Cablegate: Scenesetter for the Visit of Congressman Chabot

DE RUEHML #0533/01 0461025
O 151025Z FEB 07





E.O. 12958: N/A

1. (U) Congressman Chabot, a warm welcome to the Philippines!
The relationship and spirit of partnership between the
United States and the Philippines remain strong. The unique
bond shared between U.S. and Philippine veterans further
strengthens our ties, as the memory of our partnership in
World War II still resonates here. U.S. interests in this
major non-NATO ally center on strengthening democracy,
fostering economic growth, fighting terrorism and other
threats to security, and providing superb services to our
American and Filipino publics. The U.S. is the largest grant
donor to the Philippines, its largest trading partner, and
the largest investor.

2. (U) Your visit will enable you to meet with senior
Philippine officials, including new Defense Secretary Ebdane
and Philippine Armed Forces Chief Esperon. You will join me
in launching Balikatan 07 (shoulder to shoulder), an annual
exercise that strengthens the U.S.-Philippine security
partnership through civil military operations, staff
exercises, and interoperability training. You will also pay
tribute to the dead and missing from World War II
immortalized at the American Cemetery. We look forward to
making your visit productive and useful to you.


3. (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 islands, many
of them mountainous. Basic literacy (94%) remains high,
although the standard of public education and other
government services has been declining. Filipinos are mainly
Roman Catholic (83%) or otherwise Christian (10%) with a
small Muslim minority (6%) living primarily in Mindanao.
Over 40 percent of Filipinos earn less than $2 per day, with
a much higher percentage of Muslims eking out a living below
this threshold.


4. (U) Philippine political life is free-wheeling, centered
primarily on the personal charisma of individual political
leaders, and largely oligarchic, with most wealth and
political power limited to a few influential families.
Then-Vice President Gloria Macapagal Arroyo assumed the
Presidency in 2001 after a "people power" movement swept out
her predecessor. She has regained her footing after a series
of challenges to her leadership, including unsuccessful
impeachment efforts in 2005 and 2006 -- based on accusations
of vote rigging in 2004 elections -- and an alleged coup plot
that led to her week-long declaration of a "State of National
Emergency" in February 2006. Efforts to amend the Philippine
Constitution to replace the bicameral Congress with a
unicameral parliament system were unsuccessful in 2006.

5. (U) The Philippines assumed the chairmanship of the
Association of Southeast Asian Nations in 2006, and hosted an
ASEAN Summit in Cebu in January 2007. In summer 2007, it
will host the annual ASEAN Regional Forum and ASEAN
Post-Ministerial Conference.


6. (U) The Philippines is home to three organizations
designated by the United States as Foreign Terrorist
Organizations -- Jemaah Islamiyah, the Abu Sayyaf Group, and
the New People's Army. The first two groups currently pose
the most direct threats to U.S. interests and are located in
the poor predominately Muslim south. The New People's Army
operates throughout the country. We work closely on
developing the capacity of the Armed Forces of the
Philippines and the police to combat terrorists. We provide
training and equipment, engage in a robust exercise program,
and are currently undertaking a joint far-reaching bilateral
program completely to reform the Armed Forces of the
Philippines into a modern, effective force. Our Rewards for
Justice Program provides incentives to identify and arrest

7. (SBU) President Arroyo is a committed counterterrorism
partner. She has repeatedly demonstrated her willingness to
work closely with us on combating Islamist extremism and we

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have seen marked improvements in the Armed Forces of the
Philippines' ability to sustain and conduct operations. The
Armed Forces, supported by the U.S. Joint Special Operations
Task Force-Philippines, has had significant success against
the Abu Sayyaf Group during "Operation Ultimatum," an ongoing
effort to eliminate the terrorist leadership on the island of
Jolo. Philippine troops killed Khadaffy Janjalani, the
leader of the Abu Sayyaf Group, in September 2006, and
operations and logistics chief Abu Solaiman in January 2007
during military offensives.


