ADMIRAL FALLON'S VISIT TO THE PHILIPPINES

C O N F I D E N T I A L SECTION 01 OF 03 MANILA 001594

SIPDIS

DEPT FOR EAP/PMBS
NSC FOR GREEN
DOD/ASD/ISA/AP FOR BG ALLEN

E.O. 12958: DECL: 04/06/2015
TAGS: MOPS MARR PTER PINS PREL RP
SUBJECT: ADMIRAL FALLON'S VISIT TO THE PHILIPPINES

Classified By: (U) Political Officer Paul O'Friel
for reasons 1.4(b) and (d).


1. (C) SUMMARY. President Arroyo told Admiral Fallon during
his March 28-30 visit she intends to move Southern Command
(SOUTHCOM) headquarters to Pagadian in order to take the
fight closer to Abu Sayyaf Group (ASG) and Jemaah Islamiyah
(JI) terrorists. National Defense Secretary Cruz's focus on
Philippine Defense Reform (PDR) includes fixed tenures for
the Armed Forces of the Philippines (AFP) Chief of Staff and
Superintendent of the Philippine Military Academy. Cruz
predicted it will take 3-4 years for major changes to take
root, and has in place a new leadership team to see the
process through. He claimed that anti-terrorism legislation
would be at the top of the GRP's agenda once both houses of
Congress had passed a value-added tax bill. END SUMMARY.


2. (C) Incoming US Pacific Command Commander Admiral William
Fallon's March 28-30 orientation visit to the Philippines
included meetings on March 29 with Secretary of National
Defense Cruz and AFP Chief of Staff General Efren Abu.
Admiral Fallon joined Ambassador and President Gloria
Macapagal-Arroyo on a March 30 trip to Mindanao to inspect
USAID-funded infrastructure and other development projects in
the vicinity of Camp Abubakar, Maguindanao, the former
stronghold of the Moro Islamic Liberation Front (MILF)
captured by the AFP in 2000.

SOUTHCOM TO MOVE
--------------


3. (C) On the margins of a lunch with local officials at
Camp Abubakar, President Arroyo noted that she had directed
Lieutenant General Alberto Braganza, the commander of
SOUTHCOM, to move his headquarters forward from its present
location in Zamboanga to Pagadian (currently the headquarters
of the 1st Infantry Division) to fight better ASG and JI
terrorists. LTG Braganza subsequently stated that he planned
to complete the move, which would also involve the transition
of the 1st Infantry Division to Zamboanga, "before the end of
the year." (Note: The SOUTHCOM Chief of Staff separately
indicated that this timeline might even be accelerated to
mid-summer 2005. End note.)

CRUZ'S PRIORITIES
--------------


4. (C) In his meeting with Admiral Fallon, Secretary Cruz
laid out five major priorities:
o Philippine Defense Reform (PDR);
o the Capability Upgrade Program (CUP);
o supporting the peace process with the MILF;
o improving the RP's anti-terrorism capabilities; and,
o upgrading the quality of life (e.g., housing) for Filipino
soldiers.

DEFENSE REFORM
--------------


5. (C) Elaborating on PDR, Cruz said he is focused on
implementing the 10 major recommendations of the 2003 Joint
Defense Assessment, noting that the arrival of US subject
matter experts should speed up improvements in key areas,
such as defense acquisition and personnel management. Among
his targets is a fixed three-year tenure for the AFP Chief of
Staff and the Superintendent of the Philippine Military
Academy (PMA). "Change the tenure, and you change the
landscape (of the AFP)," Cruz said. As an example of the
need to reform, he ruefully pointed to the PMA's
entrant-to-graduate ratio, which now stands at 36-percent.
"My goal is 65-percent," Cruz stated.


6. (C) Cruz added he hoped to reduce personnel costs, which
now account for 75-80-percent of the AFP's budget. "We need
to change the tooth-to-tail ratio," he said, noting AFP
troops were performing a lot of "non-core" jobs, such as
guarding ballot boxes and participating in anti-smuggling and
anti-kidnapping task forces. Despite "a lot of screaming,"
Cruz said he was slowly making headway on this objective.
Other envisaged personnel reforms would include transitioning
from a fixed ratio of general officers to a position-based
system and ending use of the lineal list for promotions.
Cruz expressed sharp frustration with the lineal list,
likening it to an "escalator process" where officers had to
"wait for someone to die" to get promoted. "We need a system
of deep promotion," he said.


