SPECIAL REPORT THE PHILIPPINES UNDER PRESIDENT MARCOS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A005400070002-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 19, 2016
• Sequence Number: 2
• Content Type: REPORT

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:CURRENT INTELLIGENCE WEEKLY
SPECIAL REPORT
THE PHILIPPINES UNDER PRESIDENT' MARCOS
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THE PHILIPPINES UNDER PRESIDENT MARCOS
During his eight months in office, President
Marcos has exhibited considerable vigor, and po-
litical acumen. Even so, he has made little
progress in coming to grips with the endemic eco-
nomic and social problems of his nation. The ac-
rimonious debate over his Aid-to-Vietnam bill con-
sumed most of the regular session of Congress and
left little time for the administration's domestic
reform program.
In his coming state visit to Washington,Marcos
may be expected to attempt to capitalize on his
country's firm anti-Communist posture, exemplified
by the Vietnam aid measure, as he requests exten-
sive additional US assistance.
Marcos has been prominent on
the Philippine scene since World
War II, when his brilliant record
as a guerrilla leader earned him
more military decorations than
were awarded any other Filipino.
First elected to the House in
1949 on the Liberal Party ticket,
he moved up to the Senate in
1959, and subsequently became
Senate minority leader. Under
President Macapagal he was se-
lected as Liberal Party president
and in 1963 became president of
the Senate.
The next year, however, after
Macapagal had failed to honor his
pledge to step down in favor of
Marcos as the Liberal Party pres-
idential nominee, Marcos left the
Liberal Party to join the oppo-
sition Nacionalistas. (Party
switching is a relatively common
practice in the Philippine polit-
ical system.)
At the November 1964 Na-
cionalista convention Marcos
swept aside strong opposition to
gain the presidential nomination,
and in November 1965 he again
demonstrated his apparent polit-
ical invincibility by defeating
Macapagal for the presidency by
a substantial margin. His popu-
lar mandate was a result not only
of Macapagal's failure to imple-
ment needed reforms, but also of
Marcos' own wide reputation as a
forceful, and often ruthless,
leader who is successful in every-
thing he undertakes.
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In an
effort to remove the label of
"grafter" which his detractors
pinned on him, he has placed
great stress on anticorruption
measures since he assumed the
presidency. Similarly, his al-
leged ruthlessness has not been
apparent in his attitude and ac-
tions toward his opponents.
Domestic Problems
When Marcos assumed office
he was faced with essentially the
same deep-rooted social, economic,
and political problems that have
plagued each previous administra-
tion. The basic problems are the
deep and broadening economic cleav-
age between upper and lower
classes, and the growing social
malaise which has accompanied it.
This discontent., aggravated by
pervasive corruption in the gov-
ernment, is reflected in wide-
spread and rising violence and
crime.
Discontent among the peas-
ants, who comprise about two
thirds of the population, stems
primarily from a feudalistic sys-
tem of land tenure and unsatis-
factory landlord-tenant relations.
About 40 percent of the farmers--
and a much higher proportion in
central Luzon--are share-cropping
tenants, and many of those who
own. land have too little to be
economically self'-supporting.
The farm population is also handi-
capped by usurious interest rates
and by one of the world's lowest
levels of agricultural productiv-
ity.
In the cities the major
problem is unemployment. An es-
timated 750,000 are unemployed
and two million underemployed in
a work force of 11.5 million.
Job opportunities, moreover, are
not keeping up with the steadily
increasing numbers entering the
job market. The existence of
this large unproductive manpower
pool in the cities has kept wages
low, working and living conditions
poor, and crime rates high.
These problems have been in-
tensified in recent years by a
general upward trend in living
costs and lags in wages which
have further widened inequalities
in the distribution of wealth.
Although per capita real national
income is rising, the gains tend
to accrue to the wealthy and, to
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some extent, to the small but
growing middle-class entrepre-
neurial group. In Manila real
wages for skilled and unskilled
industrial workers have declined
20 percent in the last decade.
Philippine governments have
had little success in dealing with
these basic problems. President
Macapagal's land reform program,
passed in 1963 with the help of
Marcos' effective generalship in
the Senate, was designed to abol-
ish share tenancy in favor of
leaseholds, to control agricul-
tural rents, and to raise the
wages of agricultural workers.
Although the law is well conceived,
Congress has provided only limited
budgetary support, landowners have
impeded its implementation, and
wage minimums have not been en-
forced.
