VZCZCXYZ0001
OO RUEHWEB

DE RUEHML #2182/01 2890819
ZNR UUUUU ZZH
O 160819Z OCT 09
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5446
RUEHRC/USDA WASHDC IMMEDIATE

UNCLAS MANILA 002182 
 
STATE FOR EAP/MTS AND EB/TRA 
USDA FOR SECRETARY VILSACKQ 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON PREL RP
SUBJECT: SCENESETTER FOR SECRETARY VILSACK'S VISIT TO THE 
PHILIPPINES 
 
SENSITIVE BUT UNCLASSIFIED 
 
¶1.  (SBU) Welcome to the Philippines.  Following closely after two 
natural disasters that have affected millions of lives and damaged 
agricultural production, your visit holds special significance for 
the Embassy as well as for the Filipino people and government.  Your 
visit will attract significant media attention and many Filipinos 
will study the content of your public remarks for indications of 
support for the bilateral relationship.  The United States and the 
Philippines have a longstanding and deep relationship based on 
nearly 50 years of direct American administration, a Philippine 
government modeled on the U.S. government, broad economic ties, and 
an extensive interchange of people.  The more than four million 
Filipino-Americans now constitute the largest Asian ethnicity in the 
United States, while some 250,000 U.S. citizens reside in the 
Philippines.  Reflecting this important relationship, the U.S. 
Embassy here is one of the largest in the world. 
 
¶2.  (SBU) You are coming at an interesting and challenging time. 
The destruction caused by devastating back-to-back storms in the 
last month has strained government resources and will likely 
increase the incidence of poverty.  Your visit presents an 
opportunity to build on the goodwill and gratitude stemming from the 
USG's fast and energetic response to these crises, and highlight the 
very positive U.S. relationship with the Philippines.  Your emphasis 
on  agriculture and the role of international trade will be 
especially timely and welcomed by President Gloria Macapagal-Arroyo, 
who has repeatedly called for the government, private sector, and 
development partners to work together to alleviate poverty, 
contribute to economic development, and promote peace. 
 
Activities in a Nutshell 
------------------------ 
 
¶3.  (U) During your visit, you will be briefed by the Mission 
Country Team; be the guest of honor at a dinner hosted by Philippine 
Secretary of Agriculture Arthur Yap; and participate in media 
events.  You will also visit the International Rice Research 
Institute, view the American cemetery, and visit a modern flour mill 
that uses U.S. wheat. 
 
The Economy in Brief 
-------------------- 
 
¶4.  (U) The United States is the Philippines' largest trading 
partner, with over $18 billion in two-way merchandise trade in 2008. 
 Major U.S. exports include electronics and agricultural products. 
The U.S. is also one of the largest investors here, with over $6.6 
billion in equity. The Philippine economy grew by 7.3% in 2007, the 
fastest pace of growth in over three decades, but slowed to 4.3% in 
2008, and will likely be in the 1-2% range for 2009.  However, a 
resilient service sector (particularly a booming business process 
outsourcing industry) and strong overseas workers remittances 
(expected to increase to more than $17 billion in 2009, more than 
10% of Philippine GDP) have helped Qe Philippines through this 
period of global economic slowdown. 
 
¶5.  (U) There has been limited progress over the past decade in 
reducing poverty and addressing the inequitable distribution of 
incomes.  Almost half of the population here lives on $2/day or 
less.  Socio-economic development in the Philippines is uneven with 
wide disparities across regions and populations.  Poverty is 
especially severe in rural areas.  Most of the lagging regions and 
provinces are in Mindanao, at the southern end of the country, while 
Manila and neighboring areas represent the country's most developed 
region.  While Mindanao features some of the country's more 
progressive cities and municipalities, human development indices of 
some of Mindanao's most depressed provinces approximate those of the 
world's poorest countries. 
 
The Political Situation 
----------------------- 
 
¶6.  (SBU) President Gloria Macapagal Arroyo assumed the Presidency 
in 2001 after a "people power" protest movement swept out her 
predecessor.  An economist by trade, she is a tenacious leader who 
has faced a series of challenges to her rule, including unsuccessful 
impeachment efforts and low-level military coup attempts. 
 
¶7.  (SBU) Presidential elections set for May 2010 are already 
reshaping the political landscape as candidates begin aggressively 
campaigning.  Notable candidates include Senator Benigno "Noynoy" 
Aquino III, a popular leader who decided to run for President 
following the death in July of his mother, former President Cory 
Aquino, one of the most cherished figures in Philippine politics. 
Another serious contender could be former President Joseph Estrada, 
who was ousted by popular discontent in 2001.   In 2007, Estrada was 
 
convicted of corruption and then pardoned by President Arroyo. 
Secretary of Agriculture Yap is rumored to be considering a run for 
the Senate.  The U.S. could sustain a healthy bilateral relationship 
with the Philippines under any of these leaders, although we would 
expect an Estrada presidency to be plagued by controversy.  These 
will be the first nationwide elections featuring computerized vote 
tabulation; the automation holds the promise of more accurate and 
rapid vote-counting, but many in the Philippines are anxious about 
the shift to a new and unfamiliar system. 
 
¶8.  (SBU) Although peace talks with separatist Moro Islamic 
Liberation Front (MILF) insurgents stalled after intense fighting 
broke out in Mindanao in 2008, government and MILF negotiators have 
since recommitted themselves to peaceful resolution of the conflict 
with a new ceasefire.  Last month, the parties made another 
significant step forward by agreeing to create an International 
Contact Group for interested countries to observe and support the 
peace negotiations.  While a new round of formal talks is not yet 
scheduled, observers are hopeful that the parties will continue to 
make progress in their informal discussions, leading to a formal 
resumption of negotiations.  Even during her last few months in 
office, President Arroyo has publicly committed to advancing peace 
talks, aware that a robust peace process between the Philippine 
government and the MILF would encourage stability in the region and 
enhance economic development. 
 
Human Rights 
------------ 
 
¶9.  (SBU) President Arroyo has consistently expressed her commitment 
to resolving the complex problem of extra-judicial killings and has 
takenQveral 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 
the military or police -- are brought to justice.  The problem is 
closely related to a judicial system which is inefficient and 
strained beyond its capacity.  Problems such as violence against 
women, abuse of children, child prostitution, child labor, 
trafficking in persons, and ineffective enforcement of worker rights 
are also common. 
 
Development Challenges 
---------------------- 
 
¶10.  (U) Economic development is a key U.S. objective in the 
Philippines.  Accelerating development involves key, cross-cutting 
issues, principally: opening the economic system to more 
competition; curbing high population growth; improving agricultural 
productivity; basic education and health reforms; building 
infrastructure; harnessing fiscal resources; strengthening the 
capacity of local government units; effective law enforcement; 
improving the investment climate; promoting transparency and 
accountability; and addressing peace and security issues.  President 
Arroyo has called repeatedly for unity and strong partnerships as 
the country grapples with global economic challenges and domestic 
political concerns with limited resources.  Your visit to the 
Philippines provides a timely opportunity to reiterate continued 
U.S. government support for development and the still crucial role 
of international trade and investment. 
 
Bassett