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FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5279
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS IMMEDIATE
RHHMUNA/CDRUSPACOM HONOLULU HI IMMEDIATE

UNCLAS SECTION 01 OF 04 MANILA 000533 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP, EAP/MTS, USPACOM 
 
E.O. 12958: N/A 
TAGS: OREP PREL EAID PTER MARR MASS MOPS MCAP RP
SUBJECT: SCENESETTER FOR THE VISIT OF CONGRESSMAN CHABOT 
 
 
¶1. (U) Congressman Chabot, a warm welcome to the Philippines! 
 The relationship and spirit of partnership between the 
United States and the Philippines remain strong.  The unique 
bond shared between U.S. and Philippine veterans further 
strengthens our ties, as the memory of our partnership in 
World War II still resonates here.  U.S. interests in this 
major non-NATO ally center on strengthening democracy, 
fostering economic growth, fighting terrorism and other 
threats to security, and providing superb services to our 
American and Filipino publics.  The U.S. is the largest grant 
donor to the Philippines, its largest trading partner, and 
the largest investor. 
 
¶2. (U) Your visit will enable you to meet with senior 
Philippine officials, including new Defense Secretary Ebdane 
and Philippine Armed Forces Chief Esperon.  You will join me 
in launching Balikatan 07 (shoulder to shoulder), an annual 
exercise that strengthens the U.S.-Philippine security 
partnership through civil military operations, staff 
exercises, and interoperability training.  You will also pay 
tribute to the dead and missing from World War II 
immortalized at the American Cemetery.  We look forward to 
making your visit productive and useful to you. 
 
---------- 
BACKGROUND 
---------- 
 
¶3. (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 islands, many 
of them mountainous.  Basic literacy (94%) remains high, 
although the standard of public education and other 
government services has been declining.  Filipinos are mainly 
Roman Catholic (83%) or otherwise Christian (10%) with a 
small Muslim minority (6%) living primarily in Mindanao. 
Over 40 percent of Filipinos earn less than $2 per day, with 
a much higher percentage of Muslims eking out a living below 
this threshold. 
 
--------- 
POLITICAL 
--------- 
 
¶4. (U) Philippine political life is free-wheeling, centered 
primarily on the personal charisma of individual political 
leaders, and largely oligarchic, with most wealth and 
political power limited to a few influential families. 
Then-Vice President Gloria Macapagal Arroyo assumed the 
Presidency in 2001 after a "people power" movement swept out 
her predecessor.  She has regained her footing after a series 
of challenges to her leadership, including unsuccessful 
impeachment efforts in 2005 and 2006 -- based on accusations 
of vote rigging in 2004 elections -- and an alleged coup plot 
that led to her week-long declaration of a "State of National 
Emergency" in February 2006.  Efforts to amend the Philippine 
Constitution to replace the bicameral Congress with a 
unicameral parliament system were unsuccessful in 2006. 
 
¶5. (U) The Philippines assumed the chairmanship of the 
Association of Southeast Asian Nations in 2006, and hosted an 
ASEAN Summit in Cebu in January 2007.  In summer 2007, it 
will host the annual ASEAN Regional Forum and ASEAN 
Post-Ministerial Conference. 
 
---------------------- 
SECURITY AND TERRORISM 
---------------------- 
 
¶6. (U) The Philippines is home to three organizations 
designated by the United States as Foreign Terrorist 
Organizations  -- Jemaah Islamiyah, the Abu Sayyaf Group, and 
the New People's Army.  The first two groups currently pose 
the most direct threats to U.S. interests and are located in 
the poor predominately Muslim south.  The New People's Army 
operates throughout the country.  We work closely on 
developing the capacity of the Armed Forces of the 
Philippines and the police to combat terrorists.  We provide 
training and equipment, engage in a robust exercise program, 
and are currently undertaking a joint far-reaching bilateral 
program completely to reform the Armed Forces of the 
Philippines into a modern, effective force.   Our Rewards for 
Justice Program provides incentives to identify and arrest 
terrorists. 
 
¶7. (SBU) President Arroyo is a committed counterterrorism 
partner.  She has repeatedly demonstrated her willingness to 
work closely with us on combating Islamist extremism and we 
 
MANILA 00000533  002 OF 004 
 
 
have seen marked improvements in the Armed Forces of the 
Philippines' ability to sustain and conduct operations.  The 
Armed Forces, supported by the U.S. Joint Special Operations 
Task Force-Philippines, has had significant success against 
the Abu Sayyaf Group during "Operation Ultimatum," an ongoing 
effort to eliminate the terrorist leadership on the island of 
Jolo.  Philippine troops killed Khadaffy Janjalani, the 
leader of the Abu Sayyaf Group, in September 2006, and 
operations and logistics chief Abu Solaiman in January 2007 
during military offensives. 
 
