MILF REPRESENTATIVES UNVEIL ISLAMIC ECONOMIC

C O N F I D E N T I A L SECTION 01 OF 04 MANILA 005637

SIPDIS

DEPARTMENT FOR EAP, EAP/MTS, EAP/MLS, INR/EAP, INR/TNC
S/CT
NSC FOR H.MORROW
USIP FOR SOLOMON

E.O. 12958: DECL: 11/30/2015
TAGS: PREL PINS PTER RP
SUBJECT: MILF REPRESENTATIVES UNVEIL ISLAMIC ECONOMIC
DEVELOPMENT MODEL TO PHILIPPINE BUSINESS LEADERS FORUM

Classified By: Acting Political Counselor Paul O'Friel for
reasons 1.4 (b) and (d)


1. (C) Summary: Three executives from the Moro Islamic
Liberation Front's (MILF's) development arm -- the Bangsamoro
Development Agency (BDA) -- represented MILF Vice-Chairman
for Political Affairs Ghazali Jafaar during a November 23
special closed door session of the Philippine Business
Leaders Forum and Mindanao Business Council (MBC). On behalf
of Jafaar, BDA chairman Dr. Abas A. Candao delivered the
message that a final GRP-MILF peace agreement must be rooted
in Islamic values, and that an Islamic Economic Development
Model will be implemented in whatever juridical entity is
created in Mindanao. Educating businessmen, government
officials, and the general public -- particularly within
non-Muslim sectors of Mindanao and the international
community -- on the principles, legal aspects, and merits of
an Islamic model will be a daunting challenge for the MILF,
BDA, and MBC during the months -- if not years -- ahead. End
Summary.

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Islamic Economic Development Model for Mindanao?
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2. (SBU) Some fifty businessmen, bankers, academics, and
diplomats gathered at the Filinvest Corporate Center in
Alabang, Metro Manila on November 23 for a panel discussion
on "Building Peace and Security in Mindanao." MILF
Vice-Chairman for Political Affairs Ghazali Jafaar was billed
as the keynote speaker, but failed to appear for this special
closed door event hosted by the Philippines Business Leaders
Forum (PBLF) and Mindanao Business Council (MBC). (Note:
MILF Vice-Chairman Jafaar was also expected to attend the
November 27 opening ceremony for the Southeast Asian Games in
Manila with MILF Central Committee Chairman Al Haj Murad
Ebrahim and GRP-MILF Peace Panel Chairman Mohaqer Iqbal, but
all three leaders did not appear due to "previous
commitments." Attending the SEA Games opening ceremony on
their behalf were MILF Coordinating Committee on Cessation of
Hostilities (CCCH) Chief Von Al Haq, MILF Spokesman Eid
Kabalu, MILF member Jannati Mimbantas, and attorney Abdul
Dataya. End Note.)


3. (SBU) Delivering the keynote speech in place of MILF
Vice-Chairman Jafaar at the PBLF's November 23 special forum
was Dr. Abas A. Candao, Chairman and CEO of the Bangsamoro
Development Agency (BDA). Dr. Candao began his speech --
which contained quotes from the Koran -- by conveying
Jafaar's gratitude to the PBLF and MBC for inviting him to be
the keynote speaker for a forum that would set the stage for
an international investment conference on Mindanao. Since
Jafaar was unable to attend because of "a previous
commitment," Dr. Candao represented him along with BDA
Executive Director Dr. Danda N. Juanday and BDA
Vice-Chairman/former MILF Technical Adviser Dr. Saifrullah M.
Dipatuan. (Note: The BDA is a non-governmental organization
based in Cotabato City, Mindanao that was established by the
MILF in accordance with provisions of the 2001 Tripoli Peace
Agreement. Since being activated in 2002, the BDA has been
the MILF's development arm responsible for implementing
rehabilitation and development projects within impoverished
and conflict-affected areas of Mindanao. Its executives --
Candao, Juanday, and Dipatuan -- are all medical doctors by
profession. End Note.)


4. (SBU) After thanking the Malaysian-led International
Monitoring Team (IMT),U.S. Institute of Peace (USIP),World
Bank, and international donor community for their
contributions to the GRP-MILF peace process, Dr. Candao gave
the audience a glimpse of the MILF's vision for Mindanao's
future development. His key points were as follows:

--- Spiritual and material development are inseparable and
must be in accordance with the Koran.

--- Feasibility studies will be conducted to determine the
kind of investments that are needed in each area.

--- An Islamic Economic Development Model will be implemented
in whatever juridical entity that is created by a final
GRP-MILF peace agreement.