8. (SBU) Although prospects for peace with the insurgent Moro
Islamic Liberation Front (MILF) continue to remain hopeful,
talks recently hit a snag over the question of ancestral
domain, the historically Muslim land claimed by the MILF. We
are directly engaged with all players, including the MILF
Central Committee, to keep the peace process on track.

9. (SBU) USAID devotes nearly 60 percent of its $70 million
annual assistance budget to conflict-affected areas of
Mindanao, where it is focused on reintegrating former
combatants, promoting economic growth and business
opportunities, education, health and local governance. After
the Moro National Liberation Front signed a peace deal with
the government in 1996, USAID carried out a range of highly
successful programs, including "Arms to Farms," which
reintegrated over 28,000 former fighters back into civil
society as successful farmers. USAID is ready to implement
similar programs should a peace agreement be signed with the


10. (SBU) The Armed Forces of the Philippines remains heavily
engaged in combating internal security threats, but maintains
limited external defense capabilities. Readiness is poor and
modernization slow due to a lack of funding and commitment of
resources. The Department of National Defense and Armed
Forces Chief of Staff General Esperon strongly support the
joint Philippine-U.S. Philippine Defense Reform program.
There are now 11 U.S. Subject Matter Experts on the ground,
and more may be added in the near future. In addition to
long-term institutional changes, the multi-year Capability
Upgrade Program will modernize 72 Philippine Army and 12
Philippine Marine Corps battalions over the next six years.
The Battalion of Excellence component will enhance training
capabilities and introduce new personnel policies, logistics
programs, and equipment.

11. (SBU) The Philippine National Police is plagued with many
of the same problems as the Philippine Armed Forces, yet is
critical to urban counterterrorism operations, as well as
controlling trafficking in persons, narcotics, and smuggling.
A United States Senior Law Enforcement Advisor recently
joined our Embassy team to assist the Philippine Police in
its transformation efforts. One short-term intervention he
has already conducted was a targeted training program aimed
at improving the sensitive site exploitation and evidence
handling skills of police and security officials involved in
tracking the terrorists on Jolo.

--------------------------------------------- -----
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12. (SBU) Extrajudicial killings of local leftists, a
perennial problem here as in many countries with weak rule of
law, have recently attracted much more public attention.
Leaders of leftist political groups linked to the Communist
Party of the Philippines/New People's Army blame the military
and police, while some in the government assert that the
killings are the result of an internal purge within the
Communist Party of the Philippines/New People's Army. Few of
the cases have been resolved, prompting President Arroyo to
set up a high-level independent commission and a special
national police task force to investigate the killings. The
commission recently concluded its work but its findings have
yet to be released. We press the government at every
opportunity to resolve these killings, and I have discussed
them with President Arroyo and key members of her cabinet, as
well as the Armed Forces Chief of Staff and the Chief of the
Philippine National Police. They all tell me they are as
appalled as we are, but we remain insistent that they must

MANILA 00000533 003 OF 004

get control of this problem.


13. (U) The U.S. remains the Philippines largest trading
partner, with over $16 billion in two-way merchandise trade.
Major U.S. exports include electronics and agriculture. The
U.S. is also the largest investor here, with over $6 billion
in assets. The large American Chamber of Commerce in Manila
is proud of its history as the first American Chamber of
Commerce abroad.

14. (U) The Philippine economy performed well in 2006.
Growth hit an estimated 5.5 percent, while inflation slowed
to only 4.7 percent. Both the stock market and the peso
ended the year at the highest levels in recent years. The
economy was bolstered by a 15 percent increase in remittances
by overseas workers, a recovery in exports, and sensible
fiscal policies, which have brought the budget deficit under
control. The Millennium Challenge Corporation has approved a
$21 million Threshold Program for the Philippines, which will
focus on anti-corruption and revenue enhancement. The United
States assists in economic development, anti-corruption,
environmental protection, and poverty alleviation through
USAID, USDA, and an active Peace Corps presence throughout
the country.