------------------- 
MUSLIM INSURGENCIES 
------------------- 
 
¶8. (SBU) Although prospects for peace with the insurgent Moro 
Islamic Liberation Front (MILF) continue to remain hopeful, 
talks recently hit a snag over the question of ancestral 
domain, the historically Muslim land claimed by the MILF.  We 
are directly engaged with all players, including the MILF 
Central Committee, to keep the peace process on track. 
 
¶9. (SBU)  USAID devotes nearly 60 percent of its $70 million 
annual assistance budget to conflict-affected areas of 
Mindanao, where it is focused on reintegrating former 
combatants, promoting economic growth and business 
opportunities, education, health and local governance.  After 
the Moro National Liberation Front signed a peace deal with 
the government in 1996, USAID carried out a range of highly 
successful programs, including "Arms to Farms," which 
reintegrated over 28,000 former fighters back into civil 
society as successful farmers.  USAID is ready to implement 
similar programs should a peace agreement be signed with the 
MILF. 
 
------------------------- 
DEFENSE AND POLICE REFORM 
------------------------- 
 
¶10. (SBU) The Armed Forces of the Philippines remains heavily 
engaged in combating internal security threats, but maintains 
limited external defense capabilities.  Readiness is poor and 
modernization slow due to a lack of funding and commitment of 
resources.  The Department of National Defense and Armed 
Forces Chief of Staff General Esperon strongly support the 
joint Philippine-U.S. Philippine Defense Reform program. 
There are now 11 U.S. Subject Matter Experts on the ground, 
and more may be added in the near future.  In addition to 
long-term institutional changes, the multi-year Capability 
Upgrade Program will modernize 72 Philippine Army and 12 
Philippine Marine Corps battalions over the next six years. 
The Battalion of Excellence component will enhance training 
capabilities and introduce new personnel policies, logistics 
programs, and equipment. 
 
¶11. (SBU) The Philippine National Police is plagued with many 
of the same problems as the Philippine Armed Forces, yet is 
critical to urban counterterrorism operations, as well as 
controlling trafficking in persons, narcotics, and smuggling. 
 A United States Senior Law Enforcement Advisor recently 
joined our Embassy team to assist the Philippine Police in 
its transformation efforts.  One short-term intervention he 
has already conducted was a targeted training program aimed 
at improving the sensitive site exploitation and evidence 
handling skills of police and security officials involved in 
tracking the terrorists on Jolo. 
 
--------------------------------------------- ----- 
HUMAN RIGHTS: CONCERN OVER EXTRA-JUDICIAL KILLINGS 
--------------------------------------------- ----- 
 
¶12. (SBU) Extrajudicial killings of local leftists, a 
perennial problem here as in many countries with weak rule of 
law, have recently attracted much more public attention. 
Leaders of leftist political groups linked to the Communist 
Party of the Philippines/New People's Army blame the military 
and police, while some in the government assert that the 
killings are the result of an internal purge within the 
Communist Party of the Philippines/New People's Army.  Few of 
the cases have been resolved, prompting President Arroyo to 
set up a high-level independent commission and a special 
national police task force to investigate the killings.  The 
commission recently concluded its work but its findings have 
yet to be released.  We press the government at every 
opportunity to resolve these killings, and I have discussed 
them with President Arroyo and key members of her cabinet, as 
well as the Armed Forces Chief of Staff and the Chief of the 
Philippine National Police.  They all tell me they are as 
appalled as we are, but we remain insistent that they must 
 
MANILA 00000533  003 OF 004 
 
 
get control of this problem. 
 
------------------- 
ECONOMICS AND TRADE 
------------------- 
 
¶13. (U) The U.S. remains the Philippines largest trading 
partner, with over $16 billion in two-way merchandise trade. 
Major U.S. exports include electronics and agriculture.  The 
U.S. is also the largest investor here, with over $6 billion 
in assets.  The large American Chamber of Commerce in Manila 
is proud of its history as the first American Chamber of 
Commerce abroad. 
 
¶14. (U) The Philippine economy performed well in 2006. 
Growth hit an estimated 5.5 percent, while inflation slowed 
to only 4.7 percent.  Both the stock market and the peso 
ended the year at the highest levels in recent years.  The 
economy was bolstered by a 15 percent increase in remittances 
by overseas workers, a recovery in exports, and sensible 
fiscal policies, which have brought the budget deficit under 
control.  The Millennium Challenge Corporation has approved a 
$21 million Threshold Program for the Philippines, which will 
focus on anti-corruption and revenue enhancement.  The United 
States assists in economic development, anti-corruption, 
environmental protection, and poverty alleviation through 
USAID, USDA, and an active Peace Corps presence throughout 
the country. 
 