--- Dependence on foreign loans is a "disease" that has
shattered lives. Islamic principles require the Bangsamoro
people to avoid incurring foreign debt "even if it hurts."

--- Capitalism still suffers from unequal distribution of
wealth, poverty, greed, exploitation of consumers, and
distortions of the market that result in monopolies. The
rich use money for their own benefit and interest payments
are always added to the cost of production. These are
problems created by capitalism, and, unless solved, may give
birth to another reaction worse than communism.

--- While capitalists have celebrated the fall of communism
on both a political and ideological plane, the fact remains
that communism was a reaction by the common man toward
unequal distribution of wealth.

--- Communism failed because of its inherent defects. The
communist model assailed private ownership and market forces,
denied individual liberties, curtailed production, and left
people at the hands of a ruling class.

--- The principles contained in the Koran are capable of
solving economic problems in the world today. Islamic
principles allow for private ownership, market forces, and an
economic system that prevents monopolies as well as
activities such as gambling that are detrimental to society.

--- Under the Islamic Economic Development Model, common
people share in the fruits of development, income is
distributed to the needy through Zakat, and there is a just
and equitable relationship between lenders and borrowers.

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The MILF's Development Arm
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5. (SBU) Following Dr. Candao's keynote speech, BDA
Executive Director Dr. Juanday gave an overview of the BDA's
activities. A total of 3,128 persons (2,287 females and 841
males) have been trained on transparency and accountability
to support six BDA Regional Management Offices in Central
Mindanao, Lanao area, Socsksargen (South Cotabato, Sultan
Kudurat, Sarangani, and General Santos City),Zamboanga
Peninsula, and "Zambusulla."


6. (SBU) Dr. Juanday noted that Islamic development requires
"value transformation" and "agents for community change." He
highlighted existing linkages between the BDA and such
institutions as the World Bank, Islamic Development Bank,
Asian Institute of Management, World Vision, UNICEF, U.S.
AID, Japanese Government, and GRP Office of the Presidential
Adviser for the Peace Process. He especially thanked the
World Bank for assisting the BDA in capacity building and
developing plans for communications and marketing, finance,
administration, and personnel management.


7. (SBU) In his closing remarks on the future of the BDA,
Dr. Juanday emphasized the importance of the Islamic Economic
Development Model, the establishment of a partnership between
the BDA and Global Islamic System, and key role that the BDA
would play in peace and development for Mindanao.

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GRP-MILF Peace Process Continues
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8. (SBU) BDA Director Dr. Dipatuan - who formerly served on
the MILF Peace Panel -- made the following key points
regarding the GRP-MILF peace process:

--- The GRP and MILF peace negotiators have yet to determine
the kind of juridical entity to be created in Mindanao.
While a federal state is a possibility, the MILF is open to
other options and has been looking at examples from other
countries such as Peru. Whatever juridical entity is
ultimately created must be acceptable to the Bangsamoro
people.

--- The MILF is not going to rush into any final peace
agreement.

--- A key issue in the peace process is ancestral domain
which has four strands - concept, territory, natural
resources, and governance.

--- Until the recent press leak, details of the GRP-MILF
peace negotiations were held secret for good reason. Future
negotiations will continue to be held secret, with details
released to the public at an appropriate time.

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View from the Sulu Archipelago
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9. (SBU) In her opening remarks, the lead convenor for the
Council on Islam and Democracy (CID) Amina Rasul -- whose
family is originally from Sulu -- stated that Islam and
democracy were compatible based on the Koran. Rasul then
intimated that MILF Vice-Chairman Jafaar's failure to appear
for the November 23 forum was related to his meetings with
the World Bank. According to Rasul, a six member team from
the World Bank -- including a former rebel from Latin America
-- unofficially met with Jafaar and eight other MILF leaders
for the first time in Mindanao. Their meeting, which lasted
for a half day, went so well that a second meeting was
arranged.


10. (SBU) Rasul highlighted the importance of overcoming the
common stereotype that Muslims are incapable of economic
development by their own efforts. She pointed out that Sulu
once had a vibrant economy with trade routes throughout the
region. The imposition of martial law by the Marcos Regime
during 1972 and the armed conflict that followed had a
devastating impact on Sulu's economy.


11. (SBU) To date, there has been little foreign investment
in the Sulu Archipelago due to the lack of peace and
security. Local businessmen in these areas are thus pooling
their financial resources together to buy equipment for their
own development projects. According to Rasul, opportunities
exist in the Sulu Archipelago for any outside investors
willing to take a risk. (Rasul's CID has been examining
Islamic finance for the past year and plans to organize a
major conference on this important topic during 2006 for
potential investors.)


