as vulnerable to unfavourable 
government decisions and unwarranted attention from the 
taxman. Earlier, over the objections of editorial staff the 
paper had published an apology to Estrada after he threatened 
a libel suit after it called attention to a particular deal. 

Another paper to have suffered from Erap's wrath is the top 
selling Philippine Daily Inquirer. The movie industry recently 
withdrew advertising from it after criticism of Estrada. This 
was "the voluntary act of sympathetic people", explained a 
spokesman for an Estrada showing growing irritation with media 
reports of scandals. The movie industry has recently received 
tax breaks. Others to have withdrawn advertising include 
government bodies and Philippine Long Distance Telephone 
(PLDT), the phone giant where control recently passed to the 
First Pacific group, part of the empire of Suharto crony Liem 
Sioe Leong. 

Despite his State of the Nation remarks, Estrada may well 
feel that his own popularity can overwhelm anything the 
church, aggrieved businessmen or Manila's chattering classes 
have to say about him. His scandal-ridden private life has 
long been ignored by the public which still believes that he 
represents the poor. Whether or not late-night booze, girls 
and gambling sessions are a thing of the past, the masses 
still back him, according to all the opinion polls. The 
celluloid image of the fighter for the underdog still far 
outweighs either his actual elitist background or his 
association with businessmen not known for their social 
concerns or ethical practices. 

His continuing popularity has reduced to silence many of the 
normally voluble and critical members of the Senate. For now 
it is not good politics to attack Erap, so that job has been 
left to the media and the church. Congressmen have mostly 
fallen in behind Estrada, as with Ramos, because few can 
resist the patronage powers of the presidency. 

Estrada also knows that in the short term at least he can rise 
an economic recovery wave. The Philippines weathered the Asian 
crisis better than most because, through no virtue of its own, 
it suffered fewer excesses. Now the economy is growing again - 
- it should expand by at least 2.5% this year after only a 
small decline in 1998. The recovery is being driven by a 
revival in agriculture after a severe drought and this will 
lead to a pick up in consumer demand. 

 Business sentiment, like the stockmarket, is improving as 
interest rates and inflation fall, the currency remains stable 
and exports increase.The business community at least seems to 
have learned from the Asian crisis. Corporations have been 
busy reducing debt, closing loss-making factories and agreeing 
to mergers or  joint ventures with foreigners. 

All in all, the president can blame past economic ills on his 
predecessor and look forward to the rewards of recovery 
underpinning his popular standing. 

It is far too early to suggest that the Estrada regime will 
evolve into a Philippine version of Peronist populism. There 
is a tendency in southeast Asia towards populist 
authoritarianism, but here at least this is matched by a 
strong commitment to the process of voting and to the forms of 
legal and constitutional process. That's why the issue of the 
Constitution --  known here by the none too grave acronym of 
cha-cha or charter change -- matters. 

It is not yet clear what Estrada wants to do with the 
constitution. His advisers are evidently planning some changes 
and may well be able to push them through while his popularity 
is so high and Congress so tame. Certainly there are many 
faults with the Constitution which deserve attention. However, 
as Ramos found when his supporters tried to change it to allow 
him to run again, there is a deep seated antipathy to 
amendments. All moves are viewed with suspicion that the 
object is not to improve government by rationalising the power 
structure but to entrench the interests of existing power 
holders, whether by removing term limits or reducing te power 
of the judiciary to interpret the legality of executive 
decisions.It remains to be seen whether Estrada will face down 
a hostile church, press and -- most formidable of all -- 
Corazon Aquino. 

Despite the media interventions and push for constitutional 
change, many believe that Estrada is too old and lazy to want 
to want to exercise autocratic power. Instead, they see that 
danger may lie in his tendency to rely on his pals, by they 
highschool classmates, carousing buddies, movie world 
identities, associates from his days as mayor of San Juan, a 
Manila suburb, or fast talking businessmen with plausible 
sounding projects. 

