Success or Failure in the Philippines?

SUCCESS OR FAILURE IN THE PHILIPPINES? Scott Thomas .he collapse of the American effort in Vietnam in the 1970s, the ensuing buildup of Soviet naval facilities at the former U.S. base in Cam Ranh Bay, and the growing size of the Soviet navy itself, particularly its Pacific fleet, have generated unprecedented challenges to U.S. forces in the Pacific Basin. Further deterioration of the U.S. position in the region has been checked, however, by the continuing ability to project naval and air power from two bases in the Philippines, Subie Bay and Clark Air Base. Thus, a balance has been struck: both superpowers use their outposts in the Southwest Pacific to deploy strategic forces that could function autonomously in the event of a nuclear showdown, as well as to project conventional power into the region. Unfortunately, it appeared increasingly in the early 1980s as if this balance of forces was deteriorating. Although there was little hope that the Soviets ever could be dislodged from Cam Ranh Bay, or that their Vietnamese hosts would venture from the Soviet bloc, the Philippine government under Ferdinand Marcos was in serious danger of being overthrown by a communist-led guerrilla force, the New People's Army (NPA). A special Senate intelligence report in 1985 warned that the Philippine army faced a possible "strategic stalemate" with the NPA within five years. Such a stalemate would have led—still could lead— to civil war on a massive scale, posing grave strategic risks for the United States. The insurgency is an unfortunate dilemma for U.S. strategic planners , given the central position of the Philippine bases in countering the This research was completed while Dr. Thomas was a senior economist with the Project Consulting Service of Data Resources, Inc. Currently he is a program economist with the U.S. Agency for International Development. 109 110 SAIS REVIEW Soviet threat in the Pacific. Moreover, a report prepared in 1985 for the Senate Select Committee on Intelligence indicated that the Soviets had begun to enlarge greatly their embassy staff in Manila and to make indirect contacts with the NPA insurgents through Philippine labor unions. Concern heightened after reports surfaced of a growing NPA presence within the outer perimeters of both U.S. bases. Following President Aquino's failed attempt to negotiate a settlement with the NPA, it has become increasingly clear that the core of the insurgency is extremist and unwilling to compromise. Still, popular support for the NPA appears to be spurred mainly by economic factors. Nearly all reports on the insurgency in 1985 indicated that its popular support was homegrown, based on widespread poverty, falling incomes, and resentment of the Marcos government. In fact the insurgency, which had languished in the comparative prosperity of the 1970s, flourished after the sharp deterioration of the economy in 1983. Philippine economic growth in the 1970s had been fueled first by rising prices for traditional exports, then by growing external indebtedness. The economy plunged into a severe and prolonged recession in 1983: since 1982 the economy is estimated to have contracted by 20 percent in U.S. dollar terms.1 Despite favorable developments in the 1970s, Philippine economic performance has lagged behind that of other East Asian nations throughout the postwar era. The Philippines was among the richest of Southeast Asian economies after World War II. Sadly, this lead for the most part had been squandered by 1984. South Korean per capita income , which was only half that of the Philippines in 1965, was three times greater by 1984. Even Thailand's per capita income exceeded that of the Philippines by the early 1980s. The Philippines grew more slowly under the twenty years of Marcos's rule than did any of the other members of the Association of Southeast Asian Nations (ASEAN). By 1986 the per capita income of Filipinos was estimated to have fallen below $600 annually. Much of the blame for this decline must be attributed to Marcos himself and his cynical manipulation of power in awarding lucrative monopolies to his cronies and friends. His interference by decree in the workings of the Philippine economy resulted in tremendous economic distortions and inefficiencies, of which the corrupt accumulation...