Globalization aka Neoliberalism - The Road to Our National Socio-economic & Political Perdition - Why Are We Filipinos Poor...In A Country With Rich Natural Resources? (Updated 1/14/2013)

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"Let us not ask for miracles...let us not ask that he who comes as an outsider to make his fortune and go away afterwards should interest himself in the welfare of the country. What matters to him the gratitude or the curses of a people whom he does not know, in a country where he has no associations, where he has no affections? Fame to be sweet must resound in the ears of those we love, in the atmosphere of our home or of the land that will guard our ashes; we wish that fame should hover over our tomb to warm its breath the chill of death, so that we may not be completely reduced to nothingness, that something of us may survive. Naught of this can we offer those who come to watch over our destinies."..- filosofo Tasio to Ibarra  (NOLI ME TANGERE.), 

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Hi All, 

Why Are We Filipinos Poor...in a country with rich natural resources? To understand the perennial socioeconomic and political predicaments of our homeland and fellow native Filipinos in the Philippines, we have to know our past, specifically the political and economic decisions made by our past and current rulers.

How far into our past do we go? Frankly, we can look back as far as we want: to pre-Spanish times,Spanish colonization, American intervention and colonization, Japanese occupation, post-WW2, etc. 

But In terms of greater relevance and causation, the greater portion of our economic predicament and precipitous downfall (concomitant and resultant societal decline) came about with the Marcos Dictatorship and its imposed economic policies, which were/are then continued by subsequent ruling regimes, in cahoots with their native, resident aliens/foreign partners.

Below article is about 9 years old but provides a brief outline of the direction our rulers took on their own: the easy way out for themselves to stay in power, yielding to external pressures, such as those programs imposed by the IMF and WB, nowadays via the World Trade Organization (WTO) rules which brought and continually bring the impoverishing consequences to our fellow natives in terms of peso devaluation, inflation, loss of job opportunities, factory closures, agricultural demise, emasculation of labor unions and spread of job insecurities, and diaspora/escape via OFW  to "modern" slavery abroad, etc. to name a few. 

Not to mention the continuing political and social repression to support such economic policies, that is, military and paramilitary actions (extra-judicial methods first implemented during the Marcos Dictatorship) against dissenters: via disappearances, assassinations, incarcerations and tortures, etc.

We continue to hear and read praises neocolonialism aka neoliberalism aka globalization (globalism with cultural globalization) from some of our fellow Filipinos/opinion makers and those who directly or indirectly profit from it; despite the greatest misery and impoverishment economic globalization has bestowed on our native Filipino majority (and assuredly their children and grandchildren in the next generations).

We continue to hear and read that we are poor because we did not go into export industrialization -where were they all these years or are they just mouthpieces of the rulers and foreigners playing that old tune? 

We hear and read that we native Filipinos just breed like rabbits, that we are lazy, etc., ad nauseam. Anyway, we'll touch on these other matters in later posts.

- Bert

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NOTES TO READERS:  Colored and/or underlined words are HTML links. Click on them to see the linked posts/articles. Forwarding this and other posts to relatives and friends, especially those in the homeland, is greatly appreciated. To share, use all social media tools: email, blog, Google+, Tumblr,Twitter,Facebook, etc. THANKS!!

Click the following underlined title/link to checkout these Essential/Primary Readings About Us Filipino Natives:

Primary Blog Posts/Readings for my fellow, Native (Malay/Indio) Filipinos-in-the-Philippines

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UPDATE 4/14/2025:

1. The national debt of the Philippines is the total debt, or unpaid borrowed funds, carried by the national government of the Philippines. As of the end of October 2024, the total national debt of the Philippines amounts to ₱15.1889 trillion ($273.9 billion). - WIKIPEDIA

2. MANILA, Philippines — The country’s outstanding obligation rose by 9.8 percent to P16.05 trillion in 2024 from P14.62 trillion in 2023, mainly due to higher government borrowings to finance the budget deficit and the impact of a stronger

dollar.

https://www.philstar.com/.../philippines-debt-hits-p1605...

UPDATE (1/14/2013): The millstone on the necks of present and future generations of native (Malay) Filipino majority in the Philippines

Philippine External/Foreign Debt:

1. $ 61 billion as of Sept 2012 BSP Statistical Data), $51 billion in 2000, $26 billion when Marcos fled, $2 billion in 1972 or start of the Marcos Dictatorship and $600 million when Marcos came to the presidency in 1965. Throughout the years since, the ruling regimes never paid or unable to pay beyond the required interest payments on the loans.
2. Compared with the South Koreans who were devastated by the 1998 financial crisis and had to be bailed out by borrowing $50 billion from the IMF, the South Koreans completely paid off their IMF debt by August 2001, almost two years ahead of schedule!  As Yoon Dae-hee, a spokesman for the Ministry of Finance and Economy. "We've retaken our economic sovereignty," Yoon said. "From now on, we no longer need prior consultations with the IMF in planning and executing our economic policies."
3. The present Aquino regime claims we have more foreign reserves than foreign debt (and mainly due to OFW remittances at $21 billion (2012), else the Philippines would be in the red all these years). It's time we pay off the foreign debts in significant amount to pay it off and be done with IMF/WB dictates on our national economy. Foreign Direct Investments (FDI) totaled only $1.25 billion for 2012. -  BSP Statistical Data)

- Bert 1/14/2013

"The truth of the matter is that most of the people, outside of the Filipinos, who favor this bill are fundamentally opposed to Philippine Independence. Many of them have told me so. Their whole philosophy is to keep the Philippines economically even though we lose them politically." - U.S. Senator Millard Tydings, U.S. Congressional Record on Public Hearing of the Bell Trade Act, March 1946

Global Economic Crisis Neoliberal Solutions and the Philippines.
- Monthly Review, Author: Kim Scipes


The economic crisis that has been affecting the global economy for the last two and a half years started in East Asia. We've heard story after story about the problems in Thailand, South Korea, Indonesia, Malaysia, China, and even Japan--but we've heard almost nothing about the situation in the Philippines. Is there something that the U.S. government, the International Monetary Fund (IMF), and the World Bank don't want us to know about the situation there?

The IMF has acted as the mean cop for the global financial system for a long time, but its role in this crisis has brought it new notoriety. In every case in which it has gotten involved, its prescriptions have been the same: reduce or end any restrictions on global flow of capital; don't defend the domestic currency by purchasing it with foreign reserves--let it fall until it stabilizes in the market; and raise interest rates as high as necessary to keep capital in or attract capital to invest. (These prescriptions benefit multinational corporations and foreign investors, who are largely--but not exclusively--based in the United States.) And do not worry about the social consequences of adopting such an economic program.

In every case, the result has been the same: each economy that has followed IMF prescriptions has seen widespread social dislocation. Hundreds of thousands of jobs have been lost, and standards of living have plunged drastically, even for those who still have jobs. 

The cost of internationally traded goods and services has increased, due to local currency devaluation against the U.S. dollar (the denomination in which most goods are traded on global markets). Poverty and malnutrition have increased, as have the number of related deaths. However, foreign investors have been able to purchase goods and services, raw materials, and even entire corporations more cheaply since the onset of the crisis than before.

