For Gloria Macapagal-Arroyo, oil price rise creates risk and opportunity

By Carlos H. Conde
International Herald Tribune
Published: January 14, 2008

MANILA: As governments around the world find ways to mitigate the impact of high oil prices, the administration of the Philippine president, Gloria Macapagal-Arroyo, might be forced to make decisions that could offset some of the gains made in fiscal reforms, experts and analysts said Monday.

But such steps could earn the highly unpopular president the political goodwill that has eluded her the past four years.

Critics ridiculed Arroyo’s decision last week - when the price of oil hovered around the $100 mark, to cut oil tariffs by 1 percent - saying that its benefits were negligible and that it was designed more than anything else to make better headlines. Arroyo is now under pressure to lift the 12 percent value-added tax on oil products - among them gasoline, diesel and liquefied petroleum gas - to ease the burden on Philippine consumers.

Such a move could have negative consequences, some officials have said. For one, it would mean a loss in government revenues of as much as 54 billion pesos, or $1.3 billion - making it difficult for the government to balance the budget in the next year or two. The International Monetary Fund has warned that the cost of suspending the tax would outweigh the benefit, and ratings agencies have said it could lead to a downgrade.

“Our analysis has shown that the poor are better protected by increasing social spending than reducing energy taxes,” Reza Baqir, the Fund’s representative here, said at a news briefing Friday. “This is so because the benefits of social spending are better targeted to the poor than those of reducing gasoline taxes.”

The trade secretary, Peter Favila, told reporters last week that suspending the VAT would be a step in the wrong direction. “Let’s not go back to our old problems,” he said. “Let’s have faith in ourselves, I am sure we can do better.”

But some analysts and economists view the oil price crisis as an opportunity for Arroyo to regain lost political ground. Swept to power during the People Power revolt in 2001 that ousted President Joseph Estrada, Arroyo earned the ire of the public after she was accused of cheating in the 2004 elections. Surveys indicate that she is now the most unpopular president since Ferdinand Marcos.

And yet, according to Tim Condon, chief economist in Asia for ING, no other recent president has worked so hard for fiscal reforms.

“Fiscal consolidation in the Philippines has been so significant that the authorities have placed the budget,” which had been suffering huge deficits since the 1980s, “on a sustainable footing,” Condon said by phone from Singapore.

Because of Arroyo’s efforts, “the government now has the flexibility to make that move on the VAT,” Condon said. “I think its overwrought to say that this is going to undo the hard-won fiscal consolidation,” he added. The negative impact of the revenue loss from a suspended VAT, Condon said, would be minor.

Ramon Casiple, executive director of the Institute of Political and Economic Reforms in Manila, said the oil price crisis would force Arroyo to think more like a politician than the U.S.-educated economist that she is. “If she thinks like an economist would, she might find suspending the VAT a problem. If she thinks like an astute politician, she could gain from this,” Casiple said.

Adding pressure on Arroyo to cut the VAT is the strengthening peso, which has depressed the effect of remittances from overseas Philippine workers, who send in more than $12 billion annually and are vital to keeping the economy afloat.

The peso, the best performing currency in Asia in the past year, has settled, with the dollar between 40 pesos and 41 pesos, against 45 pesos late last year.

The recent increases, meanwhile, in the price of oil, have increased significantly the prices of basic commodities, like cooking gas and bread.

Killing of activists and journalists drops in the Philippines

By Carlos H. Conde
International Herald Tribune
Published: January 14, 2008

MANILA: The number of extrajudicial killings of activists and journalists in the Philippines dropped sharply in 2007 compared with the previous year - by as much as 83 percent, according to Philippine authorities.

A report released Sunday by the Interior Department said that the Philippine National Police listed only 7 such killings last year, compared with 41 in 2006. This, according to the department, “underlines the Arroyo government’s strong commitment to human rights and its firm resolve to put an end to these unexplained killings.”