15. (U) The U.S. Department of Veterans Affairs Manila
Regional Office and Outpatient Clinic are the VA's only
full-service facilities located in a foreign country. VA
provides monetary benefits to approximately 15,000 veterans
and dependents residing in the Philippines, and provides
health care to approximately 4,000 veterans residing here.
The VA operation in Manila has a sizable economic impact
here, worth about $175.2 million in FY 2006. This figure
factors in monetary benefit payments, operating costs, and
medical equipment provided to the Philippine Government's
Veterans Memorial Medical Center. Due to the low standard of
living in the Philippines and the cultural preference to
conduct business through middlemen, claims fraud remains a
significant challenge. While we have success in identifying
fraud, obtaining prosecutions through the Philippine justice
system is difficult.

16. (U) Filipino veterans have over the years challenged and
questioned what they perceive as lack of equality in the
benefits they receive as compared to those received by U.S.
veterans of WWII or those Filipino veterans residing in the
U.S. This issue continues to be the focus of intense
lobbying by various Filipino advocacy groups. Filipino
veterans and their dependents in receipt of VA benefits enjoy
a far greater standard of living here than their ineligible
counterparts, many of whom receive benefits from the
chronically in-debt Philippine Veterans Affairs Office at the
rate of approximately $100 per month.


17. (U) The Social Security Administration Division in Manila
serves as the hub for social security work for all the
Embassies and Consulates in the East Asia Pacific Region.
The division currently serves 41,000 beneficiaries and pays
out over 25 million dollars each month. In the Philippines
alone, there are almost 20,000 beneficiaries.


18. (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 addition roughly 120,000 visiting the Philippines
at any given time. The Section issues about 60,000 immigrant
visas a year, including visas to large numbers of nurses,
teachers, and physical therapists. The Section sees almost
200,000 nonimmigrant visa applicants annually, including
large numbers of merchant marine mariners and temporary
seasonal workers.


MANILA 00000533 004 OF 004


19. (SBU) In your meetings with Secretary Ebdane and General
Esperon, as well as your interaction with other government
officials and the press, you may want to draw on the
following talking points:

-- Congratulations on recent killing of Abu Sayyaf Group
leader Khadaffy Janjalani and logistics chief Abu Solaiman.
The Armed Forces of the Philippines continues to be engaged
in impressive counterterrorism efforts in Jolo.

-- Glad we can support this important operation to eliminate
the Abu Sayyaf and Jemaah Islamiyah leadership and the threat
they pose.

-- Philippine Defense Reform represents a commitment to
undertake fundamental institutional change. We're proud to
be partners in this program.

-- We take the issue of extra-judicial killings seriously.
Encouraged by steps the Philippine government has taken to
try to get control of this problem.

-- We are working with the Philippines to help achieve higher
economic growth and spread this growth to the bottom 40% of
the population living on less then $2 per day.

-- Great to be able to observe activities that are part of
this annual exercise that helps train both U.S. and AFP
personnel, and further strengthens our close security
relationship. I'm particularly pleased to see the large
humanitarian and civic action component in this year's
exercise, because this helps provide direct benefit to
Filipino citizens and makes it easier for our armed forces to
work together in the event of natural disasters.

-- We have a large and active Veterans Affairs office here to
make sure we provide benefits to all the many eligible
veterans and their dependents. It is the only Veterans
Affairs office outside the U.S.

-- The Philippines, as current chair of ASEAN and host of key
summits, has a special responsibility in promoting regional
stability and cooperation on a wide variety of issues,
including a unified response to North Korea's nuclear

-- We very much appreciate the Philippine government's public
support for the agreement reached with North Korea through 6
Party Talks, and Philippine leadership in the region on this
and other issues of international importance.

-- (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.

-- (If asked about the midterm elections scheduled for May
14) It would be inappropriate for me to comment on any
aspect of Philippine elections, but we all know the
importance of a transparent and fair election process in any
democracy. I wish all the candidates the best of luck.

Visit Embassy Manila's Classified SIPRNET website: cfm

You can also access this site through the State Department's
Classified SIPRNET website:


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