The crisis has spread beyond East Asia. It has hit Russia hard--and a bunch of hedge funds in the so-called developed countries--and its latest major victim has been Brazil. The shock to Brazil has already spread to Argentina. And while it appears that many of the worst economic effects have attenuated in the last few months, the global economy is still being rocked.

The global crisis has also hit the U.S. economy in some sectors, although the impact has been masked overall by strong stock markets, low inflation, and low unemployment rates. Tourism in Hawaii, on which the state is largely dependent, has been devastated; agriculture (particularly corn) and agricultural machinery manufacturing have been hit hard in the Midwest; and so much steel has been dumped in the United States that the United Steel Workers have joined the steel companies in demanding import protection.

In addition, the U.S. balance of trade--which measures the difference between exports of goods and services and imports of goods and services--was -118.1 billion dollars between January and June 1999; this exceeds all of 1997 (-104.7 billion dollars--itself a record at the time), and will certainly exceed the 164.3 billion dollar deficit of 1998.

Yet, as bad as all of this has been-the United States and Western Europe have largely been sheltered because of the way their officials have set up the global system-the countries that have garnered the most attention have a considerable amount of industrial development. What about the economies that don't have this industrial development, but are trying to industrialize on the basis of their cheap labor? What has the crisis meant to them?

I want to address the situation of these countries, but instead of perhaps another litany of the horror of the crisis-by the summer of 1998, Business Week was already referring to the situation on the ground in Asia as a "depression"-I want to focus on the general solution as proposed by the IMF. To do this, it is necessary to look at the situation in the Philippines.

The Philippines is, in some ways, a special case: while its economic development program has been based on neo-liberal principles promoted by the IMF and the World Bank, it did not begin as a response to the recent crisis; the Philippines has been carrying out a neo-liberal development program since 1962. 

An examination of these experiences, therefore, should give some idea of the quality of "advice" being given to economically less-developed countries by the global watchdogs. And while I don't excuse the Philippine elite for their role in this, I want to focus on what a neo-liberal program has meant to a country that has been following its prescriptions for the past thirty-seven years.


Philippine Economic Development from Independence to Deregulation, 1946-1962

Like any country that had been colonized, the Philippine social order was organized to benefit people in the colonizing country and not Filipinos. An extractive agricultural economy (sugar, tobacco, hemp, coconuts) and a political system dominated by members of the various regional elites were the product of 381 years of Spanish, and then U.S., colonization.

When the Philippines was granted "independence" by the United States in 1946, it had been devastated by the Second World War; the United States used this to set up a neocolonial relationship with the now-ruling elites. Economic relief was made dependent on political and economic concessions to U.S. investors, establishment of U.S. military bases across the country, and a currency whose value in relationship to the U.S. dollar could not be changed without the explicit permission of the U.S. President. These impositions, in addition to the extractive economy and corrupt political system, were all "grants" to the newly freed nation.

An economic crisis in the late 1940s, when luxury imports by the elites threatened to bankrupt the country (in addition to a peasant revolt in Central Luzon and a newly emerging radical labor movement), forced the ruling elites to try a new economic program, with U.S. permission. 

Unwilling to implement a genuine land reform program, the elites tried industrializing as a way of restoring the economy, pacifying the peasants and workers, and maintaining their land-based power. Although I don't want to ignore the repression directed against peasants and workers (or the direct involvement of the CIA), I'm going to limit my focus here to the economic policies implemented.

To implement their new industrialization program, the Philippine government initiated foreign exchange and import controls. The controls provided multiple economic benefits to the state: they limited both general imports (such as consumer goods for the rich) and repatriation of capital outside the country, and allowed the state to select imports to assist the industrialization process and to protect industry established in the country. This import substitution industrialization (ISI) program was a serious effort to industrialize.

While this program did not benefit the majority of the population at the time, it was a success as an industrialization program by 1960. A moderate industrial base had been established: the country had food, wood, pharmaceutical, cement, flour, textile, paint, pulp, paper, glass, chemical, fertilizer, telecommunications, appliance, electronic, plastic, refined fuel, intermediate steel, shipbuilding, motor vehicle, machine parts, engineering, and other industries. 

From 3 percent in 1949, almost 18 percent of the total national income was derived from manufacturing in 1960. And it was largely built by Filipinos: from 1949 to 1961, Filipinos had invested 1,400 million pesos in new activities, as compared to 425 million by the Chinese (mostly Chinese-Filipinos) and only thirty-one million by U.S. investors. The Philippines was then considered to be the next Japan of Asia.

But this industrial progress came at a cost: the state maintained the peso at the incredibly overvalued rate of two pesos to the U.S. dollar (established by the U.S. government before "independence,") and this made it increasingly difficult for agricultural exporters to find markets for their products, though it aided the industrialization program. (To make it easier to follow below, one dollar would buy 2 pesos, or U.S. one dollar: P2). 

Since the agricultural elites were funding much of the industrialization program, they were in the driver's seat when they pressed the state to agree to end controls and effectively devalue the peso. Ultimately, in 1959, an agreement was made that the foreign exchange and export controls would be ended in 1964, and it was these controls that had kept the peso so strong. This five-year interval was intended to make the transition less painful than an immediate termination of controls.


Implementing Deregulation

However, Diosdado Macapagal was elected President of the country, and one of his first acts after assuming the presidency in January 1962 was to terminate all controls immediately. This was supported by U.S. President Kennedy, who arranged for the Philippines to receive an immediate three hundred million dollar loan from the IMF to cover the repatriation of three hundred million dollars of U.S. corporate profits. This was the beginning of the Philippines' debt dependence.

Ending this controls-deregulation in today's terminology, and a major component of the neo-liberal program devastated the Philippine economy. The peso began weakening immediately, and was formally devalued from U.S. one dollar: P2.00 to U.S. one dollar: P3.9 in 1965. (A simple example: if you borrowed one million dollars at the old rate, you had to repay it with two million pesos before devaluation, and 3.9 million pesos at the new rate.) 

This resulted in the bankruptcy and collapse of many businesses. The balance of payments situation worsened: imports increased 68 percent between 1963 and 1967, while exports only increased seven percent. The foreign debt doubled from 275 million dollars in 1962 to approximately six hundred million dollars in 1965. And the manufacturing share of Gross National Product (GNP) decreased from 17.9 percent in 1962 to 7.1 percent in 1965.


To the Rescue: An Export-Industrialization Strategy

So, by the mid-1960s, the economy that had looked so promising going into the decade was a shambles. Different forces with a belief in neo-liberal economics--including Filipino economists like Gerardo Sicat, and the IMF and World Bank--encouraged the government to launch an export-oriented industrialization program to solve the crisis, which was caused by neo-liberal deregulation in the first place. 

Their argument was that by using low Filipino wage rates to attract foreign capital, and then basing manufacturing operations on cheap and controlled labor, the Philippines could export enough manufactured products (such as garments and electronic components) into the world economy to improve its balance of payments and employment opportunities. Consequently, poverty and income inequality would be reduced, ultimately enabling the state to "modernize" Philippine society.

