SCENESETTER FOR ADMIRAL WILLARD'S VISIT TO THE

C O N F I D E N T I A L SECTION 01 OF 03 MANILA 001443

SIPDIS

STATE FOR EAP/MTS
USPACOM ALSO FOR FPA
SECDEF/OSD/ISA/AP FOR TOLAN

E.O. 12958: DECL: 06/16/2018
TAGS: MARR MOPS PINS PREL PTER RP
SUBJECT: SCENESETTER FOR ADMIRAL WILLARD'S VISIT TO THE
PHILIPPINES

Classified By: Ambassador Kristie A. Kenney for reasons 1.4 (b)
and (d)


1. (SBU) SUMMARY: Admiral Willard, welcome back to the
Philippines! President Arroyo maintains her strong political
position, in part due to positive economic growth. The
Philippine Armed Forces continue to score successes against
terrorists in the southern Philippines, while supporting the
Philippine government's efforts to make peace with Muslim
insurgents. Philippine Defense Secretary Teodoro has taken
active control of defense reform, with positive results. On
May 12, 2008, General Alexander Yano became the 38th Chief of
Staff of the Philippine Armed Services. During your visit
you will have lunch with the Ambassador, be briefed by the
Mission Country Team, and meet Philippine Armed Forces Vice
Chief of Staff General Cardoza Luna and the Philippine Navy
Flag Officer in Command ADM Rogelio Calunsag. END SUMMARY.

--------------
MILITARY ENGAGEMENT
--------------


2. (C) As you know, the total number of yearly ships visits
has significantly increased -- from 56 in 2006 to 81 in 2007
-- and we anticipate in excess of 100 ship visits this year.
The positive impact of these ship visits and the associated
community relations activities on the ports and neighboring
areas garner immense goodwill among the local populace.
Prior to your arrival, the USNS MERCY made a highly
successful humanitarian visit to the Philippines from May 29
to June 17. In preparation for the USNS MERCY visit, the
Mission worked seamlessly over the past several months with
PACOM personnel and engaged with various Philippine
ministries, provincial officials, and local leaders to ensure
a successful and productive visit. In addition, the
Ambassador and DCM traveled to areas in Mindanao to
participate in various MERCY sponsored events. During her
visit, the USNS MERCY treated more than 26,000 patients and
performed almost 400 surgeries.

--------------
PHILIPPINE POLITICS
--------------


3. (C) The Philippine political environment is chronically
unsettled, but President Arroyo's administration has
successfully weathered several scandals. Arroyo retains a
firm grip on the House of Representatives and can also rely
on the support of a large majority of provincial governors
and local mayors. Her relationship with top security
officials likewise remains strong, and military and police
personnel have largely kept out of political debates and
stayed focused on their security roles. While there have
been some demonstrations, there has yet to be any mass
support for regime change along the lines of Philippine
"people power" movements of the past and President Arroyo
remains poised to finish her term in 2010.


--------------
ECONOMICS AND TRADE
--------------


4. (C) Philippine GDP grew by 7.3% in 2007, the fastest pace
of growth in over three decades. Growth was fueled by
increased government and rivate construction expenditures, a
robust inforation communications technology industry;
improvd agricultural harvests; and strong private
consmption, spurred in part by $14.4 billion in remittaces
from overseas workers (equivalent to about 11% of GDP). GDP
growth is expected to slow in 2008, but still reach between
5-6%. The main engine of growth will be private consumption.
President Arroyo has an impressive reform agenda --
privatize the electric power sector, build infrastructure,
increase education funding, and reduce business red tape --
but still faces significant hurdles, particularly in
improving the investment climate. The U.S. remains the
Philippines' largest trading partner, with over $17.1 billion
in two-way merchandise trade in 2007.

-------------- --------------

MANILA 00001443 002 OF 003


MINDANAO: SECURITY, THE PEACE PROCESS, AND COUNTER TERRORISM
-------------- --------------


5. (C) Military and law enforcement forces continue to
achieve important successes in the counterterrorism efforts,
which have resulted in the death or capture of eight key
terrorist leaders and over 200 other terrorism suspects since
August 2006, including the deaths of Abu Sayyaf Group leaders
Khadaffy Janjalani and Abu Solaiman. Recently, Philippine
Forces mounted a surgical strike against a known terrorist
camp in Jolo that had served as a safe haven for Abu Sayyaf
Group and Jemaah Islamiyah (JI) members for almost two years.
Philippine forces also scored a confirmed hit against JI
when they arrested the bomb maker Latif in Mindanao in
February.


6. (C) While the Arroyo administration frequently reiterates
its commitment to the peace process, and a ceasefire seems to
be holding in most conflict-affected areas, negotiations have
been stalled since December for an agreement on territory,
governance, and resources. President Arroyo's cabinet
continues to seek a workable constitutional formula for
incorporation of these issues into a territorial agreement;
some cabinet members fear that signing an agreement not
bounded by the constitution might risk impeachment
proceedings against Arroyo. Muslim insurgents in the
southern Philippines will not consider demobilizing and
disarming until a permanent peace agreement is in place.


7. (C) Lack of progress in the peace process has
implications for U.S. counterterrorism strategy in the
region, which focuses on separating the small numbers of
terrorists primarily associated with the Abu Sayyaf Group
(ASG) and Jemaah Islamiyah (JI) from other Muslim insurgents
in the southern Philippines who seek only autonomy from
Manila. Thirty-nine years after its founding as the armed
wing of the Philippine Communist Party, the 5,000-strong New
People's Army (NPA) continues to disrupt public security and
business operations with frequent strikes throughout the
Philippines on foreign investments and communications and
transportation infrastructure, funding their operations
through broad-scale extortion rings. The NPA has declined
President Arroyo's broad amnesty overtures, refusing to
negotiate unless and until its international designation as a
terrorist organization is rescinded.

--------------
PHILIPPINE DEFENSE REFORM
--------------


8. (C) In an encouraging sign of deepening support for the
ongoing armed forces overhaul, Secretary of National Defense
Gilberto Teodoro took personal control of Philippine Defense
Reform last November, and the Philippine government plans to
spend about USD 100 million annually through 2012 to fund
defense reform initiatives. To date, the Philippines has
spent over $400 million on defense reform, including $28
million to match U.S. foreign military financing. Teodoro is
personally involved in the process down to the working level,
and is currently putting his own personnel into key positions
of authority.

--------------
UNLAWFUL/EXTRAJUDICIAL KILLINGS
--------------


9. (C) Extrajudicial killings remain one of the thorniest
issues for the Arroyo administration, with critics charging
that rogue elements of the Philippine police and military are
responsible for the killings. President Arroyo has spoken
out consistently and strongly on the issue and has taken a
variety of steps to address the problem, such as the creation
of -- or strengthening of existing -- government task forces
and commissions. By the end of 2007, these steps, as well as
intensified domestic and international attention to the
problem, appeared to have had a measurable impact, with
government agencies and human rights NGOs reporting a
significant decline in the number of extrajudicial killings
during the year. The Embassy carefully vets all proposed
military and law enforcement personnel about to receive
U.S.-funded training both internally and with relevant

MANILA 00001443 003 OF 003


Philippine authorities to comply with the terms of the Leahy
Amendments.

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

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

KENNEY