12. (SBU) Speaking in reference to the ongoing armed clashes
in Sulu between the Armed Forces of the Philippines (AFP),
Abu Sayyaf Group (ASG),and Misuari Breakaway Group (MBG),
Rasul stated that most members of the Moro National
Liberation Front (MNLF) still recognize Nur Misuari as their
leader. Though the MNLF signed a 1996 Final Peace Agreement
with the GRP, this agreement has not been fully implemented.
According to Rasul, any peace agreement negotiated between
the GRP and MILF must not supersede this GRP-MNLF Final Peace
Agreement.



13. (SBU) Rasul ended her presentation with remarks about
charter change. Consultations during November in Mindanao
with local government, religious, and civil society leaders
revealed concerns about the motive, timing, and necessity of
charter change and its potential impact on the implementation
of a final GRP-MILF peace agreement. In Rasul's view, a
constitutional convention must be held, and, if federalism is
adopted, the Bangsamoro state should include the 13 provinces
of Mindanao.

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An Outsider's Perspective
--------------


14. (SBU) Panelist Edward McBride - the Bangkok based
Southeast Asia Correspondent for The Economist -- made the
following points:

--- Mindanao needs more rather than less capitalism.
Increased investments and loans can only improve the
situation there.

--- Countries with the most open economies and least
interference by government in the Southeast Asian region,
such as Singapore and Malaysia, are the most prosperous.
Making Mindanao more like these countries would improve the
lives of the Bangsamoro people.

--- Neither the Philippine political system nor some of the
people claiming to speak on behalf of the Bangsamoro people
have really addressed their aspirations and concerns.

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Views from the Audience
--------------


15. (SBU) The following key points were made by several
businessmen, a retired banker, an academic, and former GRP
official during the open forum:

--- Mindanao is currently divided into two areas -- a growth
area that includes Davao and Bukidnon and a conflict-affected
area that includes Sulu. Without strong GRP intervention in
the conflict-affected area, there will be a negative
spillover into the growth area and rest of the Philippines.

--- Four major factors inhibit investment in Mindanao --
lack of law and order, conflicting GRP land policies and
competing land claims, poor infrastructure, and local
poverty.

--- The excessive focus on religion in the dialogue on
Mindanao is a source of concern to bankers and businessmen.

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MBC Chairman Santos Accentuates the Positive
--------------


16. (SBU) In delivering the closing remarks for the forum,
MBC Chairman Antonio R. Santos Sr. highlighted the positive
aspects of Mindanao for potential investors:

--- Mindanao, which is located in the heart of the
Asia-Pacific Region, offers investment opportunities in
agri-business, industry and tourism.

--- Approval has been given for the establishment of an ARMM
Regional Economic Zone.

--- The peaceful election within the Autonomous Region of
Muslim Mindanao (ARMM) last August reflects that governance
is improving.

--- The Polloc Port in Maguindanao has the potential to
become a major international port.

--- Power projects are now being implemented in the region.

--- Agricultural products such as bananas, mangos, and
pineapple are being exported into foreign markets.

--- Seaweed products are shipped from the Sulu Archipelago to
Cebu via Zamboanga City.

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Comment
--------------


17. (C) With the unveiling of an Islamic Economic
Development Model at this Philippines Business Leaders Forum
-- which happened to coincide with a November 21-24
international conference in Jakarta, Indonesia on "Islamic
Economics and Banking in the 21st Century" -- MILF
religious/intellectual leaders have put the business
community on notice of their opposition to free wheeling
capitalism in post-conflict Mindanao. Implementing an
Islamic Model may prove to be easier said than done, however.
Christian leaders such as Zamboanga City Mayor Celso
Lobregat, along with such groups as the Concerned
Citizens-Activists for Development (CCAD),are firmly opposed
to the creation of any juridical entity that includes areas
outside of the ARMM (Maguindanao, Lanao Del Sur, Basilan,
Sulu, and Tawi-Tawi.) It also remains to be seen whether
there is a consensus regarding an Islamic Economic
Development Model between the MILF, factionalized MNLF, new
ARMM Administration under Zaldy Ampatuan, and leading Muslim
clans within the region. Nonetheless, businessmen,
government officials and the general public would do well to
bone up on Islamic economics, finance, and banking because
the debate over this alternative paradigm to capitalism and
communism is likely to intensify in the months ahead.

Visit Embassy Manila's Classified SIPRNET website:
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You can also access this site through the State Department's
Classified SIPRNET website:
http://www.state.sgov.gov/


Jones