Ferdinand Marcos, who was elected to the presidency as a "reformer" in 1965, decided to begin focusing the economy along such lines. Marcos was able to lay some important groundwork in that direction in the late 1960s but because of substantial opposition--both within Congress and larger society--he was unable to operationalize it at that time.


Martial Law

It was only when Marcos declared martial law on September 21, 1972, that the export-oriented industrialization strategy (EOI) could be implemented. Key to the EOI strategy was the establishment of the export processing zone at Mariveles, Bataan. Two months after the implementation of martial law, Marcos issued Presidential Decree 66 (PD 66) to facilitate the development of the Bataan Export Processing Zone (BEPZ), providing incentives specifically for export production. 

According to Walden Bello, David Kinley, and Elaine Elinson, PD 66 gave firms that exported at least 70 percent of their products "permission for 100 percent foreign ownership; permission to impose a lower minimum wage than in Manila; tax exemption privileges, including tax credits on domestic capital equipment, tax exemptions on imported raw materials and equipment, exemption from the export tax and from municipal and provincial taxes; priority to Central Bank foreign exchange allocations for exports; low rents for land and water; government financing of infrastructure and factory buildings, which could then be rented out or purchased by companies at a low price; and accelerated depreciation of fixed assets." The incentives worked: "By 1980, the Bataan EPZ had attracted 57 enterprises, the great majority foreign owned, employing some 28,000 workers."

By the early 1970s, the World Bank's role in the industrialization strategy had become crucial. While it had provided the Philippines with only 326 million dollars in loans between 1950 and 1972, it gave the Philippines more than 2.6 billion dollars between 1973 and 1981. In addition to the money provided, the Bank legitimized the country's economic plan to international financial institutions. 

Not coincidentally, the Marcos government decided to follow Bank strategy for development, focusing on "industrializing efforts emphasizing the manufacture of labor-intensive exports with the strong participation of foreign capital," again according to Bello, Kinley, and Elinson.

Export production in BEPZ grew steadily for the first ten years, but then significantly declined throughout the rest of the dictatorship. Researcher Peter Warr presents data that shows huge increases in non-traditional exports: from .4 million dollars in 1972 to 73.1 million dollars in 1978 to 159.6 million dollars in 1982. However, exports from BEPZ decreased after 1982, falling to a low point of 57.6 million dollars in 1986, according to a 1994 report from the International Labor Organization.

But are there other indicators of the EOI program's success or failure? James Boyce provides considerable data that covers the years 1962 to 1986--the period after controls were ended until the end of the Marcos dictatorship. During this period, Philippine external debt grew from 275 million dollars in 1962 to 27.2 billion dollars in 1986. At the end of 1986, the country had a debt-to-GNP ratio of .90, and a debt per capita of 485 dollars.

The impact on wages for urban workers for the period 1962 to 1986 was disastrous. Boyce computed the impact of changes in wages in metropolitan Manila over this period: "In real (1986) U.S. dollars, the daily wage of an unskilled worker fell from $4.37 in 1962 to $1.12 in 1986, while that of a skilled worker fell from $6.18 to $1.72." In other words, daily wage rates for a unskilled worker in 1986 were 74.3 percent less than in 1962, while daily wages rates for a skilled worker in 1986 were 72.2 percent less! In fact, in 1986, the daily wage of an unskilled urban worker was substantially below that of an agricultural worker. Boyce concludes: "wage laborers in Metro Manila experienced a collapse in real wages in the 1970s and 1980s on a magnitude with few precedents in modem economic history."

A key to this deterioration of workers' salaries was the drastic cheapening of the Philippine peso. In January 1962, before foreign exchange and import controls were lifted, one U.S. dollar bought two pesos-, in February 1986, just before Marcos was driven out of the country, one dollar could buy 19 pesos. Thus, imported goods--especially oil, which is sold internationally in dollars, and which is used for everything from powering automobiles to transporting rice, the staple food-- became much more expensive to Filipino consumers.

There is another indicator that can be used to evaluate Philippine development: GNP per capita, one of the World Bank's favorite comparative statistics. In 1962, the Philippines GNP per capita (measured in 1986 U.S. dollars) was 495 dollars, and the only country with a higher GNP per capita in Southeast Asia that year was Malaysia (820 dollars). By 1986, Philippine GNP per capita was 540 dollars--barely above Indonesia (490 dollars), and falling increasingly behind the other economically significant countries in the region. 

The gap in GNP per capita between the Philippines and Japan had widened from 1510 dollars in 1962 to 15,660 dollars in 1986. In fact, between 1962 and 1986, the annual average growth rate of Philippine GNP (of 3.1 percent) and the GNP per capita (.4 percent) were each behind those of China, Indonesia, Japan, South Korea, Malaysia, Singapore, Taiwan, and Thailand.

To give one more specific example: South Korea had a GNP per capita of 330 dollars in 1962, which was 165 dollars per person behind the Philippines; by 1986, South Korea had a GNP per capita of 2345 dollars, or 1805 dollars per person ahead of the Philippines! The neo-liberal program of the Philippines compared poorly to state-led industrial development of South Korea (and both countries were ruled by dictators over most of this period).


Post-Marcos

But what has happened since the overthrow of the dictator? Marcos' successors--Corazon Aquino (1986-1992), Fidel Ramos (1992-1998), and Joseph Estrada (1998-2004)--have continued to follow an EOI strategy. Aquino committed her government to repaying all foreign debts, including the ones that only benefited Marcos and/or his "cronies," and Ramos and Estrada have followed suit.

One Filipino researcher, Pedro Salgado, put the debt into perspective early in Aquino's administration. He pointed out that the 28.2 billion dollar debt in 1987 was equal to about P564 billion, 4.4 times the national budget (or 81 percent of the projected GNP for the entire year). He then goes on to say, "If a person were to drop a P100 bill into a pit every second, it will take 179 years to drop P564 billion worth of bills into the pit!"

Researchers have detailed how recent presidents have gone along with the World Bank and the IMF machinations in exchange for loans. This was true under Marcos, and it has remained true since. Why? I think Temario Rivera is correct when he suggests that there is a larger reason: the ability to obtain foreign loans, no matter how bad for the country, allows political "leaders" to ignore the key issue in the country --political power based on land ownership.

And, courtesy of the World Bank and the IMF, foreign loans have been available. Philippine national debt (which was 275 million dollars in 1962 and was approximately 27.2 billion dollars in 1986), was 35.5 billion dollars in 1993, and 45.5 billion dollars in 1997, according to data from the Central Bank of the Philippines.

At the same time, the shift from traditional agricultural exports to nontraditional, labor-intensive manufacturing exports, particularly in garments and electronics, has continued. By the early 1990s, over 70 percent of total exports were in these nontraditional manufacturers. However, despite this shift (supposedly the key to Philippine economic development), the balance of trade worsened between 1987 and 1996. The trade balance in goods was -1.017 billion dollars in 1987, -8.160 billion dollars in November 1995, and -11.342 billion dollars at the end of 1996. Note that these figures are all from before the crisis.

