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C O N F I D E N T I A L SECTION 01 OF 04 MANILA 001107 
 
SIPDIS 
 
STATE FOR EAP/MTS 
 
E.O. 12958: DECL: 05/19/2019 
TAGS: MARR MPOS PINS PREL RP
SUBJECT: SCENESETTER FOR THE VISIT OF DEFENSE SECRETARY 
GATES TO MANILA 
 
Classified By: Ambassador Kristie A. Kenney, reasons 1.4 (b) and (d) 
 
¶1.  (C) SUMMARY:  Secretary Gates, we appreciate your 
engagement with Philippine officials at Shangri-La and your 
visit to the Philippines.  The Philippines has undergone many 
positive changes since the last visit of a U.S. Secretary of 
Defense in September 2000; many as a result of sustained U.S. 
assistance using coordinated hard and soft power approaches. 
Our strong bilateral relationship has been tested in court 
challenges to the Visiting Forces Agreement, but remains very 
close.  The Philippine Armed Forces have scored significant 
successes against terrorists in the southern Philippines and 
against the communist New People's Army.  Increased security 
has allowed USAID and other USG agencies to implement 
development projects in areas prone to terrorist recruitment. 
 While efforts towards a peace agreement between the 
Philippine government and Muslim insurgents have stalled, the 
military continues to press the fight against rogue elements 
of the insurgency.  Lieutenant General Victor Ibrado recently 
became Chief of Staff of the Philippine Armed Forces and is 
expected to maintain the momentum against terrorist and 
insurgent groups.  Philippine Defense Secretary Gilberto 
Teodoro, a likely candidate for president next year, has been 
a strong leader and possesses a clear vision for the future 
of the Philippine military.  You will have an opportunity to 
discuss key strategic issues -- such as our shared 
counterterrorism fight -- with Secretary Teodoro and meet 
U.S. military personnel serving in the field alongside their 
Philippine counterparts.  END SUMMARY. 
 
------------------- 
PHILIPPINE POLITICS 
------------------- 
 
¶2. (C) With a year left in office, President Gloria Macapagal 
Arroyo continues to balance competing political interests 
amidst economic challenges.  A forceful politician who has 
faced a series of challenges to her rule, including 
unsuccessful impeachment efforts and low-level military coup 
attempts, President Arroyo's administration has been plagued 
by allegations of corruption.  As her term ends in 2010, her 
Vice President and several senators have already announced 
their intent to run for the presidency.  President Arroyo's 
relationship with top security officials remains strong, and 
military and police have kept out of political debates and 
remained focused on their roles. 
 
--------------------------------- 
PHILIPPINES ECONOMIC GROWTH SLOWS 
--------------------------------- 
 
¶3. (U) The Philippine economy has averaged better than five 
percent growth for the past eight years, but GDP growth may 
slow to about half that in 2009 under the impact of the 
global financial crisis.  In recent months, many Philippine 
businesses as well as several U.S. companies announced plant 
closures and layoffs, signaling that the economic pain from 
the world-wide economic slowdown is widening.  Should the 
global economic downturn be prolonged, the impact on poverty 
in the Philippines, where more than 40 percent of the 
population lives on less than two dollars per day, could have 
a visible impact on domestic politics.  On the positive side, 
the Philippine banking system is relatively sound and not 
heavily exposed to risks from current global financial 
turmoil.  The U.S. remains the Philippines' largest trading 
partner, with over $16 billion in two-way trade during 2008 
and is one of the largest investors, with $6.7 billion in 
equity. 
 
--------------------------------------- 
PHILIPPINE SECRETARY OF DEFENSE TEODORO 
--------------------------------------- 
 
¶4.  (C) On the government's fight against the communist and 
Muslim insurgencies, Teodoro is a hawk.  Teodoro sees ongoing 
violence in central Mindanao as clan thuggery, and he 
believes there can be no peace in the southern Philippines 
without disarmament and has stressed that point with U.S. 
officials.  Teodoro has said he thinks more Philippine troops 
in Mindanao are necessary in the near term to establish a 
solid security environment.  He has echoed the Arroyo 
administration's concern with the "safe haven" designation of 
areas in the southern Philippines, as described in the 2008 
U.S. Country Report on Terrorism, and is eager to explain to 
 
MANILA 00001107  002 OF 004 
 
 
you why he believes it is incorrect.  Teodoro said the 
government will issue evaluations of the government's efforts 
against the New Peoples' Army, the ASG, and rogue MILF groups 
by the end of this year. 
 
