VZCZCXRO9111
OO RUEHCHI RUEHDT RUEHHM
DE RUEHML #3098/01 2051054
ZNR UUUUU ZZH
O 241054Z JUL 06
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2149
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS PRIORITY
RHHMUNA/CDRUSPACOM HONOLULU HI PRIORITY

UNCLAS SECTION 01 OF 02 MANILA 003098 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM PINS SOCI PTER RP
SUBJECT: SONA 2006: ARROYO PROJECTS OPTIMISM, WANTS TO SPEND 
 
¶1.  (SBU)  Summary.  With a buoyant air and an unusual high 
tech power point presentation, President Arroyo laid out 
ambitious development goals for four new supra-regions in the 
Philippines during the remainder of her term, and asked all 
to achieve together a "prosperous and united" Philippines 
under this "pro-poor, pro-growth, pro-peace" policy.  She 
highlighted USG assistance, notably the Millennium Challenge 
Corporation's new program but also USAID assistance on 
trafficking in persons and overall military and developmental 
assistance that was transforming Mindanao.  She denounced 
extrajudicial killings and called for the culprits to be 
brought to justice.  In an apparent reference to a new 
impeachment effort, she said she was "game" for those who 
want to "pick up old fights."  She promised hundreds more 
Philippine citizens would soon be repatriated from Lebanon. 
Separately, the Senate, as expected, unanimously elected 
Manny Villar as its new president, replacing Frank Drilon. 
End Summary. 
 
¶2.  (U)  Amid heavy security, President Gloria Macapagal 
Arroyo gave her sixth State of the Nation Address (SONA) to a 
joint session of Congress on July 24.  She thanked all 
members who had made tough choices over the past year to 
legislate "critical fiscal reform" measures.  She cited 
increased tax revenue, 22 straight quarters of GDP growth, 
and lifting 20 million people out of poverty as special 
achievements in recent history.  While noting that she did 
not seek to discuss politics, she thanked the public for 
resisting "pathetic" calls to undermine the government and 
the Armed Forces of the Philippines and Philippine National 
Police for upholding the law and opposing "mutineers." 
 
¶3.  (U)  The centerpiece of her high tech, powerpoint speech 
was an ambitious and lengthy rundown of major new 
infrastructure initiatives in four new super-regions: 
Northern Luzon (agribusiness); Metro Manila (urban and 
commercial modernization); Central Philippines (tourism); 
and, Mindanao (natural resources and agribusiness).  In 
addition, she described a new "cybercorridor" from Baguio to 
Cebu.  She indicated that she would like to see the 
completion of most projects by the end of her term in 2010, 
but did not provide details about funding or budget 
priorities, nor did she specifically call on Congress to pass 
the 2006 or 2007 budgets. 
 
¶4.  (U)  While acknowledging that the Philippines "deserved a 
world-class Constitution," she sidestepped last year's 
advocacy for charter change, apart from repeatedly 
acknowledging the important role of Local Government Units 
and the need for them to have more resources and authority. 
She denounced extrajudicial killings, underscoring that the 
Philippines had ended judicial killings with the abolition of 
the death penalty in 2006, and urged that eyewitnesses come 
forward to ensure that those responsible for EJKs face 
justice.  To the consternation of many commentators after the 
fact, she nonetheless singled out for an ovation General 
Jovito Palparan, the serving AFP flag officer most personally 
associated in the public mind and media accounts with alleged 
EJKs by security forces.  She made a one-sentence call for 
electoral reform, primarily through automation.  In an 
apparent reference to a new impeachment effort, she said she 
was "game" for those who want to "pick up old fights," but 
she called instead to join hands, warning that the "survival 
of our country" could be at stake. 
 
¶5.  (U)  Early in her remarks, President Arroyo acknowledged 
the $21 million grant from the Millennium Challenge 
Corporation to fight corruption, adding that her government 
will match the grant.  She excoriated human trafficking, 
while noting USAID assistance had led to the successful 
convictions of traffickers here in the Philippines and helped 
ensure that the Philippines was no longer on the USG's 
"priority watch list."  She also presented other examples of 
successful USG assistance, such as the successful Balikitan 
exercises in Basilan and Jolo and the "Arms to Farms" 
program, along with thanking other international donors. 
 
¶6.  (U)  The President touched an emotional chord when she 
described the government's efforts to help Overseas Filipino 
Workers in Lebanon, and reported that another 500 would be 
repatriated in the next four days (on top of the 232 who 
returned over the weekend). 
 
¶7.  (U)  Heavy rains may have deterred a larger turnout, but 
about 5,000 to 8,000 demonstrators -- described by 
eyewitnesses as "bedraggled and disheartened" -- were present 
on the streets near the Congressional compound in Quezon 
City, well guarded by an estimated 16,000 police and security 
forces.  There were no reported incidents.  There were also 
numerous groups, apparently representing Local Government 
Units, cheering the President and holding banners of support. 
 
MANILA 00003098  002 OF 002 
 
 
 
 
¶8.  (U)  Earlier in the day, the Senate had formally convened 
its third session in the 13th Congress.  As expected, Senate 
President Franklin Drilon, honoring what he admitted was &a 
gentleman's agreement,8 relinquished his presidency 
&without rancor or bitterness8 and subsequently nominated 
Senator Manuel &Manny8 B. Villar, Jr. as the new president. 
 In a sign of bipartisan support, pro-Administration Senator 
Pilar Juliana Cayetano and Opposition Senator Jinggoy Estrada 
seconded the nomination.  Without other nominations, Villar 
was elected by acclaim.  (Not since 1953 has a former Speaker 
of the House -- Villar,s term was 1998-2000 -- become Senate 
President.)  Senator Panfilo Lacson asked, however, how the 
Senate could now be divided into Majority and Minority sides 
since the entire Senate had voted for the same president; his 
inquiry was referred to the Committee on Rules. 
 
¶9.  (SBU)  Comment:  The contrast to the 2005 SONA, in the 
midst of the President's political nadir and fight for 
survival, was striking.  This year, the President was 
buoyant, seemingly brimming with confidence, and boldly 
optimistic in her vision for the Philippines.  She was 
nonetheless thin on specific legislative priorities, apart 
from support for a biofuels bill and calls for adequate funds 
for electoral change and for stamping out "corruption and 
terrorism."  She did not, unfortunately, reiterate her 
Administration's support for counterterrorism legislation now 
awaiting Senate consideration. 
Kenney