PDR SHIFTING TO THE IMPLEMENTATION PHASE

C O N F I D E N T I A L SECTION 01 OF 04 MANILA 001960

SIPDIS

STATE FOR EAP/PMBS
NSC FOR GREEN
OSD/ISA FOR ALLEN
DSCA FOR ROSS

E.O. 12958: DECL: 04/29/2015
TAGS: MOPS MARR PREL PINS MG ID AS RP
SUBJECT: PDR SHIFTING TO THE IMPLEMENTATION PHASE

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


1. (C) SUMMARY. Under the personal direction of Defense
Secretary Cruz, Philippine Defense Reform (PDR) is moving to

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the implementation phase. The GRP has requested three
additional US experts to complement the nine already in place
to carry out an ambitious, but well thought through agenda of
reforms ranging from logistics to operations. The April 28
US-RP progress review discussions included for the first time
Australia, which the GRP believes can play a complementary or
"niche" role in PDR. Secretary Cruz plans to attend the
upcoming annual Shangri-La Dialogue in Singapore. We
recommend the senior US officials set aside time in Singapore
to engage Cruz on PDR and other strategic defense issues.
END SUMMARY.

PDR A CORNERSTONE IN US-RP DEFENSE RELATIONSHIP
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2. (SBU) Secretary of National Defense Cruz meet at length
on April 28 with the US Executive Steering Committee before
the start of the PDR progress review later that day. The US
delegation was composed of Defense Security Cooperation
Agency (DSCA) Director for Middle East, Asia, and North
Africa Ed Ross, Office of the Secretary of
Defense/International Security Affairs Principal Director for
Asian Pacific Affairs Brigadier General John Allen, Joint
Staff Deputy Director for Asia Brigadier General Jeff
Remington, and US Pacific Command J4 (Logistics) Brigadier
General James Kennon. In the pre-brief with Cruz,
Ambassador Ricciardone stressed the importance of PDR to the
US-Philippine defense relationship. He urged the Philippine
Defense Secretary and the Armed Forces of the Philippines
(AFP) leadership to err on the side of boldness in pursuing
reform. The AFP and Department of National Defense (DND)
were the only key institutions in the Philippines with an
action plan for reform. If they succeeded, they could blaze
a path for other institutions, such as the Philippine
National Police (PNP) and the judiciary, to follow.


3. (SBU) Cruz expressed appreciation for US support, saying
he believed the effort was achievable, sensible, and long
overdue. DSCA Director Ed Ross, the chair of the US
Executive Steering Committee, noted while PDR was off to a
good start, a tremendous amount of work remained to be done
to ensure reforms in the AFP penetrated down to the common
soldier. Responding to this point, AFP Chief of Staff
General Efren Abu emphasized his commitment to implement PDR
and ensure individual soldiers understood "what we're doing
and why."


4. (C) Secretary Cruz said that he was achieving success by
moving systematically to reach out to other elements of the
Philippine government. The Department of Management and
Budget (DMB) had previously been reluctant to approve
disbursement of even appropriated funds. Reassured by the
seriousness of the PDR effort, the DMB had begun to loosen
its purse strings and had started to allocate P460 million
(roughly $7.9 million) each month to the Modernization Trust
Fund, something it had refused to do for four years. "It is
important bureaucratically to get DMB and the National
Economic Development Agency (NEDA) involved in the process,"
Cruz stated.

POTENTIAL AUSTRALIAN ROLE
--------------


5. (C) Noting Secretary Cruz's discussions on PDR with the
Australian defense staff during his April 9-16 visit to
Canberra, BG Allen stated it was a useful and very positive
development to have the Australians involved. (Note: The
Australian Defense Attache and a Political Officer of the
Australian Embassy attended the general discussions, and also
met earlier with the US team. End note.) It was important
to pursue PDR efficiently and to deconflict assistance, he
added. Potentially, cooperation on PDR could serve as a
model for other countries seeking to transform their
militaries. (Note: Allen later observed similar processes
could benefit Indonesia and Mongolia. End note.)

PROGRESS REVIEW INDICATES
CLEAR TRANSITION FROM PLANNING TO IMPLEMENTATION
-------------- ---


6. (SBU) The subsequent PDR progress review discussions
involved Cruz, his senior Undersecretaries, the senior AFP
leadership, and representatives of the Department of Foreign
Affairs, and examined in detail the status of each of the
PDR's ten different plans of action and milestones (POA&Ms).
Secretary Cruz in his opening remarks stated the USG's steady

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support had been invaluable in helping the PDR overcome some
birth pains. While great strides had been made so far, the
key to success, he believed, was to ensure effective
implementation. Ambassador Ricciardone reiterated to the
general audience that PDR is one of the most important
elements of USG engagement with the Philippines. Real
resources from both governments were devoted to the effort.
Each meeting of the Executive Steering Committee had broken
new ground; this time with the involvement of the
Australians. Improvements in field operations by the AFP,
such as recent engagements involving night helicopter
insertions, night movement to contact, and night casualty
evacuations, were testimony to what the two countries were
doing, and how far they had come together. "Count on us to
be in your corner," he said, "But you must lead your own
reforms."