--------------- 
VETERANS ISSUES 
--------------- 
 
¶15. (U) The U.S. Department of Veterans Affairs Manila 
Regional Office and Outpatient Clinic are the VA's only 
full-service facilities located in a foreign country.  VA 
provides monetary benefits to approximately 15,000 veterans 
and dependents residing in the Philippines, and provides 
health care to approximately 4,000 veterans residing here. 
The VA operation in Manila has a sizable economic impact 
here, worth about $175.2 million in FY 2006.  This figure 
factors in monetary benefit payments, operating costs, and 
medical equipment provided to the Philippine Government's 
Veterans Memorial Medical Center.  Due to the low standard of 
living in the Philippines and the cultural preference to 
conduct business through middlemen, claims fraud remains a 
significant challenge.  While we have success in identifying 
fraud, obtaining prosecutions through the Philippine justice 
system is difficult. 
 
¶16. (U) Filipino veterans have over the years challenged and 
questioned what they perceive as lack of equality in the 
benefits they receive as compared to those received by U.S. 
veterans of WWII or those Filipino veterans residing in the 
U.S.  This issue continues to be the focus of intense 
lobbying by various Filipino advocacy groups. Filipino 
veterans and their dependents in receipt of VA benefits enjoy 
a far greater standard of living here than their ineligible 
counterparts, many of whom receive benefits from the 
chronically in-debt Philippine Veterans Affairs Office at the 
rate of approximately $100 per month. 
 
------------------------------ 
SOCIAL SECURITY ADMINISTRATION 
------------------------------ 
 
¶17. (U) The Social Security Administration Division in Manila 
serves as the hub for social security work for all the 
Embassies and Consulates in the East Asia Pacific Region. 
The division currently serves 41,000 beneficiaries and pays 
out over 25 million dollars each month.  In the Philippines 
alone, there are almost 20,000 beneficiaries. 
 
-------- 
CONSULAR 
-------- 
 
¶18. (U) The Consular Section provides services (reports of 
birth, passports, notarial and emergency support) to the 
approximately 130,000 Americans living in the Philippines as 
well as the addition roughly 120,000 visiting the Philippines 
at any given time.  The Section issues about 60,000 immigrant 
visas a year, including visas to large numbers of nurses, 
teachers, and physical therapists.  The Section sees almost 
200,000 nonimmigrant visa applicants annually, including 
large numbers of merchant marine mariners and temporary 
seasonal workers. 
 
------------------------ 
 
MANILA 00000533  004 OF 004 
 
 
SUGGESTED TALKING POINTS 
------------------------ 
 
¶19. (SBU) In your meetings with Secretary Ebdane and General 
Esperon, as well as your interaction with other government 
officials and the press, you may want to draw on the 
following talking points: 
 
-- Congratulations on recent killing of Abu Sayyaf Group 
leader Khadaffy Janjalani and logistics chief Abu Solaiman. 
The Armed Forces of the Philippines continues to be engaged 
in impressive counterterrorism efforts in Jolo. 
 
-- Glad we can support this important operation to eliminate 
the Abu Sayyaf and Jemaah Islamiyah leadership and the threat 
they pose. 
 
-- Philippine Defense Reform represents a commitment to 
undertake fundamental institutional change.  We're proud to 
be partners in this program. 
 
-- We take the issue of extra-judicial killings seriously. 
Encouraged by steps the Philippine government has taken to 
try to get control of this problem. 
 
-- We are working with the Philippines to help achieve higher 
economic growth and spread this growth to the bottom 40% of 
the population living on less then $2 per day. 
 
-- Great to be able to observe activities that are part of 
this annual exercise that helps train both U.S. and AFP 
personnel, and further strengthens our close security 
relationship.  I'm particularly pleased to see the large 
humanitarian and civic action component in this year's 
exercise, because this helps provide direct benefit to 
Filipino citizens and makes it easier for our armed forces to 
work together in the event of natural disasters. 
 
-- We have a large and active Veterans Affairs office here to 
make sure we provide benefits to all the many eligible 
veterans and their dependents.  It is the only Veterans 
Affairs office outside the U.S. 
 
-- The Philippines, as current chair of ASEAN and host of key 
summits, has a special responsibility in promoting regional 
stability and cooperation on a wide variety of issues, 
including a unified response to North Korea's nuclear 
testing. 
 
-- We very much appreciate the Philippine government's public 
support for the agreement reached with North Korea through 6 
Party Talks, and Philippine leadership in the region on this 
and other issues of international importance. 
 
-- (If asked about the case of a U.S. Marine convicted of 
rape of a Filipina at Subic in November 2005)  I cannot 
comment on an ongoing legal case in the Philippine justice 
system. Both our governments remain committed to the pursuit 
of justice as well as adherence to the terms of the Visiting 
Forces Agreement. 
 
-- (If asked about the midterm elections scheduled for May 
14)  It would be inappropriate for me to comment on any 
aspect of Philippine elections, but we all know the 
importance of a transparent and fair election process in any 
democracy.  I wish all the candidates the best of luck. 
 
 
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