¶5.  (C) Secretary Teodoro has stressed that the 
U.S.-Philippine Mutual Defense Treaty, which has been in 
place since 1953, is vital in reinforcing the history shared 
between our two countries and for providing a mechanism for 
future engagement.  Teodoro believes that the next phase of 
the U.S.-Philippine military relationship should go beyond 
combat training and focus on broader strategic objectives. 
He was very pleased with joint Philippine-U.S. cooperation in 
co-sponsoring the first-ever field exercise for the ASEAN 
Regional Forum, a demonstration of disaster relief response 
held in the Philippines last month that involved 25 
countries.  He has championed the successes of Philippine 
Defense Reform with sustained U.S. assistance, and said that 
with the program set to conclude in 2010, he wants to 
complete two additional components in the next year:  a study 
of Philippine counterinsurgency doctrine based on current 
practices; and a review of information and psychological 
operations to determine the most effective way to build 
support for government efforts. 
 
-------------------------------------------- 
STRONG BILATERAL DEFENSE RELATIONSHIP CONTINUES 
--------------------------------------------- -- 
 
¶6. (C) With a new administration in Washington and Philippine 
presidential elections set for May 2010, senior Philippine 
defense officials believe now is the time to showcase the 
depth of the U.S.- Philippine relationship in a variety of 
areas, including counterterrorism operations, disaster 
relief, and multilateral engagement.  As such, these 
officials have emphasized that continued U.S. military 
assistance is essential and that expanded programs could 
provide greater improvements in areas ranging from regional 
security to human rights.  Despite court challenges to the 
Visiting Forces Agreement (VFA) and opposition from leftists 
to U.S. military presence, the Philippine Supreme Court ruled 
in February that the VFA is constitutional, and the Arroyo 
administration continues to voice strong support for our 
military partnership. 
 
¶7.  (C)  We have a robust military presence in the 
Philippines -- a joint U.S. Military Assistance Group 
(JUSMAG), Defense Attache Office, and approximately 550 Joint 
Special Operations Task Force-Philippines (JSOTF-P) 
personnel.  Such depth allows us to have a broad and 
far-reaching impact on the Philippine military.  U.S. 
military leadership is integrated into the Country Team and 
provides input that shapes decisions and policy.  Apart from 
JUSMAG's traditional role of training and military sales, we 
have focused on assisting the Armed Forces of the Philippines 
(AFP) with revising their doctrine to promote ethics and 
human rights.  The Philippines is an active provider of 
peacekeeping troops around the world, contributing to eight 
United Nations operations, and last year they became members 
of the Global Peace Operations Initiative.  This year, three 
Philippine nominees were accepted to U.S. service academies, 
one at each institution.  Members of JSOTF-P work 
side-by-side with Philippine troops in Mindanao and the Sulu 
Archipelago, advising and assisting them in counterterrorism 
operations.  At the same time, our military closely 
cooperates with U.S. law enforcement and intelligence 
agencies to achieve important successes in counterterrorism 
efforts. 
 
¶8.  (C) Several large-scale bilateral exercises are conducted 
each year between U.S. and Philippine troops, along with 
dozens of other training activities and exchanges. 
Humanitarian projects associated with the exercises have been 
welcomed by the Philippine government and population.  More 
than 28,000 people received medical and dental care as part 
of the civil-military component of the Balikatan exercise 
that concluded at the end of April.  Thousands more receive 
assistance each year through projects that JSOTF-P conducts 
in the southern Philippines with their AFP counterparts and 
through the more than 130 visits by U.S. ships. 
 
