VZCZCXRO3123
OO RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHML #0123/01 0160534
ZNR UUUUU ZZH
O 160534Z JAN 08
FM AMEMBASSY MANILA
TO RUEHUL/AMEMBASSY SEOUL IMMEDIATE 2742
RUEHC/SECSTATE WASHDC IMMEDIATE 9410
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS IMMEDIATE
RHHMUNA/CDRUSPACOM HONOLULU HI IMMEDIATE

UNCLAS SECTION 01 OF 04 MANILA 000123 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP AND H 
SEOUL PLEASE PASS TO CODEL INOUYE 
 
E.O. 12958: N/A 
TAGS: OREP AMGT ASEC AFIN RP KS
SUBJECT: SCENESETTER FOR CODEL INOUYE 
 
¶1. (SBU) Summary:  Embassy warmly welcomes Senator Inouye and 
Senator Stevens back to the Philippines!  The relationship 
and spirit of partnership between the United States and the 
Philippines are strong.  U.S. interests in this major 
non-NATO ally center on strengthening democracy, fostering 
economic growth, fighting terrorism, and providing superb 
services to our American and Filipino publics.  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 President Arroyo and 
will travel to the southern island of Mindanao to see 
first-hand our joint counterterrorism and development 
efforts.  Our entire team looks forward to making your visit 
productive and useful.  End Summary. 
 
---------- 
BACKGROUND 
---------- 
 
¶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 is weak. 
Filipinos are mainly Roman Catholic (83%) or otherwise 
Christian (10%), with a Muslim minority (6%) in the southern 
island of Mindanao and in Manila.  Approximately 38 percent 
of Filipinos earn less than $2 per day, with a much higher 
percentage of Muslims in Mindanao eking out a living below 
this threshold. 
 
------------------- 
PHILIPPINE POLITICS 
------------------- 
 
¶3. (SBU) Philippine politics is free-wheeling, focused 
primarily on the charisma of individual political leaders, 
and still largely oligarchic, with most wealth and political 
power concentrated among influential families.  President 
Gloria Macapagal Arroyo assumed the Presidency in 2001 after 
a "people power" movement swept out her predecessor, whom she 
recently pardoned after he was convicted of corruption.  She 
is a strong leader who has faced a series of challenges to 
her rule, including unsuccessful impeachment efforts and 
low-level military coup attempts.  The President's political 
position improved after May 2007 elections gave her allies a 
large majority in the House of Representatives, decreasing 
any impeachment threat.  With less than two and a half years 
left in her term, the President appears intent on 
establishing her legacy, with a focus on the economy and 
jobs, infrastructure, and seeking stability and peace on 
Mindanao. 
 
------------------- 
ECONOMICS AND TRADE 
------------------- 
 
¶4. (U) The U.S. is the Philippines' largest trading partner, 
with over $17.3 billion in two-way merchandise trade.  Major 
U.S. exports include electronics and agriculture.  The U.S. 
is also the largest investor here, with $6.6 billion in 
equity.  In 2007 Texas Instruments announced further 
investment of $1 billion in microchip production, while AES, 
a U.S. power company, acquired a coal-fired power plant for 
$930 million.  The Philippine economy grew about seven 
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 has an impressive reform agenda -- 
privatize the electric sector, build infrastructure, increase 
education funding, reduce business red tape -- but still 
faces significant hurdles, particularly in improving the 
investment climate. 
 
------------------------ 
COUNTERTERRORISM EFFORTS 
------------------------ 
 
¶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 and Filipinos.  A 
Joint Special Operations Task Force (JSOTF-P) of several 
 
MANILA 00000123  002 OF 004 
 
 
hundred personnel provides direct support to the Philippine 
Armed Forces in key locations in Muslim Mindanao, sharing 
intelligence, advice, and assistance.  The major thrust of 
U.S. development assistance is focused through USAID in 
conflict-affected areas of Mindanao, to help reduce support 
for terrorists.  President Arroyo is justly proud that the 
Philippine military has scored successes against several top 
terrorist leaders in its focused military operations. 
Equally impressive are the military's successful efforts to 
help separate local populations from insurgents through 
extensive civil-military and humanitarian activities. 
Separately, the New People's Army of the Communist Party 
continues to extort, bomb and attack remote police and 
military outposts. 
 
----------------------- 
IMPROVED COMBAT PROWESS 
----------------------- 
 
¶6. (SBU) With U.S. support, the Armed Forces of the 
Philippines (AFP) is demonstrating improved combat capability 
in its ongoing counterterrorism operations on the southern 
island of Jolo.  AFP troops -- including soldiers, Marines, 
airmen, and sailors -- have remained engaged in sustained 
action against Abu Sayyaf and Jemaah Islamiyah terrorists 
since August 1, 2006.  Improved operational readiness rates 
for aircraft and vessels, casualty treatment, night 
helicopter medical evacuations, and tactical field skills are 
directly attributable to U.S. training, advice, and 
assistance.  Successful  operations have led to the deaths in 
military operations of Khadaffy Janjalani and Abu Solaiman, 
the top two leaders of the Abu Sayyaf Group, and kept Jemaah 
Islamiyah terrorists on the run. 
 
