SCENESETTER FOR BG CROWE'S VISIT TO THE

C O N F I D E N T I A L SECTION 01 OF 03 MANILA 002355

SIPDIS

STATE FOR EAP/MTS

E.O. 12958: DECL: 10/10/2018
TAGS: MARR MOPS PINS PREL PTER RP
SUBJECT: SCENESETTER FOR BG CROWE'S VISIT TO THE
PHILIPPINES

Classified By: CDA Paul W. Jones, reasons 1.4 (b) and (d)


1. (C) SUMMARY: Welcome to the Philippines! You are coming to
the Philippines at an important time. Our bilateral
engagement remains strong with the Talon Vision/PHIBLEX
exercise ongoing during your visit. With U.S. support, the
Armed Forces of the Philippines continues to score successes
against terrorists in the southern Philippines, even as it
reforms itself and controls extrajudicial killings. The
Philippine government remains committed to a peace process
with the Moro Islamic Liberation Front (MILF),despite the
Supreme Court's ruling October 14 that a proposed territorial
agreement was unconstitutional and attacks by rogue MILF
commanders on civilians in Central Mindanao in August. The
Philippine Armed Forces have scored significant military
successes against the MILF fighters, driving them from
villages they had illegally occupied, but the violence has
given critics an opportunity to scrutinize the situation in
Mindanao, including the presence of U.S. troops. The renewed
focus on U.S. military engagement resulted in large part from
Supreme Court hearings on custody of Marine LCpl Daniel
Smith, which turned into a broader discussion of the Visiting
Forces Agreement. During your visit, you will be briefed by
the Mission Country Team and meet with Philippine officials.
You will fly to Zamboanga and spend three days with U.S.
Joint Special Operations Task Force-Philippines personnel in
Mindanao and the Sulu Archipelago and also visit the American
Cemetery upon returning to Manila. END SUMMARY.

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PHILIPPINES POLITICS
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2. (C) President Gloria Macapagal Arroyo is a forceful
politician who has faced a series of challenges to her rule
-- including unsuccessful impeachment efforts and low-level
military coup attempts -- and continues to walk a tight-rope
of initiating political reform while battling economic
challenges. The President's political position improved last
year after elections gave her allies a large majority in the
House of Representatives, decreasing any real impeachment
threat. However, opponents continue to agitate in the
Congress and filed yet another impeachment complaint against
Arroyo -- the fourth in as many years -- on October 13.
Arroyo's term ends in 2010, and while several senators
actively seek to weaken Arroyo, most are loathe to have her
impeached, lest it strengthen the hand of Vice President Noli
de Castro, who has made his intent to run for the presidency
no secret.

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PEACE PROCESS ON HOLD
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3. (C) President Arroyo's determined efforts to achieve peace
in Mindanao suffered a major setback October 14, when the
Supreme Court found the proposed memorandum of agreement on
ancestral domain between the Philippine government and Moro
Islamic Liberation Front (MILF) unconstitutional. The
Supreme Court had issued a temporary restraining order
against the signing of the agreement on August 4, sparking a
series of attacks -- in violation of the ceasefire agreement
-- by rogue MILF elements in several communities in central
Mindanao in August. The attacks, and subsequent fighting
with the military, have killed over 100 and displaced tens of
thousands of civilians. The Philippine military has
responded decisively but with discipline, as evidenced by a
relative lack of human rights complaints. The search for the
MILF rebel commanders continues, and the government is
offering significant rewards for their capture. The
effectiveness of the Philippine forces has degraded the
MILF's military capability, and the civilian casualties has
led to a public and political backlash against the MILF.


4. (C) The peace process remains stalled, but our wide
soundings indicate that the government and top MILF
leadership are committed to negotiations, if unsure of the
exact way forward. Current government efforts are focused on
carrying out basic discussions with key stakeholders in
Mindanao, including Muslim and Christian religious leaders
and groups, key national and provincial political figures,
and civic and peace organizations. Both the government and
MILF appear to have lost confidence in Malaysia's
effectiveness as facilitator in the peace process and the
international monitoring team that overseas the ongoing
ceasefire, but Malaysia's role remains intact for now, as

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there is great sensitivity to any further
internationalization of the conflict. Embassy officials
continue to underscore that a peaceful Mindanao is essential
for a prosperous, unified Philippines, and that it is vital
for the Philippine government and MILF to return as quickly
as possible to the negotiating table, but that it is for
Filipinos to determine the shape and terms of the peace
accord.

