VZCZCXRO7588
OO RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHML #1788/01 2101146
ZNR UUUUU ZZH
O 281146Z JUL 08
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1420
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RHHMUNA/CDRUSPACOM HONOLULU HI PRIORITY

UNCLAS SECTION 01 OF 02 MANILA 001788 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/MTS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PINS PINR SOCI PTER ECON KPAO ASEC
RP 
SUBJECT: PRESIDENT FOCUSES ON ECONOMY IN STATE OF THE 
NATION ADDRESS 
 
¶1. (U) In her penultimate State of the Nation Address (SONA), 
Philippine President Gloria Macapagal Arroyo highlighted her 
administration's efforts to improve the country's economy and 
help the poor cope with rising food and fuel costs.  The 
President called for legislation to implement a peace 
agreement with Muslim insurgents.  She stressed several 
successful development projects supported by the USG; 
included a projected photo of her with President Bush from 
her recent Oval Office visit; and privately thanked the 
Ambassador for her recent visit to Washington.  The 
atmosphere inside Congress was festive, while thousands 
outside in heavy rains protested peacefully against her 
presidency. 
 
¶2. (U) In the weeks leading up to the address, the media has 
focused on recent polling numbers showing President Arroyo as 
increasingly unpopular, prompting her to use the annual 
address as a forum to tout her national social welfare plan. 
President Arroyo also reminded the Philippine people of the 
large number of infrastructure projects completed during her 
tenure as president.  She appeared confident as she delivered 
her 55-minute remarks, laying out specific accomplishments, 
including successfully addressing the global rice and energy 
crisis through effective government intervention. 
 
ADDRESSING USG INTERESTS 
------------------------ 
 
¶3. (SBU) The President's address hit on several issues with 
which the Mission has been significantly involved, including 
the Millennium Challenge Corporation (MCC), the peace 
process, and the roll-on roll-off transportation system.  In 
addressing a widespread perception of government corruption, 
President Arroyo thanked the MCC, which she said has 
commended the country's gains in fighting corruption, 
contributed 1 billion pesos to fight against graft, and 
declared the Philippines eligible for more grants.  The 
President hailed a recent breakthrough in the government's 
peace process negotiations with Muslim insurgents in 
Mindanao, a breakthrough which the Mission helped bring about 
with sustained engagement with all the key players.  The 
President also highlighted new irrigation systems of 
farmlands in Mindanao, citing the unprecedented increase of 
irrigated land to a historic 1.5 million hectares in 
Mindanao, an accomplishment made possible by USG assistance. 
Similarly, the President touted the roll-on roll-off highway 
(RORO), a transportation system that permits trucks to roll 
on to a ferry and roll off on another island, a project which 
has had significant U.S. support.  President Arroyo said that 
in 2007, RORO vessels carried 33 million metric tons of cargo 
and 31 million passengers, and the Administration built 39 
RORO ports, with 12 more slated to start in the next two 
years. 
 
MIXED POLITICAL REACTION 
------------------------ 
 
¶4. (U) The reaction to President Arroyo's SONA was mixed, 
with Administration supporters predictably giving her speech 
high marks, while political opponents were unsparing in their 
criticism.  Administration supporter Senator Miriam Santiago 
described the speech as professional, complimenting the 
President on her use of statistics to buttress her claim that 
lifting the Value Added Tax would hurt, rather than help, the 
nation's poor.  Similarly, House Speaker Prospero Nograles 
said the speech had been factual, and successful in conveying 
its message.  He added that it would do much to facilitate 
needed legislation through the house.  Conversely, House 
Minority Leader Ronald Zamora, a noted Administration critic, 
stated that the President's remarks were simply a "feel-good 
speech," adding that he was not surprised that she 
highlighted success stories of average citizens to make her 
Filipino audience "feel good."  He added that he did not hear 
President Arroyo outline an agenda to address, or assign 
responsibility for, the country's problems. 
 
PROTESTERS OUT IN FORCE 
----------------------- 
 
¶5. (U) Thousands of Filipinos from many walks of life 
weathered heavy rains and wind to protest the President's 
address, and placards and banners denouncing the 
administration lined the streets.  Labor unions, including 
the leftist Kilusang Mayo Uno, jeepney drivers, peasants, and 
 
MANILA 00001788  002 OF 002 
 
 
others came out in force to demand across-the-board pay 
increases.  Civil society groups attended to protest various 
issues, including an end to government corruption, repeal of 
the Value Added Tax, and ouster of the president.  Political 
organizations, including Bayan Muna, the most prominent 
leftist political party, came out to protest killings of 
leftist activists, allegedly by government security forces. 
Despite the seriousness of the charges against the 
Administration, a festive atmosphere prevailed throughout the 
day, which culminated with the burning of a giant effigy of 
President Arroyo riding an airplane bearing the stars and 
stripes. 
 
COMMENT 
------- 
 
¶6. (SBU) COMMENT: The global economic crisis has hit the 
Philippines hard, and the President is clearly feeling the 
heat from low wage earners, who have seen a significant 
erosion in their purchasing power.  Her address, delivered 
partly in English and partly in Tagalog, probably to appeal 
to the masses, was largely meant to explain and justify some 
of the Administration's more controversial programs, 
including the Value Added Tax.  In the face of widespread 
polls indicating significant reductions in her popularity, 
President Arroyo saw this as an opportunity to tout her 
Administration's many successes in the economic area and 
elsewhere, while defusing critics' charges of the 
Administration's neglect of those most hard-pressed by recent 
rises in cost of food, fuel and another necessities.  While 
the number of protesters that came out to demonstrate against 
President Arroyo was significantly higher than in previous 
years, the rallies were nonetheless peaceful, and probably 
only a reflection of the tough economic times. 
 
KENNEY