7. (SBU) The Philippine PDR briefings discussed how to
implement PDR effectively. Internally, the DND intends to
establish two new Assistant Secretary positions under
Undersecretary for Philippine Defense Reform Carolina, one
dealing with program management and the other focused on
program evaluation, which would be responsible for research,
strategic communications, budget, and legislative issues.
Each DND Undersecretary, e.g., Operations, Policy and Plans,
Finance, Acquisition, etc., would act as program sponsor for
implementing one or more POA&Ms in cooperation with
corresponding program managers on the AFP "J" staff.
Subordinate project managers would ensure buy-in at all
levels.

REQUEST FOR THREE NEW US EXPERTS
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8. (SBU) The DND also proposed creation of a Joint RP-US
group that could quickly resolve issues, such as
establishment of performance measures, effective use of the
US Subject Matter Experts (SMEs),meshing US Defense Resource
Management Service (DRMS) support with PDR, and future PDR
budgets. SMEs would be fully integrated. They would advise
on policy, planning, and implementation; propose realistic
solutions to implementing PDR; and transfer their skills to
their Philippine counterparts. The AFP requested three more
SMEs in the areas of military education, enlisted
development, and operations and training, in addition to the
nine member team already on the ground.

AUSTRALIA COULD PROVIDE "NICHE" EXPERTISE
--------------


9. (SBU) DND officials described Australian involvement in
PDR as complementary to the ongoing US-RP bilateral effort.
They noted that Australia's military, because its size was
closer to that of the Philippines, could potentially provide
"niche" expertise in such areas as strategic planning, joint
doctrine, commercial support, professional military
education, organization and manpower, maritime security, and
project management. For example, the AFP, in order to ensure
a common vision between DND and AFP counterparts, needed help
in setting up a short, tailored PDR training course for newly
designated project managers. Assistance in this regard could
come from either the US or Australia, which could also
provide a SME to assist with development of a DND and AFP
strategic planning cadre.

"SELLING" PDR
--------------


10. (C) The AFP's and DND's plans to "sell" PDR call for
"embedding" DND/AFP advocates on legislative staffs and
networking with the Cabinet and other key government
institutions to gain support for the reform effort. Well
developed budgets and plans focused on realistic objectives
would be used to develop, justify, and account for a
multi-year defense budget. Pointing to the successes already
achieved with the Department of Management and Budget (DMB),
Cruz noted the DMB had not previously comprehended the DND's
and AFP's situation and problems. Now, Cruz said, the DMB was
making an effort "to understand our predicament and
appreciate we are proposing realistic solutions to real
problems." Thanks to the PDR plan, DMB Secretary Boncadin,
notoriously "married to her job" and "stingy" in releasing
funds to GRP agencies, evidently "was becoming convinced" of
the merits of the PDR budget requirements, as she recently
had released funds more readily.

"ONE BUDGET CONCEPT"
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11. (SBU) Under the "One Budget Concept," scarce resources
would be allocated where they are needed most, and not held
hostage by individual services. The comptroller function
would be institutionalized, and a defense-wide
centrally-administered acquisition system and a professional
acquisition force established. Supporting these and other
functions would be a defense-wide information management
infrastructure with integrated software applications.

PRACTICAL OPERATIONAL AND LOGISTICS FOCUS
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12. (SBU) AFP operational aspirations for PDR are practical,
with the immediate focus on developing combat life saving
skills and deploying a forward surgical support unit. Under
review are efforts to determine the optimum period for
pre-deployment training, unit rotation policy, and combat
operations. Training for enlisted personnel, noncommissioned
officers, and officers are also targeted. Although not fully
developed, efforts are underway to organize and integrate
civil military operations into AFP doctrine, and develop the
ability to conduct medical civic action programs (medcaps),
dental civic action programs (dencaps),and engineering civic
action programs, (encaps).


13. (SBU) Logistics concerns include weapons and ammunition
management, explosive safety, disposal of obsolete munitions,
and reorganization of the logistics structure to minimize
cost while retaining operational readiness. Procurement
efforts under the Capability Upgrade Program would address
immediate shortfalls to support overall defense strategies
and PDR priorities. The PDR Logistics Team effort needs to
transition fully into the PDR program, but has succeeded in
boosting operational readiness rates for key platforms. The
UH-1H overall readiness rate stood at 80-percent, while that
of MG-520s stood at 74.5-percent. The goal was to establish
effective maintenance and sustainment for all systems and
platforms that increased or enhanced mission capability.

PLANNING MEETING SET FOR JUNE 2005
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14. (SBU) The Executive Steering Committee decided to defer
discussion of payment mechanisms, e.g., Foreign Military
Sales, to a working group that would study the issue and
provide recommendations on a system for making spending
decisions that complied with US and Philippine law. Both
sides concurred on the need to synchronize the US Defense
Resource Management Service (DRMS) and Defense Acquisition
Service (DAS) support effort with PDR. A planning meeting
was set for June to examine the way ahead on the 2005 and
2006 effort, develop the final POA&Ms, and continue detailed
planning on current priorities.

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


15. (C) The detailed nature of the PDR progress review is
convincing evidence that a full transition from planning to
implementation is now underway. Cruz's presence and that of
his senior staff throughout the day-long discussions are
testimony to hands-on involvement and personal commitments to
see the effort through. Cruz plans to attend the June 3-5
Shangri-La Dialogue in Singapore. We recommend the senior US
participants seize the opportunity to engage Cruz on PDR and
other strategic mutual defense issues.


16. (U) Mr. Ross and BG Allen have reviewed this message.

Visit Embassy Manila's Classified website:
http://www.state.sgov.gov/p/eap/manila/index. cfm
Ricciardone