The GNP of the country has generally grown, albeit unevenly: it grew 5.9 percent in 1987, 6.6 percent in 1988, 5.7 percent in 1989, and 3.0 percent in 1990. It declined .05 percent in 1991. The GNP increased 1.56 percent in 1992, 2.02 percent in 1993, 5.1 percent in 1994, 5.7 percent in 1995, 5.8 percent in 1996, and 5.2 percent in 1997.

The neo-liberal economic program has made things worse for the large majority of Filipinos. By November 1992, while evaluating President Ramos' first one hundred days in office, IBON Databank, a Non-Governmental Organization (NGO) that focuses on the economy, estimated that the number of Filipinos living under the Filipino poverty line had increased from 70 percent to 75 percent, and noted that a peso in 1992 "could only buy 60 centavos of what it could have bought in 1988." The numbers in poverty are likely to have been somewhat reduced between 1994 and 1997, when the GNP of the country grew over 5 percent each year.

Roger Daenekindt, using Department of Labor and Employment figures from September 1995, reported that 62 percent of the 29.2-million-member labor force was either unemployed or underemployed. Furthermore, only 10 percent of the labor force received at least the minimum wage, but even this was insufficient, as the minimum wage itself resulted in income below the poverty line. 

In 1994, according to the government, the daily cost of living was P237.57 (approximately 9.50 U.S. dollars), while the mandated daily minimum wage was only P145 (approximately 5.80 U.S. dollars). Additionally, while nominal wages increased by more than two hundred percent between 1983 and 1993, real wages for all workers (based on 1978 prices) actually decreased by 14 percent, and despite nominal wages increasing 32 percent between 1990 and 1993, real wages fell 4 percent.

Daenekindt further noted definite changes in the workplace, toward a more flexible labor regime. And "flexibility" of the labor market means that workers have even fewer chances for regular employment, as workers are forced to compete at an even greater rate than before for the relatively small number of available jobs. 

This also makes it much more difficult to organize and maintain unions, which means that workers will have even less power in workplaces where they do obtain employment, and that their working conditions will get worse. And that is for those lucky enough to have regular jobs!

At the same time that the economy is not providing a sufficient number of jobs for people, and their wages are already horribly insufficient, inflation is eating at the value of the money they do earn. As mentioned above, the real value of wages for urban workers decreased by about 75 percent between 1962 and 1986. But between 1988 and 1994, the purchasing power of the peso declined another 49 percent. The inflation rate was 7.6 percent in 1993, and 9.0 percent in 1994.

But the Philippine State has never failed to keep coming up with grand plans designed to solve all of the country's problems in one fell swoop: the latest, initiated under President Fidel Ramos, was "Philippines 2000." Key to Ramos' vision was the Medium Term Development Plan for 1993 to 1998. Ramos stated his goals for the end of his presidency in June 1998: to raise per capita income to 1000 U.S. dollars; for the economy to grow by at least 6 to 8 percent, and for the poverty rate to decline to at least 50 percent. He missed all three.

Ramos' larger goal was to make the Philippines a Newly Industrializing Country (NIC) by the year 2000. And was this to be accomplished? In January 1995, at President Ramos' urging, the Philippines joined the World Trade Organization (WTO), which meant it had to open its borders to even more international trade. 

Roger Daenekindt commented: "We are ... told to be outward-looking and accept liberalization. But ... in the case of textile and garments, we enter in a stiff world of competition of cheap labor. Chinese labor is at 25 cents an hour, Vietnamese at 15 cents an hour, Philippines [at] 90 cents an hour, and there are still the countries like India, Bangladesh, Pakistan, etc." Additionally, according to former president Ramos, "Export orientation shall 'enlarge the pie.'"  And then the global economic crisis hit.


Crisis

The Philippines was hit by the global crisis, becoming one of the Asian Development Bank's "Crisis-Affected Countries." Philippine GDP, which grew 5.2 percent in 1997, fell 0.5 percent in 1998, according to the IMF The peso, which had been trading at approximately U.S. 1.00 dollar: P25 throughout most of the 1990s, lost over 40 percent of its value, falling to a rate of 1.00 dollar: P45, although by the spring of 1999, had recovered somewhat to trade around 1.00 dollar: P40.

IBON Databank reports that official unemployment jumped from 10.4 percent in April 1997 to 13.3 percent in April 1998--and yet these figures severely undercount real unemployment and don't mention underemployment. However, a 1995 government report from the Department of Labor and Employment said that unemployment and underemployment affected 62 percent of the workforce, and this was when the economy was growing strongly. 

But IBON also reports that there was 128 percent increase in firms closing between January and May 1998, as compared to a year earlier, and an 88 percent increase in the number of workers being affected by these difficulties.

And yet, the Philippines has been hurt much less than Indonesia, Malaysia, South Korea, or Thailand. Stanley Fischer, first Deputy Director of the IMF, claimed in a June 1999 speech that, of the countries at the heart of the crisis, "the Philippines' economy performed exceptionally." He suggested that this was because the country was in an IMF program at the beginning of the crisis, and that the IMF increased financing for the country once trouble hit, enabling it to avoid the worst of the crisis.

However, if we consider that the country has been in a crisis since it began following a neo-liberal program in 1962, it's clear that the global crisis has, for the Philippines, been simply a continuation of "business as usual." Since 1962, the Philippines has never achieved the advances won by these other countries, and so it was spared the intensity of the drastic fall that the others suffered. And yet, it still suffered more than a 40 percent fall in its currency exchange rates.

But while Fischer suggests that Philippine performance was not as bad as the rest because of IMF advice and money, he inadvertently let the cat out of the bag, especially in light of the overall performance of the U.S. economy during this time: "The country benefited from the composition of its trade, which is more heavily weighted towards the United States than of the more severely affected countries." 

The Philippines has done as well as it has not because of the IMF, but because its major trading partner has kept the door open to its further-devalued products despite a drastic reduction in the Philippine market for U.S. exports.


No Real Solution

An EOI program was begun in the late 1960s, designed to save a financial deregulation program that had devastated the economy. Ferdinand Marcos operationalized the EOI strategy in 1972 after the declaration of martial law; it continues today.

Because billions of dollars of economic and military aid have been provided to the Philippines by the U.S. government, the World Bank, the IMF, and commercial banks from around the world, the agrarian system and its accompanying political system has survived. In return, the Philippines has had its industry incorporated into global capitalist political-economic networks.

The neo-liberal program has been a failure on its own terms, even before the onset of the global economic crisis. The peso's value fell from 1.00 dollar: P2 in 1962 to approximately 1.00 dollar: P25 in the mid-1990s. Although exports shifted from traditional ones to nontraditional manufacturers, the balance of trade had deteriorated to -11.3 billion dollars at the end of 1996. GNP has generally increased, albeit very erratically. 

However, foreign debt has exploded: from a national debt of 275 million dollars in 1962, it ballooned to 45.5 billion dollars in 1997. In short, this program has failed to provide any type of sustainable economic development for the country. 

The cost to the people of the Philippines has been astronomical. Fourteen years of dictatorship was only the beginning. Neoliberalism has led to a social situation where approximately 75 percent of the population lived below the poverty line in the early 1990s and, while somewhat reduced since then, it is not known by how much. Urban workers had lost almost 75 percent of their 1962 wages by 1986, and things have only gotten worse since then. 