----------------------------------- 
SUCCESSFUL COUNTERTERRORISM EFFORTS 
----------------------------------- 
 
MANILA 00001107  003 OF 004 
 
 
 
¶9.  (C) The United States and the Philippines have scored 
important successes on the security cooperation and 
counterterrorism fronts.  This alliance has resulted in the 
death or capture of a dozen key terrorist leaders and over 
250 other terrorism suspects in the last three years. 
Secretary Teodoro recently emphasized that the Philippine 
government's success against key high-value individuals of 
the Abu Sayyaf Group (ASG) and Jemaah Islamiyah (JI) 
terrorist organizations was achieved despite persistent 
shortfalls in logistical assets, and he values the 
contributions of U.S. military personnel in improving combat 
capability of Philippine forces.  While the overall security 
situation in the southern Philippines has improved 
significantly over the past three years, partly as a result 
of U.S. military assistance, the brazen January kidnapping on 
Jolo island by the ASG of three members of the International 
Committee of the Red Cross, one of whom remains a hostage, 
highlights the continuing challenges that face the Philippine 
military and police in securing these volatile areas. 
 
------------- 
PEACE PROCESS 
------------- 
 
¶10.  (C) Although peace talks with separatist Moro Islamic 
Liberation Front (MILF) insurgents have remained stalled 
since  fighting broke out in August 2008, there is still a 
possibility the government will make a push to reach a 
settlement in President Arroyo's last year -- a promise that 
the government has pledged to keep.  Groundwork already 
proceeding includes a reconstituted government peace panel, a 
newly-appointed chief negotiator, grass roots consultations 
with communities across Minadano to address the public's 
concerns, back-channel communications with Muslim rebels, and 
overtures to Malaysia and other nations to play an active 
role as mediators in facilitating renewed talks.  A firmly 
re-established cease-fire and renewed peace talks would 
create a more positive atmosphere for talks and allow tens of 
thousands of displaced people to return home.  Earlier this 
year, President Arroyo publicly stated that 2009 would be a 
"comeback year for peace" and that she would emphasize to all 
stakeholders that a robust peace process between the 
Philippine government and the MILF would encourage stability 
in the region and enhance economic development. 
 
---------------------- 
PROMOTING HUMAN RIGHTS 
---------------------- 
 
¶11. (C) President Arroyo continues to express her unwavering 
commitment to making greater progress on the long-standing 
problem of extrajudicial killings, and has taken concrete 
steps in this direction.  Partly due to increased attention 
by the Philippine government, the number of extrajudicial 
killings decreased dramatically through 2007 and 2008.  While 
many execution-style slayings among politicians and others 
are likely a result of local disputes and long-standing feuds 
among rival clans, the government acknowledges the need to do 
more to ensure that all such crimes -- whether or not linked 
to security forces -- are fully investigated, and that those 
responsible are brought to justice.  The Embassy continues to 
press the issue at the highest levels of the Philippine 
government, and has implemented a comprehensive plan of 
public outreach activities, training, and 
institution-building to make further progress in addressing 
the problem. 
 
------------ 
USAID'S ROLE 
------------ 
 
¶12.  (C) Since the mid-1990s, USAID has implemented a sizable 
and highly effective program throughout the island of 
Mindanao and the neighboring Sulu Archipelago provinces of 
Basilan, Jolo, and Tawi-Tawi.  During this period, 
approximately two-thirds of USAID resources for the 
Philippines have been committed to these areas, complemented 
by 1207 funds, JSOTF-P activities (since 2002), and 
humanitarian missions such as the USNS Mercy. 
USAID-sponsored activities in these areas include 
infrastructure development, school computerization, health 
and education improvement, environmental management, former 
combatant reintegration, and governance.  USAID financed the 
 
MANILA 00001107  004 OF 004 
 
 
construction of more than 800 community-level and over 40 
regional-impact infrastructure projects throughout the 
conflict-affected communities of the southern Philippines. 
The primary objective has been to encourage economic growth 
and demonstrate sustained commitment by the Philippine and 
U.S. governments to establishing security. 
KENNEY