SCENESETTER FOR VISIT OF DIRECTOR GENERAL

1. (SBU) We warmly welcome your visit to the Philippines. The
relationship between our two nations is deep and complex, and our
partnership addressing a host of common issues has many faces. The
U.S. is the Philippines' largest trading partner, the largest
investor, and the largest donor of grant foreign assistance. During
your visit, you will meet with Philippine Department of Foreign
Affairs officials, observe American business in the Philippines, and
meet with Embassy staff and family members. Our entire team looks
forward to making your visit productive and interesting.



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BACKGROUND


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2. (U) The Philippines, with almost 90 million people, has one of
the fastest-growing populations in Asia. Metro Manila, home to at
least 12 million people, is the largest city in a country made up of
over 7,000 mainly mountainous islands. Literacy (94%) remains high,
although the standard of public education and other government
services has declined in recent decades. Filipinos are mainly Roman
Catholic (83%) or otherwise Christian (10%) with a Muslim minority
(6%) largely concentrated on the southern island of Mindanao. The
glittering high rises and high-end shops of the Makati, Ortigas and
Ft. Bonifacio districts belie the fact that approximately 38 percent
of Filipinos earn less than $2 per day.



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PHILIPPINE POLITICS


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3. (SBU) Philippine politics remains unpredictable, with President
Gloria Arroyo's administration facing renewed charges of corruption
from a loose coalition of opportunist political opponents (and
others with personal aspirations for high office), portions of the
business community and civil society, and left-wing activist groups.
Still, she retains a firm grip on the politically key House of
Representatives, effectively checkmating any impeachment attempt,
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. In general, the
broad public may be suffering from scandal fatigue since repeated
calls for the President's resignation have not mobilized sustained
mass support for regime change in the vein of the "people power"
movements of the past.



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ECONOMICS AND TRADE


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4. (SBU) The Philippine economy continues to perform well with
growth of over 7 percent in 2007, the strongest expansion in three
decades. 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 maintains an impressive reform agenda - to
privatize the electric sector, build infrastructure, increase
education funding, and reduce business red tape - but still faces
significant hurdles, particularly in improving the investment
climate, largely due to the powerful influence of an entrenched
elite of traditional business families that see little benefit for
themselves in opening the nation's economy. There is also
considerable concern over the impact of a slowdown in U.S. economic
growth, as the U.S. remains the Philippines' largest trading partner
with over $17.3 billion in two-way merchandise trade and as their
largest investor with $6.6 billion in equity.



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COUNTERTERRORISM


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5. (SBU) Three U.S.-designated terrorist organizations are active
and dangerous in the Philippines, despite significant military
success against them over the past two years. Parts of Muslim
Mindanao remain a sanctuary for terrorists, who are responsible for
bombings in the Philippines and Indonesia and kidnapping and killing
of Americans, Filipinos and others. A Joint U.S. Special Operations
Task Force (JSOTF-P) of several hundred personnel provides direct
support to the Philippine Armed Forces in Mindanao, sharing
intelligence, advice, and assistance while carefully avoiding any
involvement in combat operations, which is forbidden by Philippine
law. The major thrust of U.S. development assistance is focused in
conflict-affected areas of Mindanao through USAID to help reduce
support for terrorists. The Philippine military has undertaken
successful programs to help separate local populations from
insurgents through extensive civil-military and humanitarian
activities. Separately, the New People's Army of the Communist

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Party continues to extort, bomb, and attack remote police and
military outposts.



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MISSION MANAGEMENT HIGHLIGHTS


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6. (U) The Mission enjoys the active inter-agency participation of
27 USG agencies comprised of 315 U.S. direct hire positions (75 of
whom, or more than 20%, are first or second tour officers), 1085
locally engaged staff, and 42 eligible family member employees.
Completing our Mission are 450 family members. Three families are
currently residing in Manila while their State spouses have
volunteered for long term temporary duties in Iraq or Pakistan this
year.



7. (U) Transition plans are being formulated to address extremely
high levels of projected local staff turnover due to retirement and
immigration over the next five years. This attrition also provides
an opportunity to recruit tech-savvy staff who will help us find new
solutions to management challenges. It will also dovetail with
efforts to execute a long range plan for multi-agency administrative
support service consolidation that is designed to create a common
service platform. Completion of OBO construction of three new
office annex buildings by 2012 will also consolidate virtually all
USG staff on two compounds.



8. (U) Last year, the Mission inaugurated a Professional
Development Center (PDC) to use limited training funds to bring more
training opportunities to Manila from FSI, the regional training
center in Bangkok, and through a Post train the trainer program.
The initiative has been well received, with over 260 employees
benefiting from training in Manila in 2007 and the focused course
load is on track to expand to 35-40 courses and 300 more personnel
in 2008. Manila's demand for long-term training is also evident as
this Mission is also the largest overseas user of FSI distance
learning courses.



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YOUR PROGRAM


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9. (U) Post has a variety of activities and meetings planned for
you beginning Monday, March 24. The Ambassador will lead a Mission
Briefing at the Chancery, followed by a discussion with senior
Mission officials on effective leadership in times of crisis, with
particular focus on handling staff morale and resources. Post
invites you to deliver remarks at a town hall meeting of Mission
personnel. The Acting Consul General will then give you a tour of
the Consular Section, to be followed by an informal lunch with
Foreign Service Specialists, who will be interested in issues
relating to specialists and regional activities. Subsequently, the
Embassy's local employee association will offer a presentation on
its activities, followed by a briefing from the Human Resources
Office on Manila's brain-drain, succession planning and EFM/MOH
employment program. Beyond the Mission compound, the Philippine
Foreign Service Institute will welcome you to learn about its
process of selecting and training Filipino Foreign Service Officers.
Our regional USG publishing center, Global Publishing Solutions,
will provide a tour of its facilities and an explanation of its
operations. The Ambassador will host a reception for you with
Embassy spouses. We have also organized a visit to one of Dell
International's newest and largest call centers, for a glimpse of
the inner workings of a dynamic American company conducting
innovative human capital-intensive operations here.

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