The poor over-all performance
of the government in the field of
socioeconomic reforms is due in
large measure to the nature of
the Philippine political system.
Both major parties--Nacionalistas
and Liberals--represent the con-
servative landed and commercial
interests; other elements of the
population, including labor and
peasants, have few channels
through which to influence public
policy. Other built-in handicaps
include the insufficiency of gov-
ernment revenues because of a
narrow tax base, poor and corrupt
tax administration, wide scale tax
evasion, and smuggling. Smuggling
in itself costs the government an
estimated $100 to $200 million in
revenue annually.
Marcos' Achievements
On assuming the presidency,
Marcos announced a program "to
make the Philippines great
again." His program calls for
priority attention to reducing
corruption and smuggling, increas-
ing agricultural productivity,
implementing the land reform pro-
gram, and stimulating the private
economic sector. For the first
few months of his administration,
however, his primary concerns
have been to establish his admin-
istration and secure passage of
the Vietnam aid bill. A major
problem in both cases has been
the fact that his Nacionalista
Party has but a tenuous majority
in the Senate and is in the mi-
nority in the House of Represent-
atives.
During the 100-day regular
congressional session and two
subsequent special sessions, only
a few pieces of major domestic
legislation were passed. These
provided increased incentives for
rice and corn farmers, set up
programs of rural development and
irrigation, raised the foreign
and domestic debt ceiling, and
introduced police reforms.
There has been some press and
bipartisan criticism of the
paucity of progress toward so-
cial and economic reform, al-
though there is recognition that
these issues have been over-
shadowed by the time-consuming
Vietnam aid bill. Marcos' popu-
lar standing appears to remain
high. The people in the provinces
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are reported to support him
strongly and even in Manila, a
traditionally antiadministration
city, he appears to have majority
support.
Internal Security
Violence and lawlessness
are endemic in the Philippines,
and the government has had little
success in coping with these
problems. There is widespread
disrespect for law and order, a
strong tendency toward violence
in settling personal and political
disputes, an easy availability
of firearms, and an inadequate
police and
Judiciary.
Despite this lawlessness,
there has been no major subversive
threat to the integrity of the
state since Magsaysay suppressed
the Communist-led Huk rebellion
during the early 1950s. The
illegal Philippine Communist
Party (PKP) has managed to sur-
vive as a small, loosely organized
movement, but it probably has
fewer than 1,000 hard-core mem-
bers. It has concentrated on in-
filtrating urban, non-Communist
organizations, particularly in
labor and the press, and in set-
ting up small youth and student
fronts. In the densely populated
central Luzon "rice bowl" it has
established small peasant fronts
and maintains contact with--and
at least partial control over--
the remnants of the Huk guerrilla
force, the People's Liberation
Army (HMB). These remnants, es-
timated at perhaps 150 active mem-
bers plus 2,000 supporters, are
concentrated in Pampanga Province,
site of the US Clark Air Force
Base. The HMB now is chiefly en-
gaged in sporadic terrorism, as-
sassination, and banditry designed
to intimidate local authorities
and the population. Increasing
evidence indicates that the Huks
and gangster elements in central
Luzon have merged their activ-
ities.
The threat of subversion
from Indonesia has become of less
concern with the recent waning of
Communist influence in Djakarta,
although there is continuing evi-
dence that Djakarta would like
to influence the Philippines to
take a more neutral position in
world affairs. Chinese Communist
subversive activity among Fili-
pinos is exceedingly meager at
this time, but the Filipinos
claim that it is increasing. Al-
though the Chinese Communists
seek primarily to influence the
Chinese community of 600,000
against the Nationalist regime on
Taiwan and to eliminate the US
orientation of the Philippines,
they are also a potential source
of funds for the PKP.
Foreign Relations
Philippine foreign policy
is firmly based on free world
orientation and close alliance
with the US. The Philippine Gov-
ernment has refused to establish
political or economic relations
with any Communist country--dip-
lomatic relations with Cuba are
considered "suspended"--and has
never recognized the Soviet Union.
Because of the country's long and
close ties with the US, little
effort has been made to expand
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relations with other countries,
including those in the Far East.
Closest relations are with Thai-
land, Taiwan, Korea, and, econom-
ically at least, Japan.
