ARROYO GIVES STATE OF THE NATION ADDRESS, WHILE

UNCLAS SECTION 01 OF 02 MANILA 003397

SIPDIS

SENSITIVE

DEPT FOR EAP, EAP/PMBS, INR/EAP, DS
NSC FOR GREEN

E.O. 12958: N/A
TAGS: PGOV PREL PINS PINR ECON ASEC RP
SUBJECT: ARROYO GIVES STATE OF THE NATION ADDRESS, WHILE
OPPOSITION HOLDS RALLY

REF: A. MANILA - EAP/PMBS 07/25/05 E-MAIL

B. OPS CENTER - MANILA 07/25/05 TELCON

C. MANILA 3391

D. MANILA 3367

E. MANILA 3326


1. (U) This message is Sensitive But Unclassified. Please
handle accordingly.


2. (SBU) Summary: President Arroyo gave her State of the
Nation Address (SONA) late July 25. In a short speech, she
claimed that her government had made great strides in
strengthening the economy and she promised to hold the
course. She urged reform of the political system, stating
that it was inadequate to meet the country's current
challenges. She recommended that the Philippines' examine
constitutional changes that would transform the two houses of
Congress into a parliamentary system and she spoke warmly
about federalism. She said "permanent peace in Mindanao is
within reach." Many opposition legislators boycotted her
speech and an anti-Arroyo rally drew roughly 30,000 people.
No violence was reported. The speech did not contain any
surprises, though it was less detailed than expected.
Mission will report on reaction as it flows in. End Summary.


3. (U) President Arroyo gave her SONA late July 25. The
speech was short, about 25 minutes. (Note: Ref a contains
the text of the speech. End Note.) Arroyo spoke firmly and
was often interrupted by applause (many in the opposition
boycotted the speech -- see below). Arroyo began by noting
that "ours is a country divided" between an economy "now
poised for take off" and a political system that has become
"a hindrance to progress." She said there was good news in
regard to the economy which continued to grow and create
jobs. She said that her "non-nonsense budget" had helped the
economy by raising needed revenue and cutting into borrowing
-- despite the fact that oil price rises had hurt growth.
She said she would not waver in moving forward her economic
plans no matter the opposition.


4. (U) Arroyo related that over the course of time the
country's political system had degenerated. The country had
to "overcome our tendency to be our own worst enemy." She
urged that all sides take care not to undercut the progress
that has been made in the country: "We may disagree among
ourselves, but let us never lose sight of that greater battle
for one people, one country, one Philippines." Speaking in
general terms and without offering a timetable, she then
recommended that the Philippines' examine constitutional
changes that would transform the two houses of Congress into
a parliamentary system similar to that of "our progressive
neighbors in the region." She said that such changes were
within the ambit of Congress to decide on, but said that the
calling of a "Constituent Assembly" was one possible way
forward. She spoke warmly about federalism and devolving
powers to localities.


5. (U) She urged the swift passage of an anti-terrrorism
law. Regarding ongoing tensions in the south, she said
"insurgency had abated" and "permanent peace in Mindanao is
within reach." She claimed that "80 percent" was done in
regard to the peace talks involving the Moro Islamic
Liberation Front (MILF). She hailed the Philippines'
relationship with the Organization of Islamic Conference
(OIC). She said that "our victories in the war on terror
have been acknowledged by no less than President Bush before
the U.S. National Defense University." Jemaah Islamiya and
the Abu Sayyaf had been dealt with and "can only pick up the
pieces of its broken backbone".


6. (U) All of the leftist "Party List" representatives in
the House boycotted Arroyo's speech, as did many other
Opposition members of Congress. However, members of the
Liberal Party, many of whom have called for Arroyo's
resignation, declined to join the boycott, stating that it
was their "constitutional duty" to participate in the SONA.


7. (U) Media and police estimate that roughly 30,000 or so
attended an anti-Arroyo rally in Quezon City near the House
of Representatives. According to Pol FSN who observed the
rally, most participants appeared to be supporters of leftist
political groups. While the crowd was much smaller than the
80,000 protest organizers had predicted, it marked one of the
larger turnouts for the Opposition to date. A smaller number
of pro-Arroyo demonstrators gathered near the House to show
their support for the President. Approximately 6,000 riot
police, supplemented by 1,000 Philippine Army troops, set up
barricades to keep the protesters away from the site of the
SONA. As of 5:30 PM on July 25, there were no reports of
violence.

8. (SBU) Comment: The speech did not contain any surprises,
though it was less detailed than we expected. Contacts had
told us that -- in addition to other issues -- it might focus
on such issues as corruption and provide more details about
the "truth commission" that Malacanang recently proposed, but
it did not. Arroyo also did not directly address the recent
scandals over audio tapes and illegal gambling, and the
Opposition's filing of impeachment charges earlier in the day
(see ref C). Malacanang seems to have decided to keep it all
very lean. Mission will report on reaction as it flows in.

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MUSSOMELI