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COUNTERTERRORISM SUCCESSES
--------------


5. (C) Military forces and law enforcement officials
continue to achieve important successes in counterterrorism
efforts, with eight key terrorist leaders and over 200 other
terrorism suspects killed or captured in the Philippines
since August 2006. The U.S. counterterrorism strategy
focuses on offering development opportunities in areas where
the population is prone to terrorist recruitment, while
separating the small numbers of terrorists primarily
associated with the Abu Sayyaf Group and Jemaah Islamiyah
from Muslim insurgents in the southern Philippines.
Separately, the 5,000-strong Communist New People's Army
(NPA) continues to disrupt public security and business
operations with intermittent attacks throughout the
Philippines, targeting foreign companies, communications
networks, and transportation infrastructures. While the NPA
continues to decline in personnel and effectiveness, it
remains steadfast in its refusal to accept President Arroyo's
broad amnesty overtures, turning down offers to negotiate
unless its international designation as a terrorist
organization is rescinded.

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CONTINUED ENGAGEMENT, QUESTIONS ON RELATIONSHIP
-------------- --


6. (C) Defense Secretary Teodoro and the other senior AFP
officials remain strong allies on bilateral military
cooperation, and we expect you will have very positive
discussions here regarding our excellent cooperation on
Philippine defense reform and JSOTF's superb support for
their AFP counterparts. The demands on the Philippine
military and renewed scrutiny of our military presence have
led Secretary Teodoro to scale back some recent bilateral
activities. Talon/Phiblex exercises are underway, and we
expect a continued increase in joint exercises and ship
visits. Currently, the list of activities approved by our
two governments consists of more than 200 joint bilateral
military events.


7. (C) Secretary Teodoro is a staunch advocate of rapid
reform (the Philippines spent nearly $250 million on PDR last
year),and in his usual hands-on style, he recently postponed
the annual Philippine Defense Reform review slated for
October, as he was dissatisfied with the level of preparation
by his team. Philippine defense purchases from the U.S.
include more than 8,000 Harris radios, upgrades to existing
helicopters, and radar stations as part of the Coast Watch
South initiative in the southern Philippines.

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VFA COMES UNDER SCRUTINY
--------------


8. (C) The Visiting Forces Agreement (VFA) has come under
renewed scrutiny as a joint Congressional VFA oversight
committee held a hearing late last month to investigate
allegations that U.S. military forces in Mindanao were
violating the VFA. Leftist organizations presented a
negative picture of U.S. involvement in Mindanao, complaining
about a permanent U.S. military presence and involvement in
combat operations against Muslim insurgents. At this hearing
and at a followup discussion on October 2 in Zamboanga, key
Philippine officials from every branch of government strongly
rebutted the allegations and underscored the value of
significant U.S. security and development assistance their
areas receive. The intense focus on the VFA, along with a
flurry of media articles contending that the U.S. seeks a
permanent military presence here -- or even an independent
Mindanao -- underscore the sensitivity surrounding the
U.S.-Philippine military relationship at this time, and these
issues will continue surface at regular intervals. All
Mission elements continue to emphasize both in high-level
discussions and public comments that the U.S. has no interest

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in bases or a permanent military presence in the Philippines.


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HUMAN RIGHTS: COMBATING EXTRA-JUDICIAL KILLINGS
-------------- --


9. (C) President Arroyo consistently has expressed her
commitment to resolving the complex and longstanding problem
of extrajudicial killings and has taken steps in this
direction. With increased domestic and international
pressure, the number of extrajudicial killings decreased
dramatically in 2007 and 2008, but more still needs to be
done. While many of these deaths and disappearances are more
likely attributable to local disputes than to military or
police action, it is clear that the government needs to do
more to ensure that these crimes are fully investigated and
that responsible parties -- whether or not they are connected
to military or police -- are brought to justice. The problem
is closely related to a judicial system which is inefficient
and strained beyond its capacity. The government has
responded with a police task force to investigate the
killings, and the government also rejuvenated the
Presidential Committee on Human Rights, established an Armed
Forces Human Rights office to investigate allegations, and
allocated additional funding for the Commission on Human
Rights. The U.S. has supported all of these activities with
training, assistance, and expert exchanges.

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ECONOMICS AND TRADE
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10. (U) The U.S. is the Philippines' largest trading partner,
with over $17 billion in two-way trade in 2007. The U.S. is
also the largest investor here, with $6.6 billion in equity.
After topping 7 percent in 2007, Philippine gross domestic
product (GDP) growth is expected to slow in 2008, to around 5
percent. Despite the current U.S. financial downturn, firms
here announced that their exposure to troubled U.S. firms was
limited and that the banking sector was sound. Coupled with
a resilient service sector and strong overseas workers
remittances (expected to hit $16 billion in 2008, more than
11 percent of Philippine GDP),the Philippine economy appears
to be on relatively solid footing.
JONES