Manila participates actively
in the United Nations, but has
contributed little to the spe-
cialized agencies. It claims
that SEATO is a keystone in its
foreign policy, but its partici-
pation in that organization
has been relatively weak. The
Philippines has been active
in other regional organizations
such as the Colombo Plan and
ECAFE, and in 1961 joined Malaya
and Thailand in the Association
of Southeast Asia, aimed at es-
tablishing closer economic and
cultural relations among the three
nations. Although the Association
subsequently became dormant as a
result of disagreements between
the Philippines and Malaysia over
Sabah, it has recently been re-
vived and Malaysian-Philippine
relations have improved.
Marcos is firmly anti-Commu-
nist and a supporter of the US in
most issues concerning the Commu-
nist world. Well aware of the
growing nationalist feeling in
his country, however, he has been
publicly critical of the US when
he believed its actions con-
flicted with Philippine inter-
ests. On the other hand he has
been less concerned than Macapagal
with the Philippine image among
his Asian neighbors, and has been
less prone to indulge in gestures
of independence of the US such
as Macapagal's flirtation with
Indonesia from late 1962 to early
1964.
Marcos' support for US pol-
icy in Vi-t-m has been demon-
stratedi y his success-
ful efforts s to pass the Vietnam
aid bill
Marcos has shown much inter-
est in settling long-standing is-
sues and irritants between the
US and his country, particularly
in regard to bases;aand bilateral
economic issues. Although most
of the base issues were resolved
by previous administrations, cer-
tain relatively minor differences
remain as irritants. None of
these, however, appears likely to
hamper effective use of the bases
in support of US operations. In
the economic sphere main areas
of tension involve differences
over the so-called "parity issue"
and over the Retail Trade Nation-
alization Law. "Parity," as ex-
pressed in the Philippine Consti-
tution and the trade agreements
of 1946 and 1955, gives US citi-
zens rights equal to Filipinos
(nationals) in establishing com-
mercial enterprises and in ex-
ploiting national. resources.
Since the US anno raced in early
1965 that it woul not seek re-
newal of parity rights beyond
1974, the significance of parity
as an irritant has been mini-
mized for the time being at
least.
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A more immediate issue arises
from the application of the Re-
tail Trade Nationalization Law.
This law, originally aimed at
the Chinese, requires all enter-
prises engaged in retail trade
to be "wholly owned" by Filipinos
and/or US citizens. In recent
years, Philippine courts have
interpreted "retail trade" as
encompassing normal wholesale op-
erations, and "wholly owned" as
meaning 100-percent ownership by
Filipinos or Americans. Few US
corporations with publicly held
stock can meet this qualification.
Some 90 US firms with investments
totaling over $250 million are
involved.
Another source of friction
is the recurrent issue of Philip-
pine veterans' claims on the US.
These claims have been recently
revived and will constitute a
major item on Marcos' agenda
during his visit to Washington
in mid-September. Other major
problems and needs which will be
discussed during Marcos' visit
will include US assistance in
the fields of economic develop-
ment and military assistance.
Economic development assistance
to be considered will cover such
areas as rural electrification,
rural credit and farm coopera-
tives, irrigation, and agricul-
tural education. Military items
will include the completion of
equipping ten engineer construc-
tion battalions, defense support
in the form of the construction
of bases, airfields, and roads,
and the supply of some additional
military hardware.
economic development and social
reform programs, his outstanding
political skill and personal
drive and determination suggest
that he may well make more rapid
strides in the next year or so.
Nevertheless, his lack of clear-
cut legislative support, continu-
ing funding problems, and the
basic antagonism of the dominant
social and political elements to
far-reaching reforms are formid-
able obstacles. Even more fun-
damental than these issues of
reform are those of honesty and
efficiency in government. Marcos
has been explicit in condemning
public corruption and immorality,
but it remains to be seen whether
he understands or will effectively
confront the grave danger pre-
sented by these deep-seated so-
ciopolitical evils to the po-
litical future of the Philippines
as a viable member of the free
world. Lack of any significant
improvements along these lines
would increase the already wide
popular disrespect for law and
order and could seriously erode
popular acceptance of the demo-
cratic system.
In the field of foreign
affairs Marcos will generally
continue to maintain his coun-
try's close and unique relation-
ship with the US. However, dur-
ing his forthcoming state visit
he may be expected to ask for
somewhat unrealistic levels of
assistance, and will probably
not be fully satisfied. Although
this could result in a temporary
strain in relations, the basic
Philippine alignment with US
policies is not expected to be
Notwithstanding Marcos'
slow start in implementing his
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