VZCZCXYZ0000
OO RUEHWEB

DE RUEHML #0053/01 0071224
ZNR UUUUU ZZH
O 071224Z JAN 08
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9337
INFO RHHMUNA/CDRUSPACOM HONOLULU HI IMMEDIATE
RUEHKL/AMEMBASSY KUALA LUMPUR 0785

UNCLAS MANILA 000053 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE BUT UNCLASSIFIED 
 
STATE FOR EAP AND H 
 
KUALA LUMPUR PLEASE PASS TO CODEL SMITH 
 
E.O. 12958: N/A 
TAGS: OREP PREL EAID RP
SUBJECT: SCENESETTER FOR CODEL SMITH 
 
¶1. (SBU) Summary: Embassy warmly welcomes CODEL Smith 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 several key government officials 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 three 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 nearly 
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 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 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 in conflict-affected areas of 
Mindanao through USAID 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 gradually is 
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.  Successful 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. 
 
--------------------------------------------- -- 
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. 
 
---------------- 
CONSULAR AFFAIRS 
---------------- 
 
¶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 ISSUES 
--------------- 
 
¶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. 
 
-- (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