---------------------------- 
COMMITMENT TO DEFENSE REFORM 
---------------------------- 
 
¶7. (SBU) The Philippines' Defense Reform Program is gradually 
transforming the Philippine military into a more transparent, 
accountable, and effective institution.  The effort was 
strengthened when Secretary of National Defense Gilberto 
Teodoro recently assumed personal responsibility for the 
reform program.  This U.S.-supported effort aims at a 
complete restructuring of the military establishment, ranging 
from personnel management and logistics to acquisition and 
training.  With the advice of the Joint U.S. Military 
Assistance Group and a 13-member team of U.S. experts, the 
AFP and Department of National Defense have already 
registered significant gains.  U.S. Special Force troops are 
helping jumpstart the newly-begun Battalion Retraining 
Program, which will retrain all 72 Army and 12 Marine 
battalions. 
 
------------------------- 
PEACE PROCESS IN MINDANAO 
------------------------- 
 
¶8. (SBU) Negotiations with the Muslim insurgency, under 
Malaysian auspices, are making headway toward establishing a 
larger Muslim political entity within the Philippines that 
would determine its own governing structure.  While 
significant progress has been made on the territorial borders 
of the new political entity, the challenge will be to bring 
together Mindanao's diverse Muslim, Christian and native 
communities.  We are pressing for concrete progress on this 
complex agenda this year.  Successfully achieving peace in 
Mindanao would make the Philippines a stronger, more 
outward-looking partner, while also denying terrorists 
ungoverned spaces. 
 
¶9. (U) Development assistance from the U.S., complemented by 
increasing support from the World Bank, Japan, Australia, and 
others, has established growing zones of peace and private 
sector-led growth in Mindanao.  About 60% of USAID's annual 
development assistance is channeled to conflict-affected 
areas of Mindanao to promote economic opportunities, build 
infrastructure, and carry out health, renewable energy, 
environment, education, local governance, and livelihood 
programs.  These programs attack the conditions of poverty 
that provide breeding grounds for terrorists.  USAID 
coordinates its activities with the U.S. military's Civil 
Affairs programs.  Our exchange programs for students and 
community leaders offer a chance to interact with responsible 
and moderate Muslims. 
 
--------------------------------------------- -- 
 
MANILA 00000123  003 OF 004 
 
 
HUMAN RIGHTS: COMBATING EXTRA-JUDICIAL KILLINGS 
--------------------------------------------- -- 
 
¶10. (SBU) President Arroyo has consistently expressed her 
commitment to resolving the complex problem of 
extra-judicial killings and has taken several steps in this 
direction.  While many of these deaths and disappearances are 
more likely attributable to local disputes than to military 
or police action, it is clear that the government needs to do 
more to ensure that these crimes are fully investigated and 
that responsible parties -- whether or not they are connected 
to military or police -- are brought to justice.  The problem 
is closely related to a judicial system which is strained 
beyond its capacity and inefficient.  The government has 
responded with a police task force to investigate the 
killings and file charges; specially designated courts to 
handle them; a rejuvenated Presidential Human Rights 
Commission, a new Armed Forces Human Rights office to 
investigate allegations; and additional funding for the 
Commission on Human Rights. The number of extra-judicial 
killings decreased dramatically in 2007, but more still needs 
to be done. 
 
-------------- 
SERVING PEOPLE 
-------------- 
 
¶11. (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 additional roughly 120,000 visiting the 
Philippines at any given time.  State Department officers 
issue about 60,000 immigrant visas a year, including visas to 
large numbers of nurses, teachers, and physical therapists. 
We interview almost 200,000 nonimmigrant visa applicants 
annually, including large numbers of merchant mariners and 
temporary seasonal workers. 
 
---------------- 
VETERANS SUPPORT 
---------------- 
 
¶12. (U) The U.S. Department of Veterans Affairs Manila 
regional office and outpatient clinic are the VA's only 
full-service facilities in a foreign country.  In FY 2007, VA 
provided $165 million in monetary benefits to 15,000 veterans 
and dependents -- both American and Filipino -- in the 
Philippines and health care to another 4,000 veterans. 
Filipino veterans receive benefits based on their service 
under U.S. command in World War II.  The Philippine 
government and Philippine veterans associations are lobbying 
for enactment by the U.S. Congress of the Filipino Veterans 
Equity Act (House Resolution 760), which would provide 
additional benefits to some Filipino WWII veterans and their 
dependents. 
 
------------------------- 
THEMES AND TALKING POINTS 
------------------------- 
 
¶14. (SBU) You may wish to draw on the following themes in 
your meetings: 
 
-- The Philippines is a vital partner in the fight against 
terrorism to secure peace and prosperity for our two 
nations.  Our delegation looks forward to learning more about 
U.S.-Philippine cooperation during this visit. 
 
-- U.S. military forces are here at the invitation of the 
government of the Philippines to provide assistance and share 
information with the Philippine military.  Together, we 
provide health care, build schools, and provide clean water 
to communities in need. 
 
-- 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. 
 
-- 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. 
 
-- U.S. development assistance and business partnerships are 
helping achieve higher economic growth and spread this 
growth, especially to the poor and disadvantaged. 
 
 
MANILA 00000123  004 OF 004 
 
 
-- (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. 
 
-- You may be asked about your position in the U.S. Congress 
on the Filipino Veterans Equity Act. 
 
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