SCENESETTER FOR BG TOOLAN'S VISIT TO THE

C O N F I D E N T I A L SECTION 01 OF 03 MANILA 000592 SIPDIS SIPDIS STATE FOR EAP/MTS OSD/ISA FOR TOOLAN E.O. 12958: DECL: 03/06/2018 TAGS: MARR MOPS PINS PREL PTER RP SUBJECT: SCENESETTER FOR BG TOOLAN'S VISIT TO THE PHILIPPINES Classified By: Ambassador Kristie A. Kenney, reasons 1.4 (b) and (d). ¶1. (SBU) Summary: Brigadier General Toolan, welcome back to the Philippines! You will find the POLITICAL atmosphere in the usual state of ferment, with President Arroyo still in firm control, in part due to continued strong economic growth. U.S. and Philippine military personnel just concluded a successful Balikatan exercise that drew some opposition but no significant incidents. 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 and Chief of Staff General Esperon are taking more active control of defense reform, with positive results. The Joint Special Operations Task Force-Philippines coordinates closely in the overall USG counterterrorism and development programs. During your visit, you will meet Philippine civilian and military leaders and visit Philippine Forces we are assisting to build counterterrorism capacity. End Summary. -------------- BALIKATAN A SUCCESS -------------- ¶2. (C) We recently completed our Balikatan joint military exercises with the Philippine Armed Forces. The exercise went smoothly, despite a vocal minority of POLITICAL and social leaders who sought to gain POLITICAL capital by mischaracterizing Balikatan as a hostile military exercise aimed at the people of Mindanao. Our Embassy elements mounted a quick and effective response, countering misperceptions in the southern Philippines by engaging a wide array of politicians, community leaders, and individuals involved in the peace process. Throughout Balikatan, there were no significant demonstrations or security incidents at any of the Balikatan sites on Mindanao or elsewhere, and I received a very warm welcome at the medical civil action event I attended on Jolo February 19. Elsewhere in the Philippines, field training and staff exercises went very well, and during his visit to a remote area of southern Palawan, the DCM was impressed by the excellent work our Marines did rebuilding a school and conducting medical events. PHILIPPINE POLITICS -------------- ¶3. (SBU) Philippine politics remains unsettled, with President Gloria Arroyo's administration facing renewed charges of corruption. Still, she retains a firm grip on the House of Representatives, where she orchestrated the removal of the former Speaker of the House in favor of another political ally, and can still count on the support of a large majority of provincial governors and local mayors. Her relationship with top security officials also remains strong, as evidenced by their recent reminders to military and police personnel to stay out of POLITICAL debates and stay focused on their security roles. Moreover, the public may be suffering from scandal fatigue, as there has not yet been strong mass support for regime change in the vein of the "people power" movements of the past. ECONOMICS AND TRADE -------------- ¶4. (SBU) The Philippine economy grew over 7 percent in 2007, the strongest expansion in three decades, and the third consecutive year of growth above 5 percent. Unemployment and inflation are down and government revenues are up, even in the face of rising fuel prices, continued corruption allegations, terrorist bombings, and POLITICAL tumult. President Arroyo has an impressive reform agenda -- privatized power generation, build infrastructure, increase education funding, and reduce business red tape -- but still faces significant hurdles, particularly in improving the investment climate. There is also considerable concern over the impact of a slowdown in U.S. economic growth, as the U.S. remains one of the Philippines' largest trading partners, with over $17.3 billion in two-way merchandise trade, and one of the largest investors, with $6.6 billion in equity. MANILA 00000592 002 OF 003 MINDANAO: SECURITY AND THE PEACE PROCESS -------------- ¶5. (C) Military and law enforcement forces continue to achieve important successes in the counterterrorism efforts, which the government said have resulted in the death or capture of 7 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. The Philippine Armed Forces recently recovered the suspected remains of Bali bomber and Jemaah Islamiyah leader Dulmatin. FBI agents are assisting Philippine National Police in the forensic examinations and DNA analysis, which could take several weeks. Whatever the outcome of the DNA tests, it will be important to ensure that the Philippine government has the opportunity to announce the results first, given their command of the antiterrorism efforts here. Separately, Philippine forces also scored a confirmed hit against Jemaah Islamiyah when they arrested Jemaah Islamiyah member Latif in Mindanao. ¶6. (SBU) The government continues its efforts to work out a comprehensive peace agreement with the insurgent Moro Islamic Liberation Front (MILF),even as it seeks to fully implement its 1996 deal with the Moro National Liberation Front (MNLF). While progress on both tracks is fitful, a peace deal this year with the MILF still appears a viable possibility, though difficult negotiations on governance and revenue sharing remain. It is clear from my discussions with both government and insurgent leaders that all sides recognize the importance of an enduring peace for the long-term prosperity of Mindanao. PHILIPPINE DEFENSE REFORM -------------- ¶7. (SBU) The Armed Forces of the Philippines remain heavily engaged in combating internal security threats while continuing to enhance their limited external defense capabilities. Secretary of National Defense Gilberto Teodoro has taken personal control of Philippine Defense Reform, and the Philippine government plans to spend about USD 100 million annually through 2012 funding defense reform initiatives. The Philippines is already realizing positive effects from these efforts including improved operational readiness through better maintenance. At the same time, they have promoted transparency in their procurement system, which has allowed them to expand their combat capability. Last November, the Philippines made their initial deposit of $11.2 million for a $91 million purchase of more than 8,000 Harris radios through the Philippines single largest Foreign Military Sales case. We are working to ensure the AFP pays its second installment due on March 15, after which the tranche of over 900 radios will be delivered to the Philippine military. Long term, the defense reform program will modernize 72 Philippine Army and 12 Philippine Marine Corps battalions over the next six years. COMBATING EXTRAJUDICIAL KILLINGS -------------- ¶8. (SBU) Extrajudicial killings remain one of the thorniest issues for the Arroyo administration, with critics charging that rogue elements of the Philippine military are responsible for some politically-motivated killings. President Arroyo has spoken out consistently and strongly on the issue, including during the State of the Union address, 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. New U.S. assistance to government and NGOs has helped build capacity to address the problem. 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. ¶9. (U) The Embassy carefully vets all proposed military and law enforcement candidates for U.S.-funded training, both internally and with relevant Philippine authorities to comply with the terms of the Leahy Amendments. THEMES: MANILA 00000592 003 OF 003 KEEP UP PDR, COUNTERTERRORISM FIGHT, AND RULE OF LAW -------------- -------------- ¶10. (SBU) In your meetings with Philippine officials, you may want to draw on the following themes: -- Philippine Defense Reform is transforming the Armed Forces of the Philippines into a more modern, capable force. We are proud to be partners in this program. -- Impressed by your large-scale commitment to purchase 8,375 Harris radios. Now, critical to adhere to contractual deadlines for payments so we can keep equipment flowing. -- The Philippines is a strong and valued partner in counterterrorism efforts. -- Congratulations on recent successes in the fight against terrorists, and commendations to those brave Filipinos who provided information leading to these successful military operations. -- We are committed to helping sustain the momentum in Philippine counterterrorism efforts by assisting with military and humanitarian offensives. -- We are following the peace process with great interest as it moves forward. We fully support the government's desire for a durable peace agreement. We believe it is important to keep open communications with those willing to discuss peace. -- We take the issue of extra-judicial killings seriously. Suspects need to be apprehended and tried. We are encouraged by steps the Philippine government has taken to eliminate this problem, and we support the ongoing efforts to promote a culture of democratic security that protects everyone. Visit Embassy Manila's Classified website: http://www.state.sgov.gov/p/eap/manila/index. cfm KENNEY