Conditions among the peasantry and agricultural workers have also deteriorated, to the extent that they have joined and maintained a revolutionary army for over thirty years (albeit considerably weakened since 1986--and particularly since 1993--by internal problems). Accordingly, this type of development, when viewed from the perspective of the large majority of the population, deserves to be called "detrimental development."

It is within this larger context of detrimental development--maintained at all times by armed force and a determination to use it to defeat any challenges--that Philippine economic development since 1962 has been evaluated.

A neo-liberal approach to development, as advocated by the World Bank and the IMF, has only benefited the global capitalist political-economic networks (including certain Filipino partners), and the Philippine state; and these benefits all come at the direct cost of the large majority of Filipinos. This program has failed on its own terms and been a social disaster as well.


Kim Scipes, author of KMU: Building Genuine Trade Unionism in the Philippines, 1980-1984 (Quezon City, Metro Manila: New Day Publishers, 1996; also available from Sulu Arts and Books in San Francisco), is a PhD. student in Sociology at the University of Illinois at Chicago.

Source: Monthly Review Foundation, Inc.1999

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"We have about 50% of the world's wealth but only 6.3% of its population.... Our real task in the coming period is to devise a pattern of relationships, which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and daydreaming, and our attention will have to be concentrated everywhere on our immediate national objectives. We need not deceive ourselves that we can afford today the luxury of altruism and world benefaction.... We should cease to talk about vague and unreal objectives such as human rights, the raising of the living standards, and democratization. The day is not far off when we are going to have to deal in straight power concepts. The less we are then hampered by idealistic slogans, the better."

- George Kennan, U.S. Secretary of State, Department memo, 1948

"The selfish spirit of commerce knows no country, and feels no passion or principle but that of gain" - Thomas Jefferson, 1809

"You show me a capitalist, I'll show you a bloodsucker" - Malcolm X, 1965

“Capitalism and altruism are incompatible; they are philosophical opposites; they cannot coexist in the same man or in the same society" - Ayn Rand, 1961

The Politics of Economic Chaos in the Philippines

The Politics of Economic Chaos in the Philippines
by Robert Weissman - The Multinational Monitor, January/February, 1994