According to the Philippine human rights group Karapatan, more than 800 people, mainly activists, have been killed since 2001 as part of an alleged plot by the Arroyo administration and the military to silence critics and leftists.

Human Rights Watch, a group based in New York, welcomed the decline in killings but challenged the Arroyo government to prosecute the killers.

Sophie Richardson, the group’s Asia advocacy director, said the Philippine police and government “are much more interested in discussing numbers, but we really have not seen one of the most important developments we’re waiting for, and that’s the prosecution of senior members of the military” who are alleged to be carrying out what the group earlier described as a “dirty war” against leftists and journalists.

Trumpeting the decline in the killings, Richardson said by telephone from Washington, “obscures the more important questions that needed to be asked: Who’s doing the killings, and why they are not being prosecuted?”

The “culture of impunity” in the Philippines that has been blamed for the spate of killings has not changed at all, Richardson continued. “These guys have got to get prosecuted.”

According to the police, only two have been convicted so far in these killings. The police also disputed the number of victims and have been insisting that only a little more than 100 have been killed since 2001.

The Asian Human Rights Commission, a nonprofit organization based in Hong Kong, said last week that the Philippine government had been rejecting and dismissing figures related to the deaths.

“Sadly they have clearly missed the point; be it 100 or over 800, no one has been held to account,” it said in a statement.

Although the Interior Department said that charges had been filed against suspects in 22 of these cases, most of them were members of the Communist New People’s Army, while only one soldier was charged. The government has been saying Communists were behind the murders - a claim that the United Nations special rapporteur on extrajudicial killings, Philip Alston, had earlier found unconvincing.

The administration initially rejected the findings by the UN, as well as those by groups like Human Rights Watch, but later formed a police task force to investigate the killings.

The police report came as journalists’ groups protest Philippine government plans to make criminal charges against reporters and news organizations if they disobey government orders while covering emergencies.

Journalists denounce warning by Philippine government

By Carlos H. Conde

International Herald Tribune
Published: January 13, 2008

MANILA: Philippine and international journalists’ groups are protesting a Philippine government memorandum that threatens reporters and news organizations with criminal charges if they disobey government orders while covering emergencies.

The warning, contained in an advisory memorandum released Friday by the Philippine Justice Department, was denounced as “dangerous” and “perilously vague and broad” by the National Union of Journalists of the Philippines, the biggest media group in the country. The National Press Club of the Philippines said the policy “constitutes prior restraint.”

Justice Secretary Raul Gonzalez, who signed the memorandum, told reporters Friday that it was needed because enemies of President Gloria Macapagal Arroyo’s administration were planning a “destabilization plot” for later this month, similar to the incident in November in which dissident soldiers took over the five-star Peninsula Manila Hotel and called for Arroyo’s ouster. That uprising was quickly squelched.

The warning, Gonzalez said, was issued precisely to avoid a repeat of that incident, in which more than 30 journalists were arrested and briefly detained along with the alleged plotters. At the time, the police said the journalists had been arrested “for processing” because some might have been rebel soldiers in disguise. The police said they had arrested those who defied an order to vacate the premises.

In his memo, Gonzalez warned media companies that they could “incur criminal liabilities” if any of their representatives “disobey lawful orders from duly authorized government officers and personnel during emergencies which may lead to collateral damage to properties and civilian casualties in case of authorized police or military operations.”

The New York-based Committee to Protect Journalists urged the government Saturday to withdraw the advisory. “Journalists in the Philippines have long covered dangerous emergencies without the threat of being charged as criminals,” Bob Dietz, the group’s program coordinator for Asia, said in a prepared statement.

“One wonders what sort of effect this directive would have had on reporters covering the dramatic events which ousted the Marcos regime and paved the way for what were supposed to be more democratic governments,” Dietz said, referring to the public protests that drove President Ferdinand Marcos from office in 1986.

On Sunday, the National Union of Journalists called on journalists to defy the order, saying a public demonstration against it was being planned.