VZCZCXRO4016
OO RUEHCHI RUEHDT RUEHHM
DE RUEHML #3472/01 2300758
ZNR UUUUU ZZH
O 180758Z AUG 06
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2558
INFO RUCPDOC/USDOC WASHDC IMMEDIATE
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS IMMEDIATE
RHHMUNA/CDRUSPACOM HONOLULU HI
RUEKJCS/SECDEF WASHDC

UNCLAS SECTION 01 OF 02 MANILA 003472 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR H, EAP/MTS, EB/CIP 
STATE PASS USTR 
USDOC FOR 4430 ITA/MAC/ASIA 
 
E.O. 12958: N/A 
TAGS: ETRD EAID PREL SCUL OREP KPAO RP
SUBJECT: CODEL HYDE DISCUSSES ECONOMY AND COUNTER-TERRORISM 
ASSISTANCE WITH PRESIDENT ARROYO 
 
REF: MANILA 03401 
 
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION - PROTECT 
ACCORDINGLY 
 
¶1.  (SBU) Summary.  Chairman of the House International Relations 
Committee Henry Hyde and members of his delegation met with 
President Arroyo and senior GRP officials over dinner August 12. 
They discussed the improving economy; a potential U.S.-Philippine 
FTA; plans for the Philippine chairmanship of ASEAN; a Philippine 
suggestion for a counter-terrorism summit at APEC; and, Burma. 
President Arroyo expressed deep appreciation for ongoing U.S. 
development, humanitarian, and military assistance to fight 
terrorism in Mindanao.  Philippine House Speaker de Venecia noted 
that the Philippines was making no new requests for assistance, now 
that President Arroyo had put the government on a sound financial 
footing.  President Arroyo said the Philippines only sought a strong 
partnership with the U.S.  End Summary. 
 
¶2.  (U) Chairman of the House International Relations Committee 
Henry Hyde and Congressmen Dana Rohrabacher, Eni Faleomavaega, 
Melvin Watt, and Jeff Flake, accompanied by Mrs. Watt, Mrs. Flake, 
Congressional staff, Charge and Emboff, met with President Gloria 
Macapagal Arroyo over dinner at Malacanang Palace on August 12. 
Joining the President were Executive Secretary Eduardo Ermita, House 
Speaker Jose de Venecia, Secretary of Defense Avelino Cruz, Acting 
Secretary of Foreign Affairs Franklin Ebdalin, and DFA Assistant 
 
SIPDIS 
Secretary for the Americas Rey Carandang. 
 
SIPDIS 
 
----------------------------- 
Appreciation for U.S. Support 
----------------------------- 
 
¶3.  (SBU) President Arroyo expressed her government's deep 
appreciation for U.S. support, particularly for the programs 
implemented by the Joint Special Operations Task Force and USAID in 
Mindanao, as well as for Philippine defense reform.  With U.S. 
assistance, economic development is underway even in conflict areas 
such as Jolo and Basilan islands, she remarked, and the joint 
U.S.-Philippine Balikatan training exercises are resounding 
successes (REFTEL).  Praising the enormously positive impact of the 
visit of the U.S. Hospital ship Mercy, the President added that she 
is looking for a way to convert her Presidential yacht for medical 
missions to Mindanao. 
 
--------------------- 
ASEAN and APEC Issues 
--------------------- 
 
¶4.  (SBU) President Arroyo described the Philippines' new role as 
chair of ASEAN and host of the next ASEAN+3 meeting, East Asia 
Summit, and the ASEAN summit meeting in Cebu this December. 
Congressman Rohrabacher expressed concerns about engaging in free 
trade with countries with non-democratic regimes and human rights 
issues, including China, Burma, and Vietnam.  The President said 
that as the oldest democratic ally of the U.S. in Asia, the 
Philippines would support democratic reform in these countries.  The 
President and Speaker de Venecia noted that the ASEAN+3 meeting 
could be an opportunity to bring China, Japan, and Korea together to 
discuss trade and human rights.  President Arroyo proposed a broad 
counter-terrorism summit of Asian leaders, which could perhaps 
coincide with the next APEC meeting. 
 
¶5.  (SBU) Congressman Rohrabacher expressed concern that Burma's 
military regime would use the ongoing visit of Philippine Secretary 
of Foreign Affairs Alberto Romulo as an opportunity to gain 
credibility.  President Arroyo recounted how she broke with ASEAN to 
support reporting Burma to the UN Security Council, and assured the 
Congressmen that Romulo would take a tough line with Burma, pushing 
for democratic reform and the release of Aung San Suu Kyi. 
 
---------------------------- 
Philippine Economy Improving 
---------------------------- 
 
¶6.  (SBU) In a lively presentation, President Arroyo explained how 
her fiscal reforms are allowing the GRP to repay its debt early, 
balance its budget by 2008, and invest in critical infrastructure to 
boost the economy.  Speaker de Venecia noted that the Philippines 
was not requesting additional assistance from the USG due to the 
President's successful economic reforms.  The President said that 
the Philippines only sought a strong partnership with the U.S. as a 
treaty ally and number one partner in trade, investment and 
 
MANILA 00003472  002 OF 002 
 
 
assistance. 
 
¶7.  (SBU) Speaker de Venecia noted that the Philippines is near 
completion of a free trade arrangement with Japan.  He asked if the 
United States would negotiate a Free Trade Agreement with the 
Philippines.  The Congressmen stated that a Free Trade Agreement 
would be worth considering, but noted that Presidential Trade 
Authority is unlikely to be renewed.  President Arroyo said she 
believed it was important to get started on an FTA with the U.S., 
even if it takes time to complete. 
 
¶8.  (SBU) Regarding trade, President Arroyo remarked that, since the 
expiration of the U.S. textile quota system in 2003, the Philippines 
garment industry has suffered great losses due to competition with 
China, particularly in exporting low-cost goods to the U.S.  Over 
the past year, however, the garment industry recovered from these 
losses by shifting to production of high-end clothing.  The 
President said the GRP is concerned about competition from Vietnam, 
now that U.S. markets are open to Vietnamese goods. 
 
--------------------------------------------- 
Plans to Improve English Language Proficiency 
--------------------------------------------- 
 
¶9.  (SBU) President Arroyo explained that English language 
proficiency had decreased markedly in the Philippines since Tagalog 
became the primary medium of instruction in a period of post-Marcos 
nationalism in the late 1980's.  She directed the Education 
Department to return to English as the primary medium of instruction 
in schools, but admitted the government did not have sufficient 
funds fully to implement the program.  She had recently selected 
Congressman Jesli Lapus as the new Secretary of Education due to his 
proven record spearheading the country's economic reforms.  Now that 
he is in charge of the department with the largest budget, the 
President predicted that he would be able to implement her 
English-language policy, which would create more economic 
opportunities for Filipinos, at home and abroad.  The President 
added that she was particularly grateful for the ongoing support of 
the Peace Corps in English language programs, including those in 
Mindanao. 
 
¶10.  CODEL Hyde did not have the opportunity to clear this cable. 
 
JONES