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UNCLAS SECTION 01 OF 03 MANILA 001835 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT OF DEFENSE, PLEASE PASS TO TRANSCOM 
 
E.O. 12958: N/A 
TAGS: MARR MOPS OVIP PINR PINS PREL RP
SUBJECT: SCENESETTER FOR TRANSCOM COMMANDER GENERAL DUNCAN 
¶J. MCNABB 
 
¶1. (SBU)  SUMMARY:  General McNabb, welcome to the 
Philippines!  The relationship between the United States and 
the Philippines continues to remain 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. continues to be the Philippines' largest 
trading partner, the largest investor, and the largest donor 
of grant foreign assistance.  During your visit, you will 
meet with the Ambassador, receive a briefing from the Mission 
Country Team, and meet with senior officials from the Asian 
Development Bank.  The current Arroyo Administration is 
strongly pro-U.S., and committed to continued close security, 
intelligence, and economic ties.  Our entire team looks 
forward to making your visit productive and useful.  END 
SUMMARY. 
 
PHILIPPINE POLITICS 
------------------- 
 
¶2. (SBU)  With less than a year left in office, President 
Gloria Macapagal Arroyo continues to balance competing 
political interests amidst economic challenges.  President 
Arroyo has weathered numerous unsuccessful impeachment 
efforts and low-level military coup attempts.  Her 
administration has been plagued by allegations of serious 
corruption, as well as charges her supporters are attempting 
to juggle the Philippine Constitution to extend legal 
protection for Arroyo and her family after her term ends next 
year.  With national elections scheduled for May 2010, nearly 
20 cabinet members have announced their intention to seek 
office.  Some presumed candidates have attempted to 
politicize aspects of our security relationship, such as the 
Visiting Forces Agreement (VFA), but none of the likely 
presidential contenders would represent a radical departure 
from the status quo.  President Arroyo met with President 
Obama in the Oval Office July 30, and, following additional 
meetings with key U.S. cabinet members, returned to Manila 
earlier than scheduled due to the August 1 death of former 
President Corazon Aquino, a much-beloved icon of democracy. 
 
 
PHILIPPINES ECONOMIC GROWTH SLOWS 
--------------------------------- 
 
¶3. (U)  The Philippine economy has averaged better than five 
percent growth for the past eight years, but under the impact 
of the global financial crisis, GDP growth may be outpaced by 
the country's annual 2.04 percent population growth.  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 tangible impact on domestic politics.  Poverty is 
especially severe in the Muslim areas of the southern 
Philippines.  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 USD 17 
billion in two-way trade during 2008, and is one of the 
largest investors, with USD 6.7 billion in equity. 
 
 
ASIAN DEVELOPMENT BANK 
---------------------- 
 
¶4. (U)  The mission of the Asian Development Bank (ADB), 
established in 1966, is to reduce poverty and improve the 
quality of life among its developing country members.  Its 
main tools for accomplishing this mission are loans, 
technical assistance, grants, advice, and knowledge.  The ADB 
is owned and financed by its 67 members.  Under its long-term 
strategy adopted in 2008, the ADB concentrates on inclusive 
growth, environmentally sustainable growth, and regional 
integration.  Southeast Asia remains the region with the most 
ongoing ADB projects, although its loans and grant assistance 
to Central and West Asia have been growing most rapidly. 
Under the Central Asia Regional Cooperation Program, the ADB 
has facilitated significant advances in regional cooperation 
on trade policy, transport, and energy. 
 
¶5. (SBU)  The Philippines is one of the ADB,s founding 
members, its 11th-largest shareholder, and its 5th-largest 
borrower, accounting for about eight percent of total 
sovereign and non-sovereign lending.  In response to 
criticisms that ADB's large program with the Philippines had 
yielded less than expected results, coupled with the current 
economic uncertainties in the Philippines economy, the ADB is 
 
MANILA 00001835  002 OF 003 
 
 
showing greater selectivity of the projects it supports in 
the Philippines.  The current ADB country strategic plan 
allows wide flexibility in the ADB-Philippines partnership to 
ensure that new operations do not run ahead of the political, 
macroeconomic, and sector supports needed for sustainability 
and high impact. 
 