MANILA - Philippine President Fidel Ramos fears the future may be slipping away.
The gap between the booming economies of the Asian tigers (Taiwan, South Korea, Hong Kong and Singapore) and the emerging tigers (Malaysia, Thailand), and the Philippines is huge and growing. While the 1991 Philippine per capita gross national product was $730, the per capita GNP in Thailand was $1,570 and S6,330 in South Korea. These countries grew rapidly in the 1980s, but the Philippine economy constricted; the Philippines' average growth ate from 1980 to 1991 was negative 1.2 percent, while Thailand achieved a 5.9 percent annual growth rate and South Korea 8.7 percent. And the disparity shows no sign of narrowing; all of its regional competitors registered significantly higher growth rates in 1993 than the Philippines' estimated rate of approximately 1 percent. Even nearby competitor Indonesia is preparing to pass the Philippines in per capita income.
Signs of the economic chaos besetting the Philippines are apparent to even the most casual observer in Manila.
Poor families, mostly immigrants from the countryside, have established squatter communities throughout the Philippine capital. Virtually every Manila neighborhood is now dotted with shanties; the only exceptions are the most exclusive, guarded enclaves, which stand as a testament to the country's extreme concentration of wealth. In neighborhoods with names like Forbes Park and Bel Air, streets are blocked and guarded, the mansions within accessible only to residents and authorized visitors.
Thousands of Filipinos support themselves by sifting through huge garbage dumps in Manila, pulling scrap metal and other items for recycling or reuse out of people's trash. The scene is repeated in other big Philippine cities, though on a smaller scale. Dump-site residents are among the poorest of the huge numbers of Filipinos living below the poverty line. The government's official statistics show 40 percent of the nation's 66 million citizens living in poverty, but the actual percentage is undoubtedly far higher.
At crowded intersections all over the city, vendors rush to cars and buses caught in Manila's paralyzing traffic, offering to sell cigarettes, gum, candy, newspapers or trinkets. The cigarettes are sold individually, not by the pack, to accommodate the tiny budgets of most Filipinos. Some of the vendors are adults, but many are children, 10 or 11 years old. An estimated two-thirds of Philippine children work.
Taxi drivers explain to foreign passengers that their dream is to improve their English so they can get a job abroad. People throughout the city - even those with steady jobs - echo the sentiment. They have given up hope of succeeding economically in their own country; instead, women aspire to work as foreign domestics, and men hope for shipping or construction jobs with foreign companies.
Ear-shattering noise plagues the streets in office districts of downtown Manila, the result of small, private electricity generators operated by individual stores and office buildings during the city's daily brownouts. For more than a year, the energy shortage on the main island of Luzon has caused daily brownouts lasting 4 to 12 hours. The resulting loss to industrial and commercial output has been immense; the difficulties imposed on individuals in the form of lost wages, wasted time - much of it literally spent in the dark - and discomfort are incalculable.
Despite his worries and the economic and social misery so pervasive in Manila - and equally apparent in the desperately poor countryside - Ramos is optimistic about the future. He expects to go down in history as the man who transformed the Philippines from an economic basket case to an eco nomic powerhouse similar to the Asian tigers.
Ramos' vision
Ramos's plan for economic rejuvenation, known as the Philippines 2000 program, aims to have the country join the NIC (newly industrializing country) family by the year 2000. Its ambitious outlines are contained in the Philippine Medium-Term Development Plan (MTDP) for the years 1993-1998. Ramos says the MTDP "embodies the vision of a nation empowered, its human resources stretched to optimal capacity, and its industries, products and services of world-class standard."
The MTDP is a comprehensive plan covering all aspects of the Philippine economy. Plan policy goals range from deregulating the financial sector and removing investment restrictions on foreign banks to improving scholastic physical education programs.
The plan establishes formidable targets. By 1998, it calls for: achieving a growth rate of 10 percent; lowering the number of families in poverty by 10 percent; increasing the national investment rate by one-half; and more than doubling the annual rate of export growth to a level of 27.1 percent.
The soaring rhetoric of the plan offers something for everyone. The MTDP promises free market disciples, for example, that the Philippines will "reduce government intervention in the production, marketing and processing of agricultural inputs and outputs," and "discard traditional trade and industrial policies that dispense protection to domestic industries." At the same time, it assures environmentalists that the government will "play its role as custodian of the environment for future unborn generations and give the attention needed to rehabilitating and preserving the country's environmental stock."
The central prongs of the MTDP, however, are much narrower than the plan's rhetorical aspirations. Attracting foreign investment - in manufacturing, in resource-extractive industries such as mining and logging and in the energy sector - is the key element of plan. New foreign and domestic investment in the manufacturing sector will be directed into 15 Regional Industrial Centers (RICs). Geographically dispersed throughout the country, the RICs will function as expanded export processing zones, offering tax breaks and other government incentives and sound infrastructure support (telephone, roads, ports, etc.). The other, complimentary emphases of the plan are to orient both the manufacturing and agricultural sectors toward exports, and to increase government investment in infrastructure.
While Ramos touts Philippines 2000 as representing a bold, new start for the Philippines, grassroots critics of the plan label it nothing more than failed, free-market, foreign-investment-reliant poli cies presented in new packaging. As Ramos begins to put the program into place, opposition to Philippines 2000 is intensifying among a wide variety of popular sectors.
Militarized "development"
Throughout the Philippines, land and labor conflicts are emerging in areas newly scheduled for "development" under the MTDP, and are continuing and intensifying in areas where the MTDP proposes building on existing projects and developments. With all social conflict in the Philippines taking place against the backdrop of the government's war against the two decade-long rebel insurgency of the leftist New People's Army (NPA), opposition to Philippines 2000 projects often evokes a violent response from the military.
The Regional Industrial Centers are quickly establishing themselves as a focal point for the battles engendered by the Philippines 2000 program. The Calabarzon RIC, which will build on the economic processing zones, industrial estates and industrial parks established under Marcos and Aquino, is illustrative.
The announcement of plans to create an RIC in Calabarzon - an area combining pieces of five provinces south of Manila - led to rampant land speculation and the expulsion of poor farmers from their land, says Rafael Mariano, former acting chair of the peasant association KMP. Large landowners successfully circumvented the land reform program by converting their lands from agricultural to industrial purposes; the landowners got even richer, and the tenant farmers who had previously worked these lands were evicted.
Labor abuses in the factories established in Calabarzon have been rife, according to Norma Binas, assistant secretary of the KMU labor center's international department. The provincial governments in these areas are stridently anti-union; the governor of Cavite province, Juanito Remulla, has even pledged to enforce a "no union, no strike" policy. (The 'U.S. Department of Commerce, in a Philippines "Investment Climate Summary," notes that Cavite "enjoy[s] a reputation for being actively 'pro-business,' and has reaped the rewards of new investments.") Companies already operating in the Calabarzon economic zones - mostly Japanese, Taiwanese, South Korean, Hong Kong or Singaporean garment and light manufacturers - aggressively deny their employees' right to organize and commonly abuse their workers, particularly women, who are frequently sexually harassed. The KMU reports that employers routinely fire workers engaged in union organizing activity, and carefully question potential employees about their attitudes toward unions in an attempt to screen out any union sympathizers. Armed guards - from the local police, special economic zone police, a special Calabarzon-wide police force or private security forces - stand at the gates of the economic zones, preventing organizers from entering and intimidating the workers within.
The entire Calabarzon region itself has in fact been militarized, according to Reynaldo Quindara, deputy secretary general for internal affairs of the Ecumenical Movement for Justice and Peace. He says that the government has deployed large number of troops both to protect foreign and domestic investments from sabotage by the NPA and to discourage independent civilian activists from challenging Philippines 2000 projects and developments.
Generally, Quindara says, the RICs and Philippines 2000 projects are becoming a magnet for mass troop deployments, with many new or ongoing military operations being carried out in close proximity to areas planned to be used for RICs, agrarian export projects connected to the MTDP or development projects tied to the MTDP. Examples include military action in Agusan del Sur in Northern Mindanao, targeted to develop tree and palm oil plantations, and in Western Mindanao, where the government is encouraging resort development and growing vegetables for export. In the Philippines, large-scale deployments like those in Calabarzon, Agusan del Sur and Western Mindanao are often accompanied by widespread harassment of civilians, as well as arbitrary arrests, torture and extrajudicial killings.
MTDP-relatcd violence has also wracked the island of Cebu, the other province which the U.S. Department of Commerce denotes as having a pro-business reputation. At least four peasants were killed on Cebu in the first six months of 1993, apparently because of their efforts to prevent landlords from taking advantage of the opportunities offered by Ramos's Philippines 2000 plan by converting agricultural land into residential and tourist properties. In the case of scenic Cebu, Ramos's commitment to expanding tourism provides a special incentive for such conversion. There is suspicion that two of the murdered peasants were killed by thugs employed by a real estate company, a third by a city councillor associated with a local vigilante group and the fourth by unknown assailants.
