Breaking Manila's Cycle of Corruption

By Philip Bowring

14 December 2011

Manila -- Former president of the Philippines Gloria Macapagal Arroyo's arrest last month reignited a longstanding national debate about clean government. Eighteen months ago, Benigno Aquino III surged to the presidency astride a wave of hope that he would bring the moral fiber of his mother, former president and legendary democracy activist Corazon Cojuangco-Aquino, to the top post after a decade of scandals under Presidents Joseph Estrada and Arroyo. But many Filipinos see the investigation into Mrs. Arroyo as a political family feud, not justice.

The controversy shows the difficulty of submitting the political class to the rule of law without appearing to engage in revenge politics or show trials. Philippine writer Joel Rocamora describes a cycle in which "exposes of corruption form a vital part of the system of political competition, but nothing is done to end systemic corruption because the 'outs' do not wish to poison the wells for the day they become the 'ins.'" Ending this cycle is Mr. Aquino's brief.

The politicized behavior of the Supreme Court is not helping public perception of the Arroyo investigation. The court consists mainly of the former president's appointees. Chief Justice Renato Corona, who was appointed in the last hours of her presidency, was impeached this week for corruption and for showing favoritism toward Mrs. Arroyo.

The court overturned a Justice Department order preventing Mrs. Arroyo from leaving while under investigation, whereupon she was arrested and charged with electoral fraud. She was treated the same way she treated Mr. Estrada, who was charged with taking kickbacks in 2001.

Supreme Court decisions today are assumed to be politically motivated even if they are not. When the court recently struck down a plan to keep Hacienda Luisita, the Aquino/Cojuangco clan's vast estate, from being broken up under the land reform program it was widely seen as revenge for the president's treatment of Mrs. Arroyo. But the court's decision was unanimous. Whatever the arguments for and against land reform, the survival of Hacienda Luisita has long been an example of powerful interests thwarting the reform's implementation. Mr. Aquino's clan should stop fighting.

The Supreme Court's politicization is a challenge Mr. Aquino can overcome only with time. He should raise judicial standards by appointing the best-qualified judges instead of the most loyal. At present, fighting with the judiciary is not a viable strategy to make the institutions of government work better.

Mr. Aquino's best strategy to weather the controversy over Mrs. Arroyo and improve governance is to lead by example. Here there are grounds for optimism.

Key budget and economic appointments have shown the president at his finest. There has been some slowdown in actual government spending as projects have been reviewed or re-tendered to improve accountability and reduce graft opportunities, but that will bring long-term gains. The budget has focused on education and help for the poorest while serious efforts are being made to improve project implementation and the design of public-private partnerships to attract infrastructure investment.

Improving governance doesn't mean new laws. Generally, the country already has good ones, such as those on mining and private investment in public infrastructure. The problems lie in the application of the laws. Who wants to invest in roads and power stations if the rules change when the government changes? Or what if insurgents, corrupt local officials or turbulent priests harass companies?

While in principle it would help to amend the constitution to remove barriers to foreign investment, it is more important to create a climate that will attract investors to the many industries already open. And new legislation must be weighed cautiously against the pork-barrel costs of winning votes for it.

In principle, the country should enjoy advantages as a result of its democracy, independent judiciary, free speech, a spirit of tolerance, a relatively open economy and sensible macroeconomic policies. Yet on measures of corruption, political stability, rule of law, government effectiveness and regulatory quality over the last three decades, it has declined drastically against most of its Asian peers.

Even as the economy faces challenges, improving governance is the key to Mr. Aquino's success. Remittance growth is down, global capital flows are slowing and the weather may not be as clement as for the past two years. Business-process outsourcing is still booming, but the success of this industry makes the stagnation of the country's labor-intensive manufacturing (which would do more to reduce unemployment) all the more stark.

With economic growth likely to disappoint in the short term, Mr. Aquino can only secure a lasting legacy by meeting high expectations for honesty in government. If he breaks the political mold described by Mr. Rocamora, economic growth will follow