 
PROMOTING HUMAN RIGHTS 
---------------------- 
 
¶6. (SBU)  President Arroyo continues to express her 
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 
may be the 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 continues to conduct a comprehensive plan of 
public outreach activities, training, and 
institution-building to make further progress in addressing 
the problem. 
 
 
SUCCESSFUL COUNTERTERRORISM EFFORTS 
----------------------------------- 
 
¶7. (SBU)  The Philippines and the United States 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. 
Defense Secretary Teodoro recently emphasized that the 
Philippine government achieved success against key high-value 
individuals of the Abu Sayyaf Group (ASG) and Jemaah 
Islamiyah (JI) terrorist organizations despite persistent 
shortfalls in logistical assets.  He greatly values the 
contributions of U.S. military personnel in improving the 
combat capability of Philippine forces.  A brazen January 
kidnapping on Jolo island by the ASG of three members of the 
International Committee of the Red Cross (who subsequently 
obtained their freedom) highlights the continuing challenges 
that face the Philippine military and police in securing 
volatile areas. 
 
PEACE PROCESS 
------------- 
 
¶8. (SBU)  In recent weeks, the Philippine government and 
members of the separatist Moro Islamic Liberation Front 
(MILF) have established a new ceasefire and taken steps 
toward restarting formal peace talks, demonstrating that both 
sides share a mutually reinforcing commitment to peace.  This 
ceasefire ended a year of fighting that followed a Philippine 
Supreme Court decision in August 2008 that a key peace deal 
with the MILF was unconstitutional.  The two sides have 
pledged to work toward a new framework for engagement and to 
aid the return of tens of thousands of internally displaced 
persons (IDPs) affected by the conflict.  The U.S. Mission is 
initiating new programs and reinforcing existing ones to 
support the return of IDPs to their homes and their 
livelihoods, in cooperation with local Philippine authorities 
and military.  U.S. support through development assistance 
will be an important component of a successful peace process, 
for which many are now cautiously optimistic. 
 
STRONG DEFENSE RELATIONSHIP 
--------------------------- 
 
¶9. (SBU)  Bilateral defense ties remain strong across a range 
of key activities, including counterterrorism operations, 
disaster relief, and multilateral engagement.  Philippine 
officials believe 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 1998 Visiting Forces 
Agreement (VFA) and opposition from leftists to a U.S. 
military presence, the Philippine Supreme Court ruled in 
February that the VFA is constitutional.  During her July 30 
Oval Office meeting with President Obama and in a later 
separate meeting with Secretary Clinton, President Arroyo 
 
MANILA 00001835  003 OF 003 
 
 
voiced strong support for the VFA and our military 
partnership.  Agreement was also reached on a memorandum to 
increase cooperation against high-seas piracy -- a subject of 
special interest to the Philippines, given the nation's 
status as home to nearly one-third of the world's commercial 
seamen. 
 
¶10. (SBU)  We have a robust military presence in the 
Philippines -- a Joint U.S. Military Assistance Group 
(JUSMAG), Defense Attach Office, and approximately 550 Joint 
Special Operations Task Force-Philippines (JSOTF-P) 
personnel.  Such depth allows us to have offer broad and 
far-reaching assistance to the Philippine military. 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 counterterrorism 
successes.  In addition to its traditional focus on training 
and military sales, JUSMAG is helping the Armed Forces of the 
Philippines (AFP) to revise its 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.  This year, three Philippine 
nominees were accepted to U.S. service academies, one at each 
institution. 
 
USAID'S ROLE 
------------ 
 
¶11. (SBU)  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.  Approximately two-thirds of 
USAID resources for the Philippines have been committed to 
these areas, complemented by Department of Defense 1207 
funds, JSOTF-P activities, 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 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