Philippines 2000 and indigenous communities
Indigenous peoples' communities are likely to be particularly affected by the large infrastructure projects and major resource-extractive activities proposed in Ramos's economic plan.
The conflict over the Chico Dam, a massive hydroelectric project called off in the mid-1980s, may well be a prototype of the disputes likely to proliferate with the pursuit of the MTDP. The giant hydro project would have dammed the Chico River and displaced thousands of indigenous people in the mountainous five-province Cordillera region in Northern Luzon. Local opposition was intense, and included large demonstrations, civil disobedience (such as lying in front of bulldozers) and a world-famous event at which protesting women bared their chests to shame soldiers in a civilian face-off with the military - as well as armed resistance in collaboration with the NPA. The unprecedented local resistance, combined with international opposition from environmentalists and solidarity organizations, eventually led the World Bank, which had sponsored the project, to call it off. But leaders of the anti-dam struggle were killed during the conflict, and the military committed widespread human rights violations against the mobilized villages.
The Cordillera has remained a hotbed of opposition to the government since the Chico Dam struggle, supporting both civilian and guerrilla resistance movements. Consequently, the region has been a prime target of the military's counterinsurgency program. With new unrest expected as a result of the MTDP, military action against Cordillera civilians is not likely to end any time soon.
The government is now planning a series of 17 so-called mini-dams for the Cordillera region as part of the MTDP. While "mini" connotes the idea oflow-impact and sustainability, Dr. Contancio Claver, executive director of the Community Health Concerns for Kalinga-Apayao, a community health center serving residents of the Cordillera, points out that the rivers which the government has proposed damming are substantial rivers with significant currents. "It is hard to imagine how there can be `mini-dams' in relatively large rivers," he says. Local residents and outside environmentalists alike fear the new dams will still be large, even if they are not as huge as the originally proposed Chico Dam, and will displace hundreds or thousands of local indigenous people.
For the time being, says Claver, "the people are suspicious but have not yet made up their minds to totally oppose" the dam projects. However, if their fears about the size of the dams are realized, massive resistance is almost guaranteed, and the government's response may well be to further militarize the region and intensify its repression of the indigenous population.
The root problem in the Cordillera, says Father Eddie Balicao of the Office for Cordillera Peoples' Concerns, is longstanding "laws which have made the Cordillera a resource base for exploitation without even considering what the Cordillera people think." Development projects undertaken as part of the MTDP are likely to exacerbate this enduring problem.
Pushing past the ecological limits
Despite its rhetorical promises to the contrary, the Philippines 2000 program is likely to further devastate the country's already battered environment. As they have in other initiatives over the last several decades, government and private investment in infrastructure projects and resource-extractive activities are likely to have severe environmental effects. The mini-dams and other energy projects may submerge large land areas and create dangerous local pollution problems; and if the government decides to press ahead with opening the Bataan nuclear power plant, the country will be burdened with an immense environmental and public health hazard. New or expanded mining projects are likely to pollute rivers and thousands of people's water supplies with waste-rock and treatment chemicals; the timber industry is likely to continue overlogging of the country's fast-diminishing forests; foreign and domestic fishing companies are likely to overharvest local fisheries.
However, the most significant ecological damage may stem from the increasing inequity of the country's land distribution scheme. The Ramos administration is exhibiting virtually no political will to push through a land reform program. (The KMP's Mariano says that "while the Aquino administration made many empty promises, the Ramos government just sides with the big landlords. ") Many landowners are eagerly converting their land to non-agricultural uses or export crop production in order to take advantage of the opportunities posed by the MTDP, and increasing numbers of poor farmers are becoming landless [see "Land Scam: Agrarian `Reform,' Ramos Style"]. These displaced rural people have few options but to encroach on forests and other marginal public lands.
Recent Philippine history demonstrates how harmful the ecological consequences of rural displacement can be. Rural uprootedness and increasing landlessness were the proximate causes of the worst environmental effects of the structural adjustment program implemented in the 1980s at the behest of the World Bank and International Monetary Fund, according to a recent World Resources Institute study. As unemployment rose, the study found, "only the marginal resources in the public domain - forest lands, mangroves and fisheries - remained available to a rapidly growing pool of landless workers." Many unemployed and landless people in the countryside migrated, not on the traditional path to Manila, but from lowland to upland rural and coastal areas - from the lowlands of Central Luzon to the mountain provinces of the Cordillera and from the lowlands of the central Philippine islands to the uplands of the southern island of Mindanao. As these workers "migrated to the open access resources of the uplands and coastal areas, deforestation, soil erosion, the destruction of coastal habitats and the depiction of fisheries increased," the World Resources Institute report concluded.
A blurry vision
Perhaps the worst indictment of the Philippines 2000 program is that despite its social and environmental costs, it is not likely to deliver the benefits which it is designed to produce. Critics denounce the program as unrealistic and based on a misreading of the success of the East Asian tigers, and they say it fails to grapple seriously with the central Philippine political and economic problem - the highly stratified distribution of land.
The first problem identified by critics is that the MTDP aims too high and stretches too far. They say that it really is no more than an arbitrary and exhortory political wish list. One financial analyst comments that the MTDP "is more of a declaration of intent than a plan as such," A plan, he says, would imply the imposition of a concrete schedule, detailed policies to achieve specified goals and a means to finance agreed-upon programs.
Many elements of the MTDP reflect the personal interests of Ramos and the imperatives of Philippine politics rather than sound economic planning, confirms Maria Rina Rosales, a senior economic development specialist with the Philippine National Economic Development Agency (NEDA) . For example, says Rosales, NEDA economists recognized the goal of achieving a 10 percent growth rate by 1998 as being wholly unrealistic - hut it was included in the MTDP because Ramos insisted on setting a target of double digit growth. The country has already failed to meet the 1993 goal of a4.5 percent growth rate, indicating that there is little chance of achieving the MTDP's overall goal of a five-year 7.5 percent growth rate. Similarly, Rosales says, NEDA economists acknowledge that the goal of establishing a RIC in each region of the country is unrealistic, but it was included to avoid criticisms from excepted regions.
More generally, there is virtually no chance of the government achieving its goal of turning the Philippines into a NIC by 2000. As Filomeno Sta. Ana, secretary general of the Manila-based Freedom From Debt Coalition, notes, "The NIC goal of the Ramos administration has no long-term vision." He explains, "fulfilling the vision of NIC is not an overnight affair. A giant leap towards industrialization begins with many small steps. ... And the whole process spans decades, involving a complex but coherent and comprehensive set of measures for reform and transformation."
A second major criticism is that the MTDP's emphasis on recycled policies of export-oriented industrialization and foreign investment is not likely to help the economy escape from the rut in which it lies. In 1979, Ferdinand Marcos said, "Industrialization for exports-this is what we in government ... proclaim and I think by and large we accept this as the fundamental thrust of our national economy today. There is a natural and necessary correlation between our new industrialization program and our export expansion program which stands at the forefront of our national economic goals today. Marcos' words could have been spoken by Ramos in 1993. There is very little substantive difference between Marcos' export processing zones and Ramos's regional industrial centers, except perhaps that Ramos is promising companies bigger tax breaks and subsidies. What failed under Marcos is not likely to succeed under Ramos.
A third criticism voiced by economists like Sta. Ana is that Ramos is making a crucial error in his attempt to mimic the success of the Asian tigers. In the early stages of industrialization, the tigers did not open their economies to foreign investment and trade and pursue an export-oriented strategy, Sta. Ana notes. Instead, they devoted attention to building up their internal markets; they protected domestic producers; and they limited foreign investment.
A fourth point of contention is the bankruptcy of the notion of "competitiveness" which underlies Ramos's foreign-investment-dependent, export-oriented strategy. As an Asian country with a poorly developed infrastructure and little history of domestically controlled high-tech production, the Philippines has little to offer foreign investors besides low wages, a point conceded by NEDA economist Rosales. But the Philippines is not especially well positioned to compete on the basis of low wages; the country's four-dollar-a-day minimum wage rate is not low enough to compete with Vietnam, China or Indonesia, countries where wages range as low as a dollar a day or less.
"Can we compete with China in the export market?" asks Sta. Ana. "Their labor is much cheaper than ours. The distorted logic, of course, is for us to cheapen our labor further. And that is not the way."
A final - and probably the most important - criticism of the MTDP is that it fails to deal seriously with the country's overriding political and economic problem: land reform. In 1988, according to Department of Agrarian Reform statistics reported by researcher James Putzel, 3,235 land owners (about .2 percent of a total of more than L 5 million), owned almost one-quarter of the agricultural land in the Philippines, and land ownership is becoming increasingly concentrated.
"Unless the problem of landlessness is addressed first, a `NIC-hood' development strategy could not only fail but lead to economic disaster," says the KMP's Mariano, noting the dangers of pushing more farmers off the land without providing any jobs for them to fill.
The refusal to confront the powerful agrarian elite and force through a genuine land reform may be sufficient to doom Ramos's Philippines 2000 program to failure, even on its own terms. The achievement of a relatively egalitarian land distribution regime has been a prerequisite to the successes of the Asian tigers. "Study of the industrial transformation of previously agrarian economies - from Japan to the NICs - shows that agrarian reform plays a key role in breaking down the social base, releasing the energies of the peasantry and opening up the possibility for transformation from a feudal to industrial economy," says Satur Ocampo, spokesperson for the National Democratic Front, the political wing of the rebel New People's Army.
Ocampo and others emphasize that land reforms in the Asian tigers helped jumpstart the domestic market by creating a significant market of rural consumers for both agricultural inputs and some consumer goods; reduced the pressure on the rural poor to migrate to the cities by giving them a base to support themselves; and helped equalize labor market conditions in the manufacturing sector by strengthening the bargaining position of workers for whom the option of returning to the countryside became more viable.
Who benefits?
For the last few decades, "Development for whom?" has been the virtual mantra of Filipino activists as they confront one development scheme after another. At first hearing, their question sounds like a demand that the costs and benefits of development be widely and fairly distributed. It is that, but it is a more profound challenge as well.
Sustainable development activists - whether they come out of the labor, environmental, indigenous rights or underground movement - are challenging conventional top-down, foreign-dependent economic development models as inherently unable to improve the well-being of most Filipinos. In the context of recent Philippine experience, "Development for whom?" is an incisive critique of development programs that promise to benefit the elite while hurting the majority and, on balance, worsening the country's economic, environmental and social conditions.
Relentless in their efforts, these activists continue to pose their troubling question, now about Ramos's Philippines 2000 program - and their answer remains disturbing. As Ocampo succinctly says, the Philippines 2000 program is another in a long line of government programs that "fail to consider a lot of factors. It is always the people who are left suffering the consequences of neglect and skewed priorities. "M
Economic Shocks
OLONGAPO, PHILIPPINES - The last few years have been viciously cruel to the people of central Luzon. They have had to absorb not only the economic recession that has struck the whole country, but the twin blows of the eruption of Mt. Pinatubo and the closing of the economic centerpieces of the region, the U.S. -operated Clark Air Field and Subic Bay Naval Base.
Food or free trade zones
The desperation of the region's situation is apparent at the foot of Mt. Pinatubo, within the confines of the fence encircling what used to be the U.S. military outpost at Clark. Of the thousands of families who had their homes destroyed by the Pinatubo blast, hundreds now live at Clark, many of them in overcrowded, leaky tents.
"Food is our number one problem here," says one leader of the resettlement community. "We get some from non-governmental organizations, but we often eat only a couple meals a day, and the kids often go hungry." He adds, "Sickness is a major problem because of the tight living conditions," poor sanitation and difficulty in acquiring medicine. The refugees have little money, since virtually all of them are unemployed.
The refugees are demanding that they be allowed to establish permanent dwellings on the base, and that they be allowed to grow crops on its extensive open fields. The government opposes the idea; it wants to turn Clark into a free trade zone or an international airport, and government officials believe having a poor community in close proximity is not likely to be appreciated either by foreign investors or visitors.
Unfortunately for residents of the area, the Pinatubo problem is an ongoing one. The rainy season causes massive mud and volcanic ash flows that are expected to continue for years. A government project to build a 20-kilometer-long dike has run behind schedule, resulting in the burial of still more communities during the past rainy season.
A baseless economy
The closure of Clark and Subic has hit the region as hard as the Pinatubo eruption.
In September 1991, three months after Mount Pinatubo erupted, the Philippine Senate, in a rare display of independent nationalism, voted not to renew the U.S. bases agreement. The U.S. Air Force withdrew from Clarke in 1991 and the Navy completed its pull-out from Subic in November 1992.
Progressive forces in the Philippines had long demanded the withdrawal of the U.S. forces, but no one was ready for a sudden pullout. The closure threw 70,000 base workers out of work, according to Manuel Torres, chair of the Workers' Alliance of Region III, a Central Luzon labor alliance affiliated with the KMU labor center. Twenty-two thousand of these workers were direct employees on the bases; the rest worked as subcontractors, domestics for U.S. soldiers or in similar positions. Today, Torres reports, the region's unemployment rate stands at 18 percent.
The thousands of sex workers who had served U.S. soldiers at the bases were particularly hard hit by the closings. Ten thousand women worked in 300 to 500 bars when the bases were open, says Pearly Bulawan of the Buklod Center, a community center serving women sex workers. Now there are only 1,000 sex workers, catering primarily to Taiwanese, Japanese and Filipino tourists.
Buklod conducts a variety of skills training and livelihood programs, to teach and provide work for sex workers who want to opt out of the business or who can no longer support themselves, but the organization's small soapmaking and dressmaking projects are hardly enough to meet the needs of most of the unemployed women.
The post-bases transition has been particularly difficult for the generally poorly educated and low-skilled unemployed sex workers, the majority of whom came from the provinces in search of a means to make money. A large number have returned to their homes in the countryside, where jobs are scarce and where many, as former prostitutes, will be stigmatized. Others have moved to Manila, seeking sex work or jobs as domestics. Some of the women have remained in the region, working as laundresses or in odd jobs.
A lost opportunity
Much of the tragedy which has befallen Central Luzon could have been averted. The volcano eruption could not have been prevented, but a more efficient handling of the dike-building would have saved many communities, and a more humane assistance package could have been offered to volcano refugees. More significantly, if the U.S. withdrawal from the bases had not been so sudden, and had the government put in place a sound conversion plan, the economic shock of the closure would have been mostly alleviated.
Economic conversion of the bases was a viable option, contends Torres. "The Americans were just overseers; it was Filipinos who were operating the [civilian side] of the base," he says. "All the work was done by Philippine personnel."
Torres points to the example of ship building, an area in which Philippine workers had accumulated important skills. "All that we needed to do was change customers, from the U.S. military to commercial buyers," he says. "That would have spawned so many local industries' and enabled the country to build up a deep-sea fishing industry and otherwise take advantage of the surrounding sea.
But the Philippine authorities, under the leadership of Richard Gordon, head of the Subic Bay Metropolitan Authority, have a different vision - one that calls for integrating the bases into the Ramos administration's Philippines 2000 program. To much international acclaim, Gordon is pressing ahead with plans to convert Subic into a free trade port; plans for Clark remain uncertain.
Many local residents are pinning their hopes on Gordon's project. Bonje, who works in one of the remaining clubs in Olongapo, near Subic, says she hopes that unemployed former sex workers will be able to find work as employees of the new Subic businesses, and maybe even given preferred hiring status. The Philippine experience with free trade zones, however, suggests that the Subic free port - even if it succeeds in attracting foreign investment - will not do much to improve the lives of workers or nearby communities.
Torres sees Gordon's plans as a tragically lost opportunity to pursue a development path different than the one represented by the free trade zones. Proposals for developing self-reliant Philippine industry and harnessing the talents of the former base workers are of little relevance in the context of Gordon's efforts. Torres says, "All those conversion ideas are now difficult even to suggest because of the whole framework of Ramos's Philippines 2000 and the foreign-oriented scheme of Gordon."
- Robert Weissman and Stephanie Donne
Staying the Course
From the perspective of the international financial community, the Philippine economy is already on the right track. They applaud the Aquino government's decision to honor the country' s foreign debt; the Foreign Investments Act of 1991, which permits up to 100 percent ownership of companies engaged in all but a few sectors, as well as in firms exporting at least 60 percent of production; and government steps taken in 1992 to liberalize the exchange rate. "The government has already done a serious job" of undertaking reforms, says one international financial analyst. He points to the country's build-up of foreign exchange reserves over the last two years and its recent rapid export-earning growth (11 percent in 1992 and 15 percent in 1993) as signs of the country's upswing.
The financial community is concerned that the government has operated without a formal agreement with the International Monetary Fund since April 1993, a condition which prevents the government from obtaining new foreign loans and forces it to pay in full interest and principal on maturing obligations. However, analysts note with satisfaction, the single issue preventing consummation of a new IMF standing agreement is the government' s chronic budget deficit- not the basic structure of the economy.
An economic turnaround driven by foreign investment will slowly come to the Philippines is the position of financial analysts. Building credibility with foreign investors will take time; the Philippines should maintain its present course and stay patient.
Patience, however, is not a viable option for Fidel Ramos.
- R. W.

Source: http://multinationalmonitor.org/hyper/issues/1994/01/weissman.html