7. (C) To implement his reform agenda, Cruz said he had
established a calendar of regular meetings with AFP Chief of
Staff Abu and the major service commanders to discuss issues.
Asked how long he would stay on as Defense Secretary, Cruz
projected it would take 3-4 years to put in place major
changes, and was confident that his new all-civilian senior
leadership team would help see the process through. Cruz,
who expressed disappointment that the present 400-person DND
civilian staff was not performing at a "professional level,"
said his target was to create a pool of 30-40 professionals
who could serve as a catalyst for change.

CAPABILITY UPGRADES
--------------


8. (C) The CUP consists of an 18-year program separated into
three six-year tranches aimed at addressing the AFP's most
compelling equipment needs to win the counterinsurgency
fight, according to Cruz. With a rough total budget of P110
billion (approximately $2 billion),the priority is on
mobility: trucks, patrol craft, and -- most importantly --
helicopters, of which Cruz hopes to obtain 100 more for the
AFP inventory.

MILF PEACE PROCESS
--------------


9. (C) Cruz spoke optimistically of the GRP's peace process
with the MILF, claiming there is "consensus to push ahead."
He indicated the GRP is prepared to engage constructively on
the "ancestral domain" issue and was confident the
Malaysian-brokered peace talks set to resume on April 16
would succeed.

ANTI-TERRORISM
--------------


10. (C) Looking beyond the AFP, Cruz said he wanted to
improve the GRP's broad-based anti-terrorism capabilities,
including improving inter-agency coordination within the
Anti-terrorism Task Force. Cruz claimed anti-terrorism
legislation would be at the top of the GRP's legislative
agenda, once both houses of Congress had passed a value-added
tax bill.

CHIEF OF STAFF FOCUSED ON NCO DEVELOPMENT
--------------


11. (C) Separately, AFP Chief of Staff Abu told Admiral
Fallon that, after 35 years of dealing with insurgencies, the
Philippine people were "fed up." The AFP had to make itself
more capable to respond to and deal with these threats. Abu
described his goal as tailoring the AFP for counterinsurgency
operations. "We need to shoot, move, and communicate," he
stated, noting he had reduced the number of "J" staff
positions from 11 to 7. Abu added he was spending a "lot of
effort" on PDR, and was specifically focused on developing
non-commissioned officer (NCO)training. Undersecretary for
Defense Reform Ernesto Carolina in his meeting with Admiral
Fallon underscored the importance of NCO training. Fifteen
AFP instructors who had just completed training at US schools
in Hawaii would form the core staff for the centralized NCO
Academy located at the 2nd Infantry Division, and would focus
on instituting change.

COMMENT
--------------


12. (C) While strongly applauding the concept of bringing
the fight closer to the terrorists, we are not sanguine that
SOUTHCOM's transition from Zamboanga to Pagadian will occur
seamlessly. Unlike Zamboanga, Pagadian has no direct flights
to Manila, and its infrastructure is inadequate to support a
headquarters. A better choice might have been Cotobato City,
which does have direct flights, and whose 6th Infantry
Division is bearing the brunt of current combat operations
against ASG/JI terrorists hiding in the Liguasan Marsh and
the Kraan Valley.


13. (C) Cruz has put together a talented team of civilian
undersecretaries, three of whom come directly from
high-paying jobs in the private sector, and we are encouraged
by his professed commitment to put together a core cadre of
professionals who will serve as a catalyst for change. The
Philippine Defense Secretary has the right instincts to focus
on a fixed tenure for the Chief of Staff, "J" staff, service
chiefs, and PMA superintendent as the only means of seeing
through reform. However, to beat the insurgents he also
needs to end the revolving door at SOUTHCOM, and identify and
keep in place a tough commander who can find, fix, and finish
the terrorists. End comment.


14. (U) Admiral Fallon did not have an opportunity to clear
this message.
Visit Embassy Manila's Classified website:
http://www.state.sgov.gov/p/eap/manila/index. cfm
Mussomeli