That reliance on pals is not always unfortunate. New central 
bank governor Rafael Buenaventura may be a former classmate, 
but he is also a highly regarded banker. The same applies to 
Foreign Minister Domingo Siazon. Policy-wise there been no 
retreat from the liberalising agenda of President Ramos. 
Legislation to open retail trade to foreigners, to increase 
competition in banking, to privatise the power industry is in 
process. Despite recession there has been no major backsliding 
from tariff reform. Senior ministers such as Finance Secretary 
Edgardo Espiritu, Trade and Industry Secretary Jose Pardo and 
Economic Planning Secretary Felipe Medalla all appear on top 
of their jobs and espouse coherent policies. 

But critics there is a growing gap between coherent policies 
and implementation on an ad hoc basis through the 
intermediation of Erap's court of buddies and business 
associates. That matters in the Philippines, a nation where 
government institutions are weak and where politicians are 
easily influenced by the patronage that the executive can 
bestow.  The president seldom holds cabinet meetings and the 
regular meetings between the president and congressional 
leaders to speed important bills through the legislature have 
come to a halt. Though Estrada supporters currently dominate 
both houses of Congress, legislation has been making snails' 

Decisions on purely business issues are being made in 
Malacanang (the presidential palace) not the marketplace. 
Deal-makers close to the palace have been key figures in big 
deals including acquisition of control of Philippine Long 
Distance Telephone Co. (PLDT) and the takeover of PCI Bank. 
The intermediary in these cases, Mark Jimenez, is subject to 
extradition proceedings by the US on a variety of criminal 
charges. After much pressure, Jimenez has resigned as an official 
adviser but may yet have Erap's ear. 

Government and private sector social insurance funds 
controlled by palace-friendly executives have been used to 
promote particular deals and shares, including the above two. 
Thus far, playing in the marketplace has been profitable. But 
those with memories of the Marcos era recollect how social 
security savings were abused in the past. 

There has been a huge increase in legalised gambling, some of 
it connected with businessmen of mixed reputations. The 
gambling surge is supposed to be a way of raising money from 
the rich to help the poor but critics say that the poor are 
also the gamblers and the main winners are middle men. 

Erap's ballyhooed anti-poverty program so far featured 
telegenic parades of movie stars -- reminiscent of past 
ventures by Imelda Marcos -- rather than efforts to collect 
taxes and invest in irrigation, roads and schools. Priority 
for agriculture is so far just rhetoric, though the poor are 
mainly rural and the weakness of the agricultural sector has 
been a root cause of the Philippines' abysmal economic 
performance over the past two decades. 

Several names closely linked to the Estrada administration are 
new and not yet well known. But others include such prominent 
Marcos business associates as Eduardo "Danding" Cojuangco and 
tobacco magnate Lucio Tan. Both had made partial comebacks 
during the Ramos era, but are now enjoying the benefits of 
having been strong backers of the Estrada campaign. Tax cases 
against Tan have been dropped or shelved and Danding seems 
poised to keep many of the proceeds from a Marcos-era coconut 
levy which critics say was the biggest of all frauds on the 
poor conducted by Marcos. 

It has always been difficult to keep business (with its 
oligarchical tendencies) and politics (with its quasi-feudal 
basis) separate in the Philippines. Cultural habits of 
rewarding friends are also strong. But Ramos made a conscious 
effort to reduce the government's role, to undermine oligarchy 
by increasing competition, cutting tariffs and liberalising 
foreign investment. His tough but thoughtful National Security 
adviser Jose Almonte ran a long campaign against big business 
tax evasion. Success was mixed but the trend was encouraging. 

The extent of payola now cannot be measured. But anecdotal 
evidence indicates an increase. The latest World 
Competitiveness Report, ranks the Philippines close to Russia 
and Indonesia for tax evasion, irregular payments and 
favouritism towards well connected companies. 

Estrada's administration is not without its successes -- for 
example a reduction in kidnappings. But its association with 
people on the fringes of the business world is causing concern 
in many quarters, not just among censorious Catholic bishops. 
Estrada may yet galvanize himself into action. He may listen 
more to ministers and less to friends. He may use his 
popularity to take on the church over family planning. He may 
collect taxes and promote job-creating investment over crony 
capitalism. He may remain popular regardless of his 
performance in office. 

But there is a long way to go before the celluloid champion of 
the poor becomes their real champion, and before smart 
Filipinos stop looking abroad to exercise their talents rather 
than struggle against